Credit: Original article can be found here
The UK government looks like it is going to leave an open door for agricultural produce to enter the market in Britain, with no tariffs or quotas to control the amount entering. There are protests in British farming circles about Australia not having the same production standards and that it is unfair for British farmers to have to compete with that.
This is something of a red herring, because the big issue is that without either a tariff or quota limit on imports, the door is open for unlimited quantities of Australian beef to target the British market.
This could, of course, be phased in over time and Australia may choose to sell their beef and sheepmeat elsewhere. However, the reality is that for the first time since the UK joined the EU, the market will be open when the UK and Australia conclude the deal.
Standards are a distraction
Focusing the debate on standards alignment when negotiating a trade deal is, at most, of secondary importance and at worst, a distraction. The big issue is how much product you are prepared to let in and at what level of preferential tariff.
Even in what farmers consider the seriously hostile Mercosur deal agreed with the EU, there is an annual limit of 99,000t extra at a 7% tariff after a prolonged period of 10 years.
In the EU trade deal with Japan, who, like the UK, are a net importer of agricultural produce, the level of EU beef access is controlled by a phased reduction over 15 years to a 9% tariff, while the volume of access is controlled by a safeguard clause. This enables Japan to restore the full 38.5% tariff for a period if the market is becoming over supplied.
UK produce will always command a premium, while Irish exports have direct competition from outside the EU in the British market
The UK have by far the strongest hand in a negotiation with Australia, because Australia stands to benefit much more from a trade deal than the UK, as the UK government’s own impact assessment points out.
A major opportunity was missed earlier this year, when the Trade and Agriculture Commission (TAC), recommended to the UK government that it should pursue a no tariff, no quota policy and focus on not compromising standards.
The TAC was set up following a successful lobby by the National Farmers Union (NFU) and it had representation from all main farm organisations across the UK.
Importers decide standards
The issue of standards is secondary, because it is the importing country that sets the bar for what it will accept and what it will not. All countries exporting to the EU are required to supply beef that they can demonstrate hasn’t come from cattle treated with hormones.
Therefore, trade negotiations between the EU and other countries are purely about quotas and tariffs, not standards, as the EU sets the standard for product entering, irrespective of its tariff or quota status.
The UK have this same opportunity, though in negotiations, we can expect countries that use hormones in beef production will press for a concession on this as well. Where the UK-Australia negotiation is on this isn’t known at present, but the US has made it clear that it is a red line issue in any negotiation on a trade deal. The US isn’t in a hurry to get into negotiation at present with either the UK or EU.
However, Canada has rolled over the EU deal with the UK, but has been clear in its desire to pursue a separate negotiation for a longer-term deal, and we can be certain that access for hormone-treated beef will be high on that agenda, given its dislike of the CETA deal for not allowing hormone-treated beef into the EU.
Zero tariff, zero quota becomes the base line
The biggest problem of all with the UK granting a no tariff, no quota to Australia is that this will become the base line for all other negotiations, whether between New Zealand – which is ongoing – or any future negotiation with the US, Canada, Mercosur or anyone else. While open access to the UK market hits British farmers, it will be worse for Irish farmers.
UK produce will always command a premium, while Irish exports have direct competition from outside the EU in the British market.
Additionally, if the British market is oversupplied, more British agricultural produce will be exported to EU markets, crowding that space as well. It is a case of the deal not being good for British farmers and being worse for Irish farmers.