UK-Australia Free Trade Negotiations: An Agri-food Sector Perspective

Author: Con Lucey

Negotiