By Bev HaighJones

This is the section where you, our readers, can have your say on matters that you feel strongly about, or share stories and opinions that you think would be of interest to others. We haven’t received much content for this issue, but perhaps everyone has been too preoccupied with Christmas and New Year. Now that the festive season is over, if any of you would like to send us something for future issues, you can contact us on: newsroom@cornwallforeurope.org

However, this month we have been very fortunate to receive another contribution from Paul, following on from his previous, comprehensive article in issue five, and last month’s graph related to UK/EU trade.

This time, Paul has provided us with some very topical information on the much lauded UK/Australian Free Trade Agreement. This is direct from the horse’s mouth, as he was himself involved with the Public Accounts Committee reviewing the details of the FTA. Perhaps unsurprisingly, the benefits do not quite appear to match those suggested by Ms Truss and her team.

UK farming turns up the heat under the UK-Australia FTA

By Paul Giles

The story to date

Cornish farmers have good reason to be nervous about the UK-Australia “Beef for Cars” free trade agreement’s implications for beef and sheep farming – after all, the Secretary of State for the Environment feels the same! Born into a Cornish farming family and with his own constituency being Camborne and Redruth, he expressed his alarm in Cabinet meetings last May. The FTA allows Australian farmers the opportunity to undercut UK beef and sheep prices almost immediately with a huge quota increase. Unfortunately he apparently “lost the cabinet battle with Liz Truss”, then International Trade Minister, over the FTA’s tariff rate quota (TRQ) provisions.

The Rt Hon George Eustice is as aware as all of us that Australian beef farming enjoys the acreage to run on a completely different scale from the UK. The size of the average Cornish farm is 68 hectares; in Australia the average beef farm is over 13,000ha, i.e. nearly 200 times larger (!) The largest, Anna Creek, South Australia, covers over 23,000km2, i.e. about 5 times the size of Cornwall, has its own airport and, currently, about 17,000 cattle. The resulting economies of scale allow Australia to easily undercut UK beef prices even after the cost of shipping from the other side of the world.

Cornish beef farm (top) vs part of Anna Creek, South Australia (bottom)

Ironically, Eustice, as Minister for Agriculture, in a speech to the February 2016 NFU Conference persuaded UK farmers that they would do “far better” outside the EU. Liz Truss, Secretary of State for the Environment at the time, advised the opposite at same conference, i.e. that Brexit would be “a leap in the dark”. How things change! Sounds as if she was right … and it’s she who’s kindly taken the leap on our behalf!

So where are we now?

The situation was brought to a head through the Department for International Trade (DIT) publishing its 90-page “FTA Impact Statement” on 16 December 2021, where page 29 confirms a “£94m (reduction in size) of the UK agriculture sector”.

The detailed implications are below. The impact statement has since been through a Commons debate (5 January), the House of Lords International Agreements Committee (13 January) and the Public Accounts Committee (19 January). These reviews produced so many questions that the DIT are struggling to answer; we here only have space to report the main ones – the “Parade of Peculiar Percentages” as they are known.

What are these alleged Peculiar Percentages?

  • The “6,000%”

Picked up initially by Nick Thomas-Symonds, MP for Torfaen, Eastern Wales and Shadow Secretary of State for International Trade at the House of Commons and later echoed by Geoffrey Clifton-Brown, MP for the Cotswolds, at the Public Accounts Committee. Nick Thomas-Symonds referred to Australian FTAs with Japan and South Korea. In these, indigenous farming had been protected through restricting the first-year tariff rate quota (TRQ) increases to 10% and 7% respectively; the UK-Aus FTA first year increase in TRQ is “6,000%”1(see Appendix 1 below). Geoffrey Clifton-Brown went as far as to suggest that the DIT had “thrown UK farming under a bus”. They and others made clear that the FTA had been agreed “in haste, for political reasons, regardless of the costs to UK farming”.

