Behind the scenes

UK to offer Australia historic free trade deal

Tariffs to be phased out over 15 years to give British farmers time to adapt

Boris Johnson is planning to offer Australian farmers a 15-year transition to a free trade deal despite strong opposition from the UK’s agricultural sector.

Trade Secretary Liz Truss has been granted the “cabinet’s blessing to ink such a post-Brexit accord” following a ministerial battle over whether to offer Australia a “slashing of all import and export taxes on goods”, The Sun reports.

Australian negotiators had been pushing for a “rapid five year” end to tariffs, but the compromise has been reached due to fears UK “farmers could be undercut by an influx of cheaper Aussie beef and lamb”, the paper adds.

The Sun’s political editor Harry Cole tweeted that Johnson last night expressly told a meeting of the trade committee that he “didn’t want to read about [the deal] in tomorrow’s papers”, but sided with Truss’ proposal for a zero-tax agreement during what Politico calls “a crucial Cabinet sub-committee” meeting. 

How did we get here?

Truss is said to regard the completion of the deal as a “crunch point”, with one government official telling the FT earlier this week: “Liz argues that if you can’t get a good trade deal with Australia, who can you get one with?”

UK officials said Australian and New Zealand negotiators had been “holding firm on demands for full tariff liberalisation”, which would be phased in over a ten-year period, on similar terms to those the UK has with the European Union, said the FT. Truss wanted to finalise the deal ahead of the G7 summit in Cornwall this June.

“If we can’t do a deal with Australia – who produce high quality, high standard food and share our core beliefs – we may as well pack it all in and shut up shop,” a Truss supporter told Politico’s London Playbook.

“At the moment we’re giving preferential trading terms to the EU, so why shouldn’t the Aussies get something similar? It’s a much smaller market than the EU, more than 9,000 miles away. An Australia deal will not damage our farming industry. The protectionist arguments simply don’t stack up in the cold light of day.”

Truss also argued that such a deal would show support for Australia, which is currently locked in a trade row with China, and “could expedite Britain’s push to join the broader trans-Pacific trade partnership”, according to the FT.

But government insiders said both Environment Secretary George Eustice and Cabinet Office Minister Michael Gove warned of the “political fallout” of such a deal. They voiced concerns that it “risks inflaming arguments over Scottish and Welsh independence” as the impact of zero-tariff imports of Australian beef and lamb is likely to hit Scottish and Welsh rural areas the hardest.

Eustice had argued that “there’s a balance to be struck between your commercial interests and your desire to open up new markets”, the Daily Mail reported earlier this week. “In any discussion on any part of government policy there will be issues where different government departments have a shared interest and we have a discussion to establish a consensus,” Eustice said.

A battle for Brexit’s ‘soul’?

The argument among the cabinet was one over the “soul” of Brexit and what “Global Britain means”, argues the FT’s public policy editor Peter Foster. “It’s not an exaggeration to say that the ‘future of #Brexit’ is on the Whitehall chopping block right now. Scrum down. All to play for,” he tweeted

After Johnson last night voiced his support for Truss’ tax free proposal, one government insider said “the prime minister is a Brexiteer”, telling Politico: “He believes in global Britain and the free market.”

Securing a trade deal with Australia would be a “symbolic moment” for Brexiters who have long professed the virtues of free trade, says the FT.

But critics point to the value of a free trade deal with Australia, estimated by the government to be worth an additional 0.01-0.02 per cent of GDP over 15 years – or £200m to £500m more than 2018 levels. 

One insider said of the deal: “Basically we’re talking about signing off the slow death of British farming so Liz Truss can score a quick political point.”

The president of the National Farmers’ Union, Minette Batters, wrote an impassioned plea in the Mail on Sunday warning the government that British farmers would find it “all but impossible to compete” if Australian farmers were granted zero-tariff access to the UK. Such a deal would “make life unbearable for small British family farms, which, remember, must respect British laws governing high farm standards”, she wrote. 

“The only way that UK farmers could compete is by lowering our own standards,” she continued. “The government says it wants to ‘level up’ Britain. But this can never be achieved by throwing our family farms under the bus.” 

But Daniel Hannan, a pro-Brexit Conservative peer who was appointed last September to the UK board of trade as an adviser, on which former Australian prime minister Tony Abbott also serves, argued in The Telegraph: “If we can’t do a proper trade deal even with our kinsmen Down Under, we might as well throw in the towel.” 

He accused the “National Farmers’ Union officials, the Defra blob and a handful of Tory backwoodsmen” of trying to preserve “the tyranny of the status quo” and failing to embrace the free trade opportunities of Brexit, which included exports to Asia where meat prices are higher than in Europe.

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