ISSUE OF THE WEEK 2 : The UK and Australia Trade Deal
This is the second in our ‘issue of the week’ series which are designed to collect information and resources together about specific matters of political debate. Although we are publishing a number of documents every week for each new issue, we will also continually add new resources to these pages to make them as comprehensive as possible. We also hope that students will find the topics useful as a starting point for research on matters of political interest.
Some of the interviews below were conducted for UKPOL, but there are also statements, speeches and contributions from politicians and other figures over the course of the development of the UK and Australian trade deal.
INTRODUCTION
The UK’s trade deal with Australia is the first that has been negotiated since Brexit and has been seen as politically important to prove that the country can secure beneficial agreements. Many other trade deals have been rolled over from the previous arrangements from when the UK was within the European Union, with a now growing political pressure to deliver some bespoke agreements although some large deals such as with the United States are making slower progress. The agreement in principle between the two countries was signed in June 2021, with the formal signing of the agreement taking place in December 2021, with the aim to implement the UK and Australia deal in the first quarter of 2023.
There are 32 different chapters within the agreement (the full text of the trade deal with all 32 chapters) which cover key markets such as agricultural products as well as digital and financial services. Government expectations are that the trade deal will increase UK GDP by 0.08% in the long-run, representing a sum of £2.3 billion a year by 2035. This is though only a fraction of the amount that the Government’s own figures suggest will be lost by leaving the European Union. The trade deal with Australia is relatively small given the size of the country’s economy and distance from the UK, but there are important historic links between the countries.
The UK Government gave 10 main advantages of the agreement:
– unprecedented access for British services and investors
– better business travel for British professionals
– tariff-free trade for British exports
– easier for young Britons to travel and work in Australia
– digital trade opportunities for a global tech superpower
– lower prices for British shoppers and manufacturers
– slashing red tape for entrepreneurs and small businesses
– access to billions of pounds worth of government contracts
– stronger cooperation on shared challenges
– a major step for UK-trade in the Indo-Pacific
Liz Truss, the then Secretary of State for International Trade, said in a Commons statement in June 2021:
“This gold-standard agreement shows what the UK is capable of as a sovereign trading nation: securing huge benefits such as zero-tariff access to Australia for all British goods and world-leading provisions for digital and services, while making it easier for Brits to live and work in Australia”.
There has been opposition to the treaty from a number of organisations, including concerns about the agricultural trade terms and also animal rights issues in Australia. A number of political figures have also questioned whether there has been sufficient scrutiny of the trade agreement and claims that it was negotiated too quickly for political reasons leading to it not being as advantageous to the UK as it could have been. For example, the National Farmers’ Union argued that:
“There is little in this deal to benefit British farmers. When it comes to agriculture, it appears that the Australians have achieved all they have asked for and British farmers are left wondering what meaningful benefits have been secured for them. This will just heap further pressure on British farm businesses already facing serious challenges such as a squeeze on labour, the phasing out of support payments and rocketing input costs.”
The Labour Party said that they would support the trade bill in principle, but Nick Thomas-Symonds, the Shadow Secretary of State for International Trade, said that “notable from the outset is that the Government ‘list of benefits’ contains no mention of climate targets or the impact of the removal of import tariffs on UK agriculture”.
Sarah Green, the Liberal Democrat spokesperson for International Trade, said about the negotiations that:
“The Government’s need to hurriedly chalk up trade deals meant the UK-Australia FTA was not only negotiated too quickly but also carelessly. Key stakeholders were ignored, Parliamentary scrutiny was denied and unnecessary concessions were made.”
The Government’s explainer to the trade deal and the Government’s details of the 10 key benefits. The Australian Government also has its own documents relating to the trade deal. The House of Commons Library has also published a research document into the trade deal.
THE SECRETARY OF STATE FOR INTERNATIONAL TRADE
Role created on 13 July 2016.
Liam Fox : 13 July 2016 – 24 July 2019
Liz Truss : 24 July 2019 – 15 September 2021
Anne-Marie Trevelyan : 15 September 2021 – 6 September 2022
Kemi Badenoch : 6 September 2022 –
The holders of the Shadow Secretary of State for International Trade from the Labour Party have been Barry Gardiner (14 July 2016 – 6 April 2020), Emily Thornberry (6 April 2020 – 29 November 2021) and Nick Thomas-Symonds (29 November 2021 – ). The Liberal Democrat spokesperson for International Trade is Sarah Green and the SNP spokesperson is Angus MacNeil.
ACCOUNTABILITY AND SCRUTINY
One of the areas of debate with the Australia Trade Deal is whether there has been sufficient time for scrutiny and accountability of what and how the Government has negotiated. There have been some controversial moments, including when the then Secretary of State Anne-Marie Trevelyan failed to attend a meeting of the International Trade Committee.