Defending the FTA on behalf of the DIT, Crawford Falconer, Chief Trade Negotiation Adviser, said he thought that Australia “wouldn’t want to use these quotas as it would mean diverting existing deliveries to Asia”. So why write them in then? Interestingly, Falconer joined the civil service in 2017; previously he was a Trade Commissioner for the Legatum Institute, an extreme Brexit-leaning think tank.

  • The “1,000%”

Sarah Olney MP noted that the impact statement’s “GDP model” had changed from the one used in the original, mid-2020 impact statement; this resulted in a “1,000%” increase in the stated GDP benefit to the UK (see Appendix 2 below). She asked the Secretary of State for International Trade, Anne-Marie Trevelyan MP, for justification for such an admittedly huge increase. The SoS was unable to answer, instead she offered to “make her officials available to her to talk through …”

  • The “600%”

The December impact statement indicates that UK exports to Australia will increase by “50% by 2035”. This is six times more than was forecast in the original impact statement and closely allied to the “1000% GDP increase” (see Appendix 2 below). The three civil servants attending the Public Accounts Committee were asked for justification for an increase of this size. The DIT Permanent Secretary, James Bowler CB, spoke on behalf of the DIT but unfortunately was unable to answer the question. He did say that the new 5-strong independent (model) review panel (formed September 2021) had given the “modelling result green status.”

Next steps

The free trade agreement requires ratification by both countries’ parliaments. UK ratification will be some months away. Review and comment by the 18-month old Trade and Agriculture Commission will take place in advance of ratification.  In the meantime, write to your MP with any concerns!

Appendix

  1. FTA Agriculture Details

Full tariff-free UK exports to Australia

Imports transitioning to full tariff-free, quota free via transitional tariff rate quota

Current TRQ4,6691 tonnes per annum per UK global tariff, in place since 1 January 2021
Current tariffsBeef and sheep 12% + about £1.50 to 2.50 per kg
Total meat imports to UKBeef 250,000 tonnes per annum, sheep 100,000 tonnes pa; in both cases this is about one-third of the amount consumed in the UK pa

1 this is not a “tariff-free quota” but a “reduced tariff quota” of 20% which works out about 40% lower than the 12%+ “current tariffs”; the “6000% increase” in year 1 FTA TRQ is calculated as the 35,000 tonne tariff-free vs current UK beef imports from Australia of about 550 tonnes.

FTA TRQ, tonnes (Page 17 FTA)Year
Product12-91011 – 1516+
Beef and sheep
Beef35,000Equal instalment increases110,000Safeguard of 20% tariff for excess over instalments 110,000 – 170,000Unlimited
Sheep25,000Equal instalment increases75,000Safeguard of 20% tariff for excess over instalments 75,000 – 125,000Unlimited
Dairy
Cheese24,00048,000  (Year 5)    Unlimited from Yr 6 
Non-cheese20,00020,000 (Year 5)
Butter5,50011,000 (Year 5)
  • FTA documentation

The DIT has released three documents in relation to the UK-Australia FTA:

TitleReleasedType/SizeContent
UK’s strategic approachMid-2020Pdf, 183 pagesEffectively an initial FTA impact assessment; states UK GDP impact +0.01% (part liberalisation) to +0.02% (full liberalisation); exports +3.6% to +7.3% (part-full) at 2019 prices
Press release15 June 20212 web pages“Deal agreement”; no GDP impact or export increase details included
Impact assessment16 December 2021Summary (12 web pages) + detailed (pdf, 90 pages) sectionsUK GDP impact revised to 0.06%-0.10% (“Central” estimate = 0.08%); exports +44% (49%*) at 2035 prices; comparison with above UK strategic approach likely provoked the “1000% increase**” question, i.e. 0.10% vs 0.01%

* December 2021 document uses out of date ONS trade values; use of latest values gives this percentage.

** Technically, should compare the 0.08% Central Estimate with the 0.02% full liberalisation = 400%.

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