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Farmers across the United Kingdom and Ireland are bracing themselves for an ambitious liberalising trade pact between Australia and the UK, its first major new trade deal since leaving the EU.
UK officials have confirmed that the trade deal to be offered to Australia would see tariffs and quotas on goods traded between the two countries phased out over 15 years.
Prime Minister Boris Johnson hopes to conclude the deal before he will host a G7 summit in June.
Australia has been pushing for a five-year transition, but the 15-year period is said to have been signed off by the UK Cabinet sub-committee in charge of the negotiations.
Currently, Australian imports incur tariff charges when entering the UK, for example, 20% in the case of beef.
The trade agreement is likely to lead to an increase in Australian meat imports into the UK.
Hugh Killen, the chief executive of Australian Agricultural Company, Australia’s largest integrated cattle and beef producer, has forecast that beef exports could increase tenfold.
In the UK, the National Farmers’ Union (NFU) warned that small-scale beef and lamb farmers in the UK risk being put out of business by the Australia meat production industry.
Only 0.15% of Australian beef exports went to the UK in 2020, however 14% of the UK’s sheep meat imports came from Australia.
NFU president Minette Batters warned, “A tariff-free trade deal with Australia will jeopardise our own farming industry and will cause the demise of many, many beef and sheep farms throughout the UK.
“This is true whether tariffs are dropped immediately or in 15 years’ time.”
A UK-Australia tariff-free trade deal is also a daunting prospect for Irish exporters.
The UK is expected to remain the largest single destination for Irish food and drink exports in 2021 and beyond.
It accounts for 44% of Irish beef exports in value terms.
It is also very important for exports of Irish dairy products, taking 40% of our cheese exports in 2020.
The UK is still an important market outlet for Irish pigmeat, accounting for 30% of the total.
The UK accounts for 18% of Irish sheepmeat exports.
Most of Ireland’s poultry exports also go to the UK.
Other Irish export commodities heavily dependent on the UK are unlikely to be much affected by imports from Australia, such as the 94% of Irish horticulture exports and 68% of prepared consumer food exports from Ireland to the UK.
But the threat of displacement of UK sales by cheaper imports from around the world remains a constant since Brexit, with the UK also seeking to do trade deals with huge exporters such as the United States, Canada and Mexico.
The UK Government has started a consultation process on its trade negotiations with Canada and Mexico.
Irish beef exporters will fear that an Australia-UK trade deal could hit our beef trade with a severe blow even as it recovers slowly from the January 1 exit of the UK from the EU customs union.
For the first quarter, the UK’s imports of fresh and frozen beef totalled only 40,000 tonnes, down 36% year-on-year.
Irish export volumes to the UK are thought to be down 38%, having slumped in January following the UK’s withdrawal from the EU.
But volumes have steadily recovered month on month.
Mainly due to lower numbers of Irish beef cattle this year (down by about 13%), global Irish beef exports up to April are estimated to have fallen 22%, to 105,400 tonnes.
But the fall in value terms may be only 7%, with higher prices helping to make up for some of the reductions in volumes.
These figures come from the UK’s Agriculture and Horticulture Development Board (AHDB), which says that current high cattle prices in Great Britain offer scope for exports from Ireland to increase in the coming months, possibly helped by the re-opening of the UK’s foodservice sector, although availability of production in Ireland may limit volumes to a degree.
The AHDB also notes that Irish beef prices remain below those in Australia (but above the beef prices in New Zealand and Brazil).
The threat to Irish and EU exporters was made clear by the UK’s international trade secretary Liz Truss saying the trade deal would, after a very long transition period, allow Australia the same kind of access the EU already has to the UK market.
Therefore, she said, she had no doubts that British farmers will continue to thrive under the new deal, because they are already thriving even while the UK imports over 200,000 tonnes of beef from Europe, which is a much bigger producer than Australia.
She said beef from hormone-injected cattle will remain banned in the new Australia trade deal.
She also noted that Australian lamb coming into the UK is currently more expensive than UK lamb.
Former Australian Ambassador to the UK Alexander Downer said Australia has substantial markets in Asia, and that’s where the focus will be.
“To send beef, particularly to send large quantities of beef and sheep meat, 10,000 miles across the world, is very expensive.
“The only access to the market we would ever have in the UK is at the very high end. A high end which is substantially served by the EU.”
Sinn Féin spokesperson on Agriculture Matt Carthy TD has warned that a British government trade deal with Australia, on top of challenges of climate action and a new Common Agriculture Policy, presents a nightmare scenario for Irish farming.
He called on Agriculture Minister Charlie McConalogue to commission an impact assessment of such a deal, and to proactively engage with the British government on the is matter.
“It is also essential that the Irish government demand that the EU cease their trade deals that would further damage our agri-food sectors, particularly the Mercosur trade agreement.