The following Answer to an Urgent Question was given in the House of Commons on Thursday 27 May.
“Our trade agreement with Australia is very likely to be the first from-scratch deal that we have struck outside the European Union. It is a major milestone for global Britain and a major prize secured for our newly independent trade policy. It is on course to slash tariffs on iconic UK exports, saving business potentially about £115 million a year.
The deal will be the most advanced that Australia has struck with any nation bar New Zealand, and will, we expect, be particularly forward-leaning in areas such as services, procurement and digital trade. It will be a great deal for the UK, and our farmers will continue to thrive. The agreement is a gateway into the massive CPTPP—Comprehensive and Progressive Agreement for Trans-Pacific Partnership—free trade area in the Asia-Pacific, and opens doors for our farmers into some of the biggest economies of now and the future.
Our food is among the best in the world and incredibly competitive. We should be positive about, not fearful of, the opportunities that exist for our agriculture and our farmers. We give the EU preferential trading terms, which I do not recall those on the Opposition Benches objecting to. We should be unafraid of giving our Australian cousins something similar, taking the chance to deepen trading ties with one of our closest friends and allies.
Australian meat is of high quality and produced to high standards, and it arrives here in low volume. Meanwhile, Australia has some of the highest animal welfare standards in the world. The UK accounts for just 0.15% of Australian beef exports, and our analysis suggests that any increase in imports is more likely to displace food arriving from the EU. Any deal we strike will contain protections for our farmers, any liberalisation will be staged over time, and any agreement is likely to include safeguards to defend against import surges. Negotiators are now working to agree the outstanding elements with the aim of reaching agreement in principle in June.
This is not the end of the process. Later this year, Parliament will be given ample opportunity to scrutinise the agreement—we welcome scrutiny of the agreement—as well as any legislative changes that may be required before the agreement enters into force. Parliamentarians will also receive an independently scrutinised impact assessment. Mr Speaker, you will know that our scrutiny arrangements are among the most robust, and in line with other parliamentary democracies. Indeed, in some areas we go further still.
This will be a great deal for our United Kingdom. It will deliver big benefits for both countries and will help us build back better from the Covid pandemic. I commend it to the House.”
In the UQ Answer, the Government were adamant that:
“Any deal we strike will contain protections”
and said that
“any liberalisation will be staged over time, and any agreement is likely to include safeguards”.—[Official Report, Commons, 27/5/21; col. 549.]
Can the Minister now provide any details? Has any information been provided? We need to know the elements of any agreement now.
Is there any independent governance of trade deals and tariffs? Your Lordships have received any number of letters co-signed by the Minister and his counterpart in Defra; there was one dated 1 November on trade and standards. Does any parliamentarian have access to independent and expert advice when reviewing the impact of each trade deal on agriculture? Is there any impact assessment? Is there any trade and agriculture commission to provide any report? Why is there any disagreement in Cabinet? Why do the Secretary of State for Defra and the previous Secretary of State disagree? Does the Minister have any answers?
The noble Lord has made a number of points, but I will deal with the most significant. On the TAC, both the Agriculture Act and the Trade Act require the trade and agriculture commission to be in operation before the FTA is implemented. It is currently being established and expressions of interest to assemble the commission are out, so it will be able to report on the Australia free trade deal if it comes into effect. That report will be made available to the House. On safeguards, of course we recognise the need to reassure farmers and rural stakeholders that our market access proposals will not threaten sensitive sectors. The deal will include safeguards to defend the industry against import surges and the precise details of these are still being negotiated.
ONS data from two weeks ago showed that the UK lost £1 billion in goods exports in just one month in January to our nearest trading partner, Ireland. This is more than the entire £900 million gain the Government are forecasting over 15 years for their agreement with Australia. The Government’s own scoping document stated:
“A trade agreement with Australia could increase UK GDP in the long run by around 0.01% or 0.02%”.
The EU scoping exercise for its own agreement with Australia in 2018 suggested 0.01% to 0.02%. Can the Minister explain why the Government are failing to secure any increase on their agreement with Australia than the UK would have had before Brexit? Why has there been such a collapse in trade with our nearest neighbour and trading partner, Ireland?
With due respect, I do not think January can be taken as a representative month. I do not think any trends are yet fully established. As noble Lords know, there was some stopping beforehand and there was particular disruption as people got used to the new system. With regard to the Australia free trade agreement, we intend to secure reductions in tariffs on UK exports to Australia, which will save UK businesses millions of pounds. The deal will support over 15,300 business which already export goods to Australia, and I am sure the noble Lord would like to welcome this.
My Lords, will my noble friend accept congratulations on the fantastic work he has done on negotiating this trade deal together with Liz Truss, the Secretary of State, who seems indefatigable in her energy? Could he perhaps remind the noble Lord, Lord Purvis of Tweed, of the enormous benefits this deal will bring to the Scotch whisky industry—not least in having tariff-free access to Australia, but also in opening the door to the Trans-Pacific Partnership, which will offer huge opportunities to Scotland’s biggest export industry?
I thank the noble Lord for his kind words, which I will certainly pass on to my colleague the Secretary of State. The noble Lord is completely right: the Trans-Pacific Partnership, which this is a gateway to, will be of huge benefit to UK businesses big and small. This is something we should all welcome.
Viscount Waverley (CB)
My Lords, following on somewhat from the question of the noble Lord, Lord Purvis, how will the Government include Northern Ireland in the Australian agreement if it is unlikely that the EU will accept Australian meat and phytosanitary standards?
As noble Lords know, the Northern Ireland protocol is still subject to discussion and refinement between the parties. Clearly, Northern Ireland stands to gain in many ways from a trade agreement with Australia; for example, machinery and manufactured goods account for around 90% of all goods exported from Northern Ireland to Australia and are used extensively in Australia’s mining, quarrying and recycling sectors. These exports will certainly benefit from reduced tariffs in this deal.
My Lords, as MP for Kilmarnock, the home of Johnnie Walker, I lobbied for the lifting of all tariffs on Scotch whisky, so I welcome an FTA with Australia that removes that 5% tariff—but not at the price of unfettered access on beef and lamb, which NFU Scotland says will devastate family farms and is wholly unacceptable to farmers and crofters. Bearing in mind what Brexit has done to the Scottish seafood industry, despite repeated government assurances, is Ministers’ rejection of what they say are farmers’ invalid fears based on an objective impact assessment, or is it just an alternative opinion?
My Lords, as a fellow whisky drinker, I share the noble Lord’s sentiments. Fears about a flood of cheap imports affecting our agricultural sector are, with due respect, overstated. Australia, of course, is a much smaller market than the EU so we expect low volumes with high standards. For example, we currently import 250,000 tonnes of beef each year, with 91% coming from the EU and 190,000 tonnes from Ireland alone. Less than 1% of Australian beef exports come to the UK market. Even if that figure was to increase, as we expect it will, it will still not dent these much larger figures from the European Union.