The International Trade Committee published their first report on 22 June 2022 and they noted that:
“We have been greatly disappointed that the Government has repeatedly failed to accede to our request that we be guaranteed a period of at least 15 sitting days between the publication of the section 42 report and the laying of the Agreement under the Act, to allow us to finalise and publish our report. Our request for this guaranteed period was not unreasonable. It would have ensured that we were able to identify and make recommendations on matters of interest to the House, thereby giving the Government due notice of any potential concerns, before the brief window of statutory parliamentary scrutiny commenced.”
The committee’s second report was published on 6 July 2022 and they noted in that report:
“The Secretary of State for International Trade failed to attend before us to answer questions on the Agreement on 29 June, despite a commitment to do so. This made it impossible for us to take into account her evidence on the new date agreed—6 July— and still publish our report before the very end of the scrutiny period. Consequently, we are obliged to publish our report now, before we have taken the Secretary of State’s evidence.”
Within a separate annex of this report the committee express concern not only about the lack of willingness of Anne-Marie Trevelyan to appear in front of the committee, but also comment on the lack of time that she is willing to spend when giving evidence. The Secretary of State responded to the first and second reports with an official reply which didn’t comment on the specific complaints, but that noted:
“We have provided extensive opportunity and time to scrutinise the agreement and do not believe it was necessary to extend the CRaG scrutiny period. The UK-Australia FTA cannot be ratified until all necessary primary and secondary legislation is scrutinised and passed by Parliament in the usual way, which will give the House opportunities to debate the implementing legislation.”
In an interview with us Sarah Green, the Liberal Democrat spokesperson, criticised not just the speed and quality of the negotiations from the UK trade side, but also added that:
“The Government have rejected calls for the publication of sectoral and regional impact assessments, denying us the opportunity to gain a detailed understanding of the deal’s real impact”.
Richard Foord, the Liberal Democrat MP for Tiverton and Honiton, noted:
“The Government’s approach during negotiations with Australia and New Zealand seems to have been to sell out British farmers left and right—and then some—to try to clinch a deal. These trade deals are more about attempting to garner positive headlines than supporting our world-leading agriculture and fishing industries”.
Helen Liddell, Baroness Liddell of Coatdyke, a former Secretary of State for Scotland who has followed the Government’s recent trade deal progress commented to us that:
“I do not think there has been sufficient scrutiny of Trade Bills and that is not helped by the non availability of a trade strategy. This is the prevailing view of the International Agreements Committee of which I am a member. And a number of Peers from around the House shared that view”.
The Scottish Government said on their involvement in the trade agreement that:
“Scottish Government officials received regular briefings from DIT on the progress of negotiations, which were useful. However, as I have made clear to the UK Government, information is not the same as involvement, and we had no say in the decisions taken by the UK Government throughout the negotiations and saw no detail on key parts of the agreement, such as tariffs and tariff rate quotas (TRQs), until after they were agreed. Nor were we given the underpinning analysis or rationale behind the decisions”.
A spokesperson from the Department for International Trade didn’t directly answer our question on whether all information requested by members of the International Trade Committee would be provided to them, but they noted that:
“Parliamentarians have been able to scrutinise the full treaty text, a draft Explanatory Memorandum and independently Scrutinised Impact Assessment for the FTA since these were laid before Parliament in December 2021. We received advice from the independent Trade and Agriculture Commission and the Treaty and explanatory information have been available for Parliamentary scrutiny for more than eight months”.
Andrew Bowie, the International Trade Minister, defended the Government in the Commons in November 2022 on scrutiny, saying:
“I now briefly turn to scrutiny, which is incredibly important. Contrary to the description of the right hon. Member for Warley of the scrutiny process, and always remembering that CRaG was introduced by Labour, the Government have made extensive commitments to support robust scrutiny of all new free trade agreements. These commitments greatly exceed our statutory requirements and we have met every single one.
I hear and understand the concerns of the hon. Member for Rochdale and I accept the challenge to go further and do better, but the Australian FTA was examined by Parliament for more than seven months and the scrutiny period featured reports from three Select Committees”.
Speaking in the same debate, Gareth Thomas, the Labour spokesperson said that there was a danger in not accepting scrutiny that mistakes could be made in future trade deals:
“[George Eustice] underlined those criticisms by going on to point out that unless we recognise the failures of the Department for International Trade, we will not learn the lessons necessary for negotiations with other countries over other free trade agreements, such as, importantly, the CPTPP accession discussions. He rightly noted, as many others did—I will come back to the contributions of others—the weaknesses of the scrutiny process and crucially how it weakens the hand of British negotiators, which is a point we made during the passage of the Trade Bill back in 2020”.
Drew Hendry from the SNP said in the debate on the scrutiny argument:
“A general debate is no replacement for genuine parliamentary scrutiny. The Government have failed to provide that, even though it was promised. The deals, lumped together in the debate, are one-sided and a betrayal of farmers. They threaten food security and animal welfare, reduce consumer confidence, find climate change expendable and do nothing to mitigate the enormous losses of Brexit”.
