Boris Johnson is prepared to offer Australia tariff-free access to British food markets despite warnings that it could put farmers out of business.
The prime minister is backing a plan to give Australian food exporters the same terms as those enjoyed by the European Union in what would be the first bespoke trade deal signed by the government since Brexit.
The plan is being resisted by farming groups, which believe that it would set a dangerous precedent for future trade agreements and could result in British farmers struggling to compete with cheap imports.
They have been backed by George Eustice, the environment secretary, and Michael Gove, the Cabinet Office minister, who have privately expressed reservations about the deal.
Liz Truss, the trade secretary, is understood to have the support of Johnson, who is keen in principle for a wide-ranging agreement to be reached as early as next month.
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Australia pays tariffs of 20 per cent on all exports of beef to the UK. Under plans being negotiated these would be phased out over the next 15 years to zero, in line with the terms for the EU.
Downing Street made clear that all imports from Australia would have to meet animal welfare and food safety standards. “In principle the prime minister believes that we should be offering the same terms to Australia as we offer to the EU,” a source said. “But this doesn’t mean there will be any reductions in the standards we require.”
A fully fledged trade deal with Australia would be the first signed by the UK since Brexit. Senior figures in the government, including Eustice, are concerned that concessions would become a baseline for future negotiations.
“There is worry across Whitehall about the principle of liberalisation and the precedent it will set,” one government source said. “What we agree with Australia is likely to become a template for our negotiations with other countries and in particular America.”
Supporters of Truss argue that a failure to open British markets to other countries would send a signal that the UK’s focus was still on Europe. They add that it could also jeopardise Britain’s chances of joining the Trans-Pacific Partnership free trade agreement, of which Australia and New Zealand are key members.
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“This is a fundamental argument about the nature of global Britain,” one Whitehall source said. “Do we want to seize the benefits of Brexit and strike advanced trade deals, or pull up the drawbridge? At the moment we’re giving preferential trade terms to the EU, so why shouldn’t our Australian cousins get something similar. It’s a smaller market with high standards, more than 9,000 miles away.”
The move is politically sensitive as Scottish farmers, raising stock on less productive land, could be among those hardest hit by price competition.
The government has reserved powers to strike trade deals but ministers, including Gove, are understood to be sensitive about how the issue could be used by the SNP to further the case for independence.
“This proposed deal is a huge threat to Scottish agriculture,” John Swinney, the SNP’s deputy first minister, said. “It will devastate the hill farming communities I represent and no self-respecting UK government could sign this.”
Under the terms of the deal, tariff liberalisation would take place in stages over the next decade to allow British farmers to improve productivity. In return, Australia would reduce import tariffs on products such as Scotch and cars as well as opening its markets up to greater UK investment.
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Minette Batters, president of the National Farmers’ Union, said that the government needed to be “mindful of the cumulative impact” of free trade agreements. “They will be the first in a series of deals that will undoubtedly increase market access into the UK,” she said. “There is a very real risk that, if we get it wrong, UK farming will suffer irreversible damage rather than flourish, to the detriment of our environment, our food security and our rural communities. The government faces a choice. It must recognise that opening up zero-tariff trade on all imports of products such as beef and lamb means British farming, working to its current high standards, will struggle to compete.”
Kwasi Kwarteng, the business secretary, said: “We’ve got a great beef product, we’ve got great farmers and I think they would have plenty of time under the circumstances of the deal to adapt to the new situation.”
A spokesman for the Department for International Trade said: “Any deal we sign with Australia will include protections for the agriculture industry and will not undercut UK farmers or compromise our high standards. We will continue to work with the industry, keeping them involved throughout the process and helping it capture the full benefits of trade.”
Meanwhile, the launch of a government scheme to bring new blood into the agricultural sector will see older farmers being paid to retire. The average farmer could receive a lump sum amount of £50,000, capped at £100,000 for those with the most land.
The move is part of an overhaul of grants designed to reward farmers who protect the environment. Older farmers are often most resistant to new, “green” methods; ministers want to replace them with younger counterparts.
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The battle over tariff-free access to British markets for Australian food — and in particular beef — might seem like a niche subject for an ideological conflict within government (Oliver Wright writes). But it is what the deal says about UK future trade policy that has caused the controversy.
In the case of Australia, the chances are that agricultural exports and particularly livestock will only ever form a small part of the UK’s food market, even with a trade deal.
For a start, Australia is 9,000 miles away and although its farmers want access to British markets a trade deal is unlikely to replace Asia as the country’s main export destination. The plan is also to phase in the tariff reductions over 15 years to give UK farmers a chance to improve productivity.
The farming lobby — backed by the environment secretary George Eustice and his predecessor, Michael Gove — is concerned about future red lines in trade deals.
They fear that having conceded the principle of tariff-free access to Australia, this will become the benchmark by which other countries with whom we negotiate future trade deals will measure their demands. The worry is that up against the huge US and South American agrifood companies, UK farmers will be forced out of business.
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Privately, those who support a purist approach to free trade accept that these concerns are not far-fetched. They argue that current tariffs are protectionist and if scrapping them leads to cheaper prices for consumers this is a good thing.
Those who oppose it cite production standards in other countries as a big cause of the price differential — and raise concerns about the effect of mass farming on the climate. We should be eating less meat, they say, not encouraging greater consumption through lower prices.
