Australia to enjoy exports boost six times greater than UK from trade deal, experts say

Government also warned of slump in agricultural trade with EU – if food standards rules are relaxed

Rob Merrick
Deputy Political Editor
Tuesday 22 June 2021 01:03
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UK-Australia trade deal will benefit British farmers, Boris Johnson insists

Australia will enjoy an exports boost six times greater than the UK from the controversial trade deal agreed between the two countries, experts say.

UK sales will grow by just 0.35 per cent from the agreement, the UK Trade Policy Observatory (UKTPO) forecasts – compared with a 2.2 per cent jump for Australia’s businesses.

Its analysis also predicts a puny output increase for the UK of 0.07 per cent, less than half the 0.16 per cent stimulus it predicts for Australia.

“These are very small numbers,” said Professor Michael Gasiorek, director of the observatory at the University of Sussex, adding: “We see a bigger positive effect for Australia than for the UK.”

The conclusions come after the government admitted the average household would be just £1.20 a year better off from the deal, which would boost GDP by only 0.02 per cent over 15 years.

Prof Gasiorek also warned that agricultural trade with the EU could slump by more than any increase with Australia – if relaxing rules on food standards triggers a clash with Brussels.

Announcing the deal last week, trade secretary Liz Truss repeatedly refused to guarantee that meat treated with antibiotics, or pesticides, will continue to be barred.

Australia uses 16 times more antibiotics for poultry farming than Britain, allowing farmers to crowd animals together to make meat cheaper, despite criticism of such conditions.

Ducking questions about antibiotics, Ms Truss accused critics of demanding “regulatory harmonisation” and saying only: “We are not lowering our food import standards as a result of this deal.”

But Prof Gasiorek warned: “Liberalising agriculture may set a precedent with regard to future agreements (for example with the US) and it remains to be seen quite what has been agreed with regard to food standards.

“Allowing the import of foodstuffs with different standards to those of the EU may well cause further difficulties for the operation of the Northern Ireland protocol.”

If it prevented an agreement with Brussels to ease Irish Sea checks, it could “reduce UK agricultural trade with the EU more than it increased it with Australia”, he said.

The UKTPO study, modelling the impact on trade in 148 industries and sectors, concludes that the economic boost is tiny because Australia is far away, its economy is small – and tariff levels are low to start with.

“Economically the deal remains a poor substitute for the trade lost with European markets due to Brexit,” the professor added.

He also warned crucial details – on services, digital trade, public procurement or, rules of origin – remained to be sorted out, with the deal unlikely to be wrapped up until the autumn.

The deal has already alarmed farmers, because, contrary to pledges of 15 years’ protection, tariffs will be scrapped immediately on imported beef and lamb.

There is also anger that MPs will not – as The Independent revealed – be allowed to scrutinise the text until the autumn, when they fear it will be too late.

Meanwhile, the government announced that negotiations will begin with the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), with a view to the UK joining.

Ministers insist the Australia deal is the first step to the greater prize of the CPTPP, which boasts half a billion people and a joint GDP of £9 trillion.

However, economists have cast similar doubt on the gains on offer, given the UK already has, or will have, separate trade deals with 7 of the 11 countries, including Japan, Canada and Singapore.

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