ANIMAL RIGHTS AND ENVIRONMENTAL STANDARDS
An area of concern has been different environmental rules and animal rights regulations between Australia and the UK, with concerns from some organisations that goods with lower standards might be allowed into the UK. Natalie Bennett (Baroness Bennett of Manor Castle) said in the House of Lords that there were “atrocious animal welfare and environmental standards in Australian farming”.
The UK Centre for Animal Law stated that:
“Meat exported to the UK did not come from animals which had been subject to hot-iron branding or mulesing. Hot-iron branding is still permitted in all States and Territories of Australia but is banned in the UK. Mulesing is a painful procedure that involves cutting crescent-shaped flaps of skin from around the lamb’s breech and tail using sharp shears. The resulting wound, when healed creates an area of bare, stretched scar tissues which diminishes the attraction of blowflies thereby reducing the risk of fly strikes.”
The matter of mulesing has been frequently mentioned by politicians concerned about the variation in standards. Dominic Johnson (Baron Johnson of Lainston) speaking for the Government in the House of Lords said:
“I was told that 90% of all mulesing is done with pain relief. Yes, there are different practices and clearly, mulesing is not relevant in the UK because of flystrike and other conditions, but we have the ability to protect ourselves and we still have the ability to ensure that the food and goods we import conform to our standards.”
On environmental standards, the National Farmers’ Union (NFU) stated in a submission to the International Trade Committee that:
“The terms of the agreement do not create a level playing field in either animal welfare or environmental standards. The starting point of each party remains unaltered by the presence of the FTA commitments. However, what is foreseen is “non-regression and non-derogation” commitments that would prevent standards going backwards in a manner that affects trade, in either party. This is fundamentally different from whether there is a level playing field at the outset”.
In the same submission, the NFU added:
“Agricultural production in Australia, however, is not subject to the same environmental protections as in the UK. For example, a significant proportion of cattle in Australia are raised in feedlot systems. Australia’s feedlots have capacities ranging from 500 to over 50,000+ head of cattle. Over 60% of the cattle on feed in Australia (i.e. resident on a feedlot) as of June 2020 were located on feedlots with a capacity for over 10,000 head of beef animals. Feedlots are a feature of Australian beef production and are huge in size and scale. This compares to the average size of a beef cattle herd in England at 27 animals and whilst there will be larger farms in the UK, only 4% of English beef farm holdings have more than 100 beef cows. Furthermore, in comparison, 87% of UK beef is produced using predominantly forage based diets, a system which is not only more climate friendly, but also supports biodiversity and the natural environment through extensive grazing. The use of hormones as growth promoters are banned”.
They were also critical in their submission about the impact of climate changed, noting:
“The NFU has been clear that, for the UK to truly deliver on its ambitions for a more sustainable future and the goals of COP26, all aspects of policy, from domestic environmental and agricultural policies to international trade policy, must be joined up in their delivery of these aims. It is therefore disappointing to see the UK seeking to negotiate new free trade agreements with countries that are not taking a similarly ambitious approach to tackling the challenge of climate change without putting provisions that reinforce these ambitions in place”.
OTHER CRITICISMS OF THE TRADE DEAL
Although the animal rights and environmental standards questions have been those put forward perhaps the most frequently with regards to the deal, one of the most powerful criticisms of the trade deal has come from George Eustice, who was on the Cabinet sub-committee which negotiated the Australia deal. In November 2022, speaking in the Commons Eustice said:
“The first step is to recognise that the Australia trade deal is not actually a very good deal for the UK, which was not for lack of trying on my part. Indeed, as my right hon. Friend pointed out, there were things that we achieved, such as a special agricultural safeguard for years 10 to 15, staged liberalisation across the first decade and the protection of British sovereignty in sanitary and phytosanitary issues. It is no surprise that many of these areas were negotiated either exclusively or predominantly by the Department for Environment, Food and Rural Affairs on behalf of the UK team, but it has to be said that, overall, the truth of the matter is that the UK gave away far too much for far too little in return.”
In the speech he said one of the major mistakes was:
“We should not set arbitrary timescales for concluding negotiations. The UK went into this negotiation holding the strongest hand—holding all the best cards—but at some point in early summer 2021 the then Trade Secretary my right hon. Friend the Member for South West Norfolk (Elizabeth Truss) took a decision to set an arbitrary target to conclude heads of terms by the time of the G7 summit, and from that moment the UK was repeatedly on the back foot. In fact, at one point the then Trade Secretary asked her Australian opposite number what he would need in order to be able to conclude an agreement by the time of the G7. Of course, the Australian negotiator kindly set out the Australian terms, which eventually shaped the deal. We must never repeat that mistake.”
Some politicians, such as Emily Thornberry who was then the Shadow Secretary of State for International Development, said that the deal was too beneficial for the Australians:
“What makes this deal all the more indefensible is that, while Australia is getting everything it wanted and more, we are getting next to nothing in return, with a miniscule 0.025% increase in UK growth the most optimistic projection the government can come up with”.
The Government also stated that they did not believe that the impact on agriculture would be substantial in terms of the size of the market and because UK consumers would prefer British products, but the Northern Ireland Executive noted:
“The UK Government has stated that Australia will not be exporting significant amounts of beef to the UK or that Australian imports will replace imports from other countries. Whilst recognising the appeal of Asian markets to Australian exporters, it is likely that Australia’s insistence on achieving a rapid and very sizeable increase in market access signals an intention of making significant use of it.”
Toby Perkins, the Labour MP for Chesterfield, asked the Prime Minister during PMQs whether he agreed with the comments that George Eustice made, with Rishi Sunak replying:
“All trade deals involve give and take on both sides. The Australia trade deal will open up new markets for 3 million British jobs, which is fantastic, reduce prices for Australian goods and make it easier for young people to move back and forth between the two countries. Going forward, we will ensure that our trade deals work for the UK. That is what we will deliver”.
BENEFITS OF THE TRADE DEAL
In addition to the Government’s ten benefits from the deal, a spokesperson from the Department for International Trade told us that:
“Our landmark trade agreement with Australia will unlock £10.4 billion of additional bilateral trade, eliminating tariffs on 100% of UK exports, support economic growth in every part of the UK and deliver for the 15,300 businesses already exporting goods to Australia”.
Speaking in the House of Commons in November 2022, the International Trade Minister Andrew Bowie said:
“Our deals include a range of protections that allow us to apply higher tariffs to protect UK farmers, including tariff rate quotas for a number of sensitive agricultural products; specific additional protective measures for beef and lamb products, which will provide further tariff protections to our farmers; and a general bilateral safeguard mechanism that will allow the UK to increase tariffs or suspend their liberalisation for up to four years in the unlikely situation that the farming industry faces serious loss from increased agricultural imports. On top of all that, there is still the option of global safeguards under the WTO”.
In the same debate, Greg Hands, the Minister for Trade Policy, said:
“The Australia and New Zealand free trade agreements are deals that will deliver for people, businesses and our economy. These are our first “from scratch” free trade agreements since we left the European Union, and they are deals of which this country can be proud. They demonstrate our ambition as an independent trading nation. They secure commitments that, in places, go above and beyond international best practice, and put us at the forefront of international trade policy”.
Anthony Mangnall, the Conservative MP for Totnes, said in the Commons that it was important to consider the financial services industry, noting:
“We need to look at where the Australia trade agreement benefits us. As the Minister for Trade Policy, who is no longer in his place, said, 82% of our workforce and 80% of GDP are in financial services. That is where this deal strikes incredibly well and effectively. We will have greater access—more than ever before—to Australian markets. From architecture to law to financial services, we will be on an equal footing. That could increase UK service exports to Australia by £5 billion. Additionally, it cuts the bureaucracy that so many small businesses have been frustrated about”.
Paul Beresford, the Conservative MP for Mole Valley, noted that he felt there was also potential for British companies to increase the number of goods which they could sell into Australia:
“The UK needs to push its goods in both countries. For example, New Zealand and Australia’s roads are currently dominated by Asian-manufactured vehicles. I have asked people there why they are not buying British. The answer is “We will when the prices come down and the tariffs come down.” With this tariff reduction, we have a chance to take our share and more, but we have to use it. We have to get out there, and we have to push our products in those two countries”.
HOUSE OF COMMONS INTERNATIONAL TRADE COMMITTEE
Witness Evidence of Lorand Bartels, Chair of the Trade and Agriculture Commission
International Trade Committee’s First Report
International Trade Committee’s Second Report
Response to the First and Second Reports from the Department for International Trade
SPEECHES IN LORDS DURING THE TRADE BILL DEBATE IN JANUARY 2023
Lord Johnson of Lainston – Minister of State at the Department for International Trade
Lord Johnson – Concluding Speech in Debate
Baroness Bennett of Manor Castle
Baroness McIntosh of Pickering
PRESS RELEASES
UK agrees historic trade deal with Australia [Downing Street, June 2021]
New era of free trade with the UK [Australian Government, December 2021]
UK trade deal with Australia will create opportunities for the legal profession [Law Society, December 2021]
Australia and the United Kingdom Announce Signed Free Trade Agreement [Australia-United Kingdom Chamber of Commerce, December 2021]
Aussies to toast tariff-free British G&Ts [Foreign Office, December 2022]
COMMENTS FROM BUSINESSES, ORGANISATIONS AND PRESSURE GROUPS
