Boris Johnson sold the idea of exiting the EU to voters in part with a pledge that it would free the UK to make “buccaneering” trade deals around the world. Now that vision is running up against the realities of the hard compromises it involves. A planned agreement with Australia has split the cabinet – between ardent free-traders and those who fear the impact on agriculture, and on the UK itself, if Scottish and Welsh farmers are hit hardest. It makes political and economic sense for the government to aim for zero tariffs and quotas in a deal, at least as an end destination. But it must not do so blindly, without regard for the political fallout.
A deal with Australia would be an important symbolic prize: the first large post- Brexit trade pact that does not largely “roll over” arrangements the UK enjoyed as part of the EU. Since Australia is a founder member of the Trans-Pacific Partnership, it would be an important step towards joining what is now the CPTPP, securing beneficial access to Pacific Rim trade. Reaching an Australia
agreement would also pave the way to bigger deals with the US. Conversely, failure would make other agreements less likely. The vision of bold, free-trading Global Britain would wither. But Canberra has demanded complete removal of tariffs on exports - including of farm goods such as beef, lamb and pork. Britain’s farming industry says it could not compete with the country’s vast industrialised farms.
The prime minister has prevailed in cabinet, insisting the UK should offer a tariff- and quota-free package to Australia, though reportedly with tariffs only removed over a period of up to 15 years to allow time to adjust. Farmers’ concerns may for now be overblown. But an Australia deal would also set a precedent for talks with the US and Brazil, the two biggest beef producers. The increased competition over time could reshape Britain’s agricultural landscape - both economically and
physically.
One key issue is whether regulatory barriers are lifted or kept in place. Animal welfare and food
standards are important to the public; one million people signed a National Farmers’ Union petition last year against allowing food imports that would be illegal to produce in the UK. If the deal ends up including such regulatory barriers, UK farmers would be less threatened by full tariff elimination. Increasing shipments from far-flung Australia sits uncomfortably, too, with the government’s vow to be a leader in cutting carbon emissions. It matters whether the deal respects UK sovereignty to introduce “carbon border adjustment” - emissions-related tariffs - should it want to do so in the future. Then there is the fragile state of the union. Appearing to ignore Welsh and Scottish farmers could swell pro-independence sentiment. And the more open an agricultural deal with Australia, the tighter must be the regulatory border between Britain and Northern Ireland - which will remain under EU agricultural standards and customs rules. It remains unclear, meanwhile, whether this deal will increase market access for lucrative UK service exports and digital trade. The government must reconcile a liberal trade agenda, which will leave at least some sectors struggling, with promises of a more interventionist domestic economic policy designed to safeguard jobs and level up disadvantaged regions. Even for as skilled a political salesman as the prime minister, this is a tricky circle to square.
