Australia and New Zealand Trade Deals
The UK’s trade deals with Australia and New Zealand will come into force from midnight on 31st May. These are the first trade deals negotiated from scratch by the UK Government since leaving the EU and their application will result in increased competition over time particularly for the UK’s beef, sheepmeat and dairy sectors.
Whilst there will be an immediate elimination of 99% of tariffs on goods imported from these countries upon entry into force upon, for sensitive products, limits will be applied (via Tariff Rate Quotas (TRQs)) in the years following application, as a prelude to unlimited access (from Year 16 for beef and sheepmeat and from Year 6 for dairy products). These limits are set out in the Table below. Pork, poultry and eggs are not included so the UK Global Tariff will continue to apply.
Combined Tariff-Free Access to the UK due to Australian & NZ Trade Agreements
Sources: HMRC / UK Government / Andersons
Estimates denoted in thousand tonnes (Kt) terms are rounded. Pig and poultry meat imports not deemed sensitive and will have unlimited access from Year 1 of application, but imports from Australia and NZ likely to be negligible.
# This is access granted under the UK’s current WTO Schedule and relates to TRQ specifically allocated to Australia and NZ. * Based on annual averages during 2019 to 2021.
As we have reported previously, some studies looking at the impact of these trade deals have suggested that their effects will not be as pronounced as initially had feared. This is partly because both countries are heavily focused on the Asia-Pacific region where there has been strong demand of late. Notably, for several products (e.g. lamb), these countries already have significant TRQs with the UK, and have not been near to fulfilling these quotas of late. That said, there is an expectation that both countries, especially Australia will make a concerted effort to increase their exports of beef and sheepmeat to the UK on the back of the trade deal’s implementation. There have been increasing tensions between Australia and China on geopolitical issues and the UK will be seen by Australia as a good diversification opportunity.
The other concern for UK farming is the extent to which these trade deals will create precedents for future agreements with the likes of the US as well as an enhanced trade deal with Canada. Whilst talks with the US have stalled, the progress surrounding the recent Windsor Framework agreement concerning Northern Ireland is likely to create the scope for US-UK trade talks to resume at some point.
Farm to Fork Summit
The Government has tried to allay these concerns during the recent Farm to Fork (Food) Summit (see accompanying article) when the Prime Minister set-out six key principles to help ensure that agriculture is at the heart of British trade policy:
- Putting agriculture up-front in terms of assessing the impact of future trade deals
- Protecting sensitive sectors through permanent quotas
- Prioritising new export opportunities for UK food and drink
- Protecting UK food standards with commitments on there being no chlorine-washed chicken or hormone-treated beef being placed on the UK market at any stage.
- Upholding UK production standards in terms of the environment, animal welfare and food
- Removing market access barriers for UK food and drink exports in new trade agreements
Across the industry there are conflicting views on the extent to which these principles will be adhered to when future trade deals are about to be finalised. Many are sceptical, particularly on the permanent quotas issue, based on what happened during the Australia and New Zealand negotiations.