Baa humbug: Australia’s trade triumph breeds a British backlash

Dec 23, 2021
According to the BBC, “the UK has given Australia pretty much everything it wanted in terms of access to the UK agricultural market.” (Image: Unsplash)

Celebrations are likely to be short-lived. Australia overestimates the benefits of the agreement, while British farmers remain justifiably worried.

Any agreement between governments led by the UK’s Boris Johnson and Australia’s Scott Morrison must be treated with a healthy dose of suspicion.  A few minutes with the UK prime minister would lead you to believe that “Global Britain” is a meaningful term that covers loss and prestige. A session with Morrison will lead you to a brochure type of politics, policy implemented by glossy pamphlet and slogan.

The UK-Australia Free Trade Agreement signed last week has its predictable, chorusing champions. There are the free-marketing dogmatists who assume that their dogma is based on fact and that such trade is a boon for all. “This is a historic agreement — it’s a true free-trade agreement. Everyone wins,” the admirably deluded Australian Trade Minister Dan Tehan stated.

At least one party seemed to win more than the other. The BBC’s global trade correspondent tartly remarked that, “The UK has given Australia pretty much everything it wanted in terms of access to the UK agricultural market.”

There are those who see this agreement merely as a front for other prejudices, among them showing that the UK can make independent agreements without the approval of doddery, fussy types in Europe overly keen on regulations. Financial journalist Matthew Lynn delighted in an understanding reached between two countries “stripped of all the supra-national baggage that the EU and its dwindling band of supporters insist are essential to ‘free trade’ — and for that every reason is vastly superior to Europe’s creaking, overly-complex single market.” The empire delusion, nostalgic and heavy, prevails in such thinking.

Then come the calculating types in Downing Street and beyond who hope that this deal with Australia becomes some sort of mighty springboard to greener pastures. When the deal was agreed upon in principle earlier this year, the UK government claimed it would ease its move into the Asia-Pacific region, with the eventual hope of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Peter Jennings, a paid-up member of the Anglosphere and executive director of the partially US-funded Australian Strategic Policy Institute, sees the agreement as “an example of what can be done when two countries decide to put some priority and effort into co-operation.” Unblemished by the detail, he laments the fact those stubborn sorts in the European Union have made it just that much harder in free trade negotiations.

Those at 10 Downing Street suggest that the agreement would not only end tariffs on all UK exports to Australia but lead to £10.4 billion in additional trade. The more sombre types in the UK Office of Budgetary Responsibility predict a meagre return of 0.08 per cent to the UK economy, but a loss of 4 per cent in loss of free access to the EU.

All the swooning from the free trader advocates belies the critical faults in such arrangements. As a general rule, and one remarked upon by the co-authors of a RAND report from last year, “a free trade agreement (FTA), an instrument to eliminate tariffs, imposes costs and obstacles on two-way trade.”

The Australian Productivity Commission’s (APC) report on bilateral and regional trade agreements in November 2010 was also of the opinion that such “agreements can carry the risk of trade diversion.”  This was certainly the case with the deeply flawed Australian-US FTA (AUSFTA) which, between 2005 and 2012, diverted $US53.1 billion of trade from other sources.

The authors of the APC report were also suspicious about evaluations arising from such trade deals: these tended to be based on political considerations rather than sound economic returns.

The potential costs to Britain have stirred representatives of 14 trade bodies and companies, who warned the then UK Trade Secretary Liz Truss that “the pace of these negotiations, particularly the free-trade agreement with Australia, is too quick and denying the opportunity for appropriate scrutiny and consultation.”

British farmers remain justifiably worried. There are concerns that certain agricultural sectors will immediately feel the effect of Australian exports.  As part of the agreement, Australian sheep meat will receive an immediate tariff-rate quota (TRQ) of 25,000 tonnes, rising to 75,000 tonnes over a series of instalments. The equivalent arrangement with beef covers an initial 35,000 tonnes, eventually rising to 110,000 tonnes. Both beef and sheep tariffs will be paired in a decade.

Earlier in the year, the National Farmers’ Union (NFU) livestock chairman Richard Findlay proved unequivocally hostile to the deal.  Australian agriculture risked being a sinister Trojan horse, undermining British standards.  “There is no comparison whatsoever between the robust production methods in this country and in Australia – they simply do not compare due to sheer size and scale.”

Australia, Findlay points out, was the world’s biggest beef exporter in 2019 (in terms of value) and second largest (behind Brazil) in terms of volume.  Such scale meant fewer regulations, a lower “assurance burden” and significantly lower production costs.

With little by way of fraternal feeling between Commonwealth nations, the NFU livestock chair also pointed his finger at differing standards of animal welfare between the countries.  The UK government was contemplating an arrangement with a country that exported “hundreds of thousands of live cattle and over a million sheep on long sea journeys to Asia and the Middle East every year.” The same UK government had also contemplated banning live exports for slaughter.

This point was picked up by Vicki Hird, the head of sustainable farming at Sustain, an agri-food group. Painting a picture of antipodean barbarity, Hird enumerated the darker aspects of Australian agricultural practices. Australia, for instance, permitted “the use of hormones and antibiotics to speed up growth as well as the removal of skin from live sheep [‘mulesing’, to prevent fly-strike], and they license almost double the number of highly hazardous pesticides as the UK.”  And just to make things that bit grimmer, Australian farmers also used feedlots, battery cages and sow stalls.

As for the agreed protections for British farmers, NFU president Minette Batters found little comfort, suggesting they were neither extensive nor effectual. Dairy would be fully liberalised after six years, sugar after eight, and beef and lamb after 15. Phil Stocker of the National Sheep Association also noted the absence of “any resolution on how TRQs [tariff rate quotas] could be managed in a way to limit potential damage to our own domestic trade”.

A tone-deaf International Trade Secretary Anne-Marie Trevelyan sees little to bother the UK farming sector, or anybody else in Global Britain. For one thing, most Australian beef and sheep meat exports (somewhere in the order of 70 per cent) made it to Asia-Pacific markets. “They’re closer for them and they get great prices.” She expected no “dramatic surge into UK markets” from Australian products but she was “very pleased to do things that will open up consumer choice.” That is a choice that promises to be very costly indeed.

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