The UK is preparing to accept huge quantities of lower-cost Australian beef in a landmark trade deal hailed by Boris Johnson as a "new dawn" for relations between the two countries.
Britain will immediately accept up to 35,000 tonnes of tariff-free beef from the Commonwealth nation over the next year as part of the agreement – equal to 13pc of all the country’s current total beef imports. This figure will then rise steadily over the next decade and a half.
The agreement also opens the door for Britons under the age of 35s to work and live more freely in Australia as part of a liberalisation of the working holiday visa scheme.
The Prime Minister said: "Today marks a new dawn in the UK’s relationship with Australia, underpinned by our shared history and common values.
"Our new free trade agreement opens fantastic opportunities for British businesses and consumers, as well as young people wanting the chance to work and live on the other side of the world.
International trade secretary Liz Truss added that the deal would lead to “lower prices and more choice for UK shoppers”.
However, British farmers warned it could mean that environmental and animal welfare standards are undercut, which they argued would set a worrying precedent for deals with larger economies such as the US.
The deal is Britain’s first new agreement since regaining control of its trade policy and will eventually eliminate tariffs on goods trade between the UK and its Commonwealth ally.
The UK will gain tariff-free access to Australia markets for key exports such as whisky, and British and Australian lawyers will be free to practice in each other’s markets.
At the same time, tariffs on Australian beef and lamb will be gradually phased out over the next 15 years, with the quota – or amount of meat that can be imported without incurring duties – due to gradually rise over the period.
Britain will initially accept up to 25,000 tonnes of lamb; 24,000 tonnes of cheese; and 80,000 tonnes of sugar.
David Edgerton, an academic at King’s College, said: "These quotas are huge."
The deal was clinched at a meeting between Prime Minister Boris Johnson and his counterpart Scott Morrison at Downing Street on Monday night.
An Agreement in Principle will be released in coming days, the Department for International Trade said, with both sides instead releasing relatively detail-light press releases on Tuesday. It could take months before a full free trade agreement text is released.
Australia-UK trade agreement | What’s in the deal?
Farmers have warned that ministers must not compromise on environmental rules as part of the deal.
Minette Batters, president of the National Farmers’ Union – which bitterly opposed lifting levies on meat imports from Australia – said it would await further details, but was concerned Tuesday’s announcement “made no mention of animal welfare and environmental standards”.
She said: “We will need to know more about any provisions on animal welfare and the environment to ensure our high standards of production are not undermined by the terms of this deal."
Pulling down Britain’s tariff shields on meat imports is a major coup for the Australian government, which had come under pressure from its powerful farm lobby to secure concessions.
The Australian Government said: “Australian producers and farmers will receive a significant boost by getting greater access to the UK market.”
Meat trade became a sticking point in talks, with the Cabinet split by a row between Ms Truss, who favoured lifting tariffs, and environment and farming secretary George Eustice, who said the UK should maintain a Tariff Rate Quota system in which charges would apply once a certain amount of beef or lamb had been imported.
Ms Truss won out, receiving the Prime Minister’s blessing to offer Canberra significantly improved terms of access.
Australian farms have significant advantages of scale over their British counterparts. During negotiations, Canberra said its producers were not interested in developing the UK as a major target for exports and had focused instead upon Asian markets.
The country’s farmers are likely to target the market for higher-end cuts, where British players have warned even a small volume of imports could have a large impact.
Business groups offered a mixed reception to the announcement, welcoming the agreement in principle but warning more detail is still needed.
William Bain, head of trade policy at the British Chambers of Commerce, said the deal would be seen as a step forward.
However, he added: “Ultimately it is businesses, not governments, that trade, and this deal with Australia needs to be complemented by providing practical, on-the-ground support to help firms maximise the new opportunities the agreement will bring.”
Karen Betts, chief executive of the Scotch Whisky Association, said the deal would help producers continue to expand Australia export markets, which have almost doubled in size over the past decade, but said the industry hoped to get further legal protections.
She said: “Our preference is always for tariff-free trade, which enables scotch whisky to compete on a level playing field and on the strength of our reputation for quality."
The potential financial benefits of the deal are small, according to official estimates. Total trade in goods and services between the UK and Australia came to £13.9bn in 2020. DIT estimates a trade deal will provide a £500m boost over the next 15 years, equivalent to 0.025pc of Britain’s total GDP. It says cutting tariffs could save Britons up to £34m a year – of about 50p a person.
The deal with Australia sets the stage for further deals, with Government sources hoping an agreement with New Zealand can now be secured in short order.
The Australia trade deal is a blueprint for what Britain can achieve with the rest of the world
By James Crisp, Europe Editor
For better or worse, the new trade deal with Australia has set the blueprint for Global Britain’s subsequent agreements around the world.
Sealing the deal in principle is an important and historic achievement. Previous agreements struck with the likes of Norway and Japan were dressed up copy and paste jobs of predecessor EU free trade agreements with a few baubles attached.
This, however, represents the first time the UK has negotiated a free trade deal from scratch since it joined and left the EU. It should silence those who doubted, before and after the referendum, that Britain would ever be able to quickly strike major trade deals with foreign countries.
UK negotiators have delivered an agreement rich in symbolism and done it quickly. The UK effectively shut itself off to Australian agricultural imports when it joined the EEC in 1973.
The country’s accession to the predecessor of the modern EU closed down a lucrative market for Aussie products such as butter, beef, lamb and apples. Those farmers were to later switch their attention to Asia with huge success. The new deal will mean that tariffs on such products are gradually phased out.
The UK exports much more to Australia than it imports
Meanwhile, the agreement with Australia could smooth the way to the UK’s Comprehensive and Progressive Agreement for Trans-Pacific Partnership, facilitating trade in UK products around the Pacific rim.
For those who dream of Global Britain renewing trade links with “Anglosphere” countries such as New Zealand and Canada, as well as other Commonwealth members, it is quite a moment. But there is little room for romanticism in the hard nosed world of international trade. The devil is very much in the detail.
Lessons should have been learned from the Brexit negotiations which pitched the UK against European Commission officials who are widely seen as the world’s toughest trade negotiators.
Perhaps fortunately for the Government, the final trade agreement is not yet ready to be published. Not only does no one have a clue exactly what is in the deal, there will be no parliamentary vote on whether to accept the deal.
Those hoping for a new post-Brexit age of accountability, parliamentary democracy and sovereignty will be rightly disappointed. That is unlikely to prevent future deals, and sell-outs, from being hidden away from the public.
But as the celebratory Kent sparkling wine begins to lose its fizz, attention will inevitably turn to what the UK has gained in the trade negotiations – and just as importantly what it has given up.
Many have pointed out that the trade deal only increases UK GDP by 0.02 percent but it will be important in the future to manage expectations of post-Brexit tie-ups. The UK is attractive but it cannot have the heft and pull of the 450m consumers in the EU’s single market. It can however strike quicker and more bespoke deals. Not every agreement needs to be a blockbuster.
Trade deals by numbers
With smart negotiation the UK could secure small wins and marginal gains that could eventually make Brexit worth the economic price paid in leaving the Single Market and Customs Union.
Australia is a free trading nation with low tariffs so the cuts in them are not immediately impressive. It is also a long way away so the trade volumes with the UK are correspondingly small.
But the goal of any trade deal is to remove barriers to trade. On this basis the Aussie agreement is a success, especially if you are Australian. The agreement removes tariffs on £4.3bn of British exports, which makes it cheaper to sell iconic products like cars, Scotch whisky and ceramics into Australia.
The UK exported £5.4bn worth of services to Australia last year and the new deal will pave the way for that to grow, as well as facilitate greater British involvement in tendering for public sector contracts. Reciprocal agreements on visas and recognition of professional qualifications are also nice to have.
Cuts to tariffs on Australian imports of wine will be popular domestically. The Government estimates that they will reduce costs to consumers to the tune of up to £34m a year; although that may be overstating the popularity of Tim Tams and vegemite in Britain.
Trade Secretary Liz Truss said the deal would lead to “lower prices and more choice for UK shoppers”
The Government is right to say all this will support UK jobs. But the British wins don’t stack up to much when compared with what Australia’s negotiators secured. Agriculture is perhaps the most totemic and difficult industry in any trade negotiation.
Australia’s trade relations with the EU have long been dominated by the resistance to Aussie agricultural imports on grounds ranging from pure protectionism to concerns over animal welfare.
Now the UK has bust that taboo by agreeing to zero tariffs being phased in over ten to 15 years. Canberra will be quick to point that out in its trade negotiations with Brussels. That concession have ramifications for British farmers, who will fear they have been sold down the river for a Brexit win.
Other countries hoping to strike trade deals with Britain will also be poring over the details of the finalised deal with Australia. UK officials can insist that they come to each and every deal totally fresh but that holds little water in the world of 4D chess that is international trade negotiations.
It is clear the US will look to bank all the British concessions on agriculture to Australia as a starting point for any talks over a trade deal with Washington. It is a win that must have outstripped Australian negotiators’ hopes and expectations. It is hard to shake the feeling that Britain may have given away too much, too cheaply.
That is understandable given the post-Brexit anxiety to strike new trade deals and really begin life as an independent trading nation. But it will be unforgivable if that mistake forms the blueprint for all the trade deals to follow.
The Government will have to toughen up, wise up, and, for once, be prepared to walk away from a bad deal if it wants to make a success of Brexit.