Why farmers will be hoping for a better FTA agreement with the Brits than the Aussies secured

Reports  this  week  indicate that  New Zealand is  getting  closer  to a  free  trade  deal  with  the  UK.  Trade Minister  Damien O’Connor says  NZ’s negotiators  have been working around the clock to reach the shared objective of an FTA agreement in principle by the end of August.

The problem, as  Point of Order understands it,  is that  NZ has  been  offered  the  same arrangements as  Australia  on  agricultural products,  with  a  phase-out  of  tariffs  over  11  years.

As  NZ trade  expert  Stephen Jacobi argues:

“It would be absolutely ridiculous if we were to enter into an FTA with the UK that did not put forward the prospect of free trade, zero tariffs in lamb and beef and dairy within a reasonable timeframe.”

Britain’s Trade Secretary, Liz Truss, says teams are working around the clock to get the deal done in the coming weeks.

“We are both big fans of each other’s high-quality products, so this could be a huge boost that allows British shoppers to enjoy lower prices and British exports to be even more competitive,” she said.

“NZ and the UK are natural partners united by modern values. An agreement would reflect those ideals and is a win-win for both countries.”

The deal would also be an important step towards the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

“Trade between the two countries was worth £2.3 billion last year and would be expected to increase following a deal,” Truss said.

O’Connor  knows,  however,  that NZ  farmers would  regard a deal  akin to the one Australia got  on   agricultural products  as  a   defeat  for    NZ’s  negotiators.

As  Jacobi put it:

“If the government could not negotiate the best outcome for NZ they should not sign the agreement in principle at the end of the month just because they said they would”.

UK farmers, through  their  national  union, have been campaigning   against  a free trade deal on the  basis  they  should  be  protected  against “cheap  imports”.

British farmers, of course, have  got used to   the  heavy  subsidies   of the  Common  Agricultural Policy.

NZ  officials have  argued  strongly  that  NZ’s lamb  in  particular  is  shipped  to the  UK  in  the off-season  for  UK  producers. But  this  does not  appear  to  cut  much  ice  with  the UK  negotiators.

For  some New Zealanders familiar  with the negotiations, it  is  ominous that   Truss  –  in her latest  update  – did  not  mention   major  agricultural products.

Of  course,   as  The  Guardian  reported  back  in  June  on the  announcement of the  Australian  deal, it  is the ‘new dawn’ you may never notice.

“Free trade deals are always an elaborate dance. Before Scott Morrison and Boris Johnson bumped elbows and enthused about the prospect of tariff-free Tim Tams in a rose garden in London this week, both sides engaged in stagecraft.

“There were reports the British trade minister, Liz Truss, planned to sit her Australian counterpart, Dan Tehan, in an uncomfortable chair ‘so he [had] to deal with her directly for nine hours’.  The Australians briefed that Boris needed this bilateral trade deal – his first since Brexit – much more than we did, and we’d take our sweet time to sign up.  In the end, Australia and Britain this week signed up to signing up, reaching an in-principle agreement on the structure of an FTA. The denouement was so rushed that concrete details about the scope of the in-principle agreement remain scant. But let’s work through the known knowns”.

So  what  are the benefits for  Australian farmers?

The Morrison government says beef and sheep meat tariffs on Australian exports to the UK will be eliminated after 10 years.

Sugar tariffs will go after eight years, and dairy tariffs will go after five years.

During the countdown to tariff-free trade, Australian producers will gain incremental access to the British market.  Australian beef producers, for example, get immediate access to a duty free quota of 35,000 tonnes (rising to 110,000 tonnes per year in a decade).

With sugar exports, producers have immediate access to a duty free quota of 80,000 tonnes, rising by 20,000 tonnes each year.

Australia says their dairy farmers will also have access during the transition period to a duty-free quota for cheese of 24,000 tonnes. This will rise to 48,000 tonnes by year five.

During the negotiations  with Australia, the National Farmers’ Union in the UK raised a number of concerns. The NFU pointed out there were different environmental and animal welfare standards in the two countries.

It is not clear whether the NFU’s objections have been addressed.

Trade Secretary Liz Truss says British farmers will be protected because the point at which tariffs kick in will be raised gradually raised over 10 years. That means farmers won’t have to compete with lots of Australian produce coming on to the UK market on day one.

Even after 10 years, the UK government says there will be safeguards. For example, if too much beef and lamb enters the UK a new tax called a “safeguard duty” can be applied for a further five years.

So  if   the  elaborate  dance ( in The Guardian’s phrase) between the UK  and  NZ  is  to  be  brought to  a  triumphant  conclusion,  what  steps   will  NZ  have to  perform?

Could  it   be that the  PM  Jacinda  Ardern   needs  to  pick  up the  phone  to  Boris  Johnson?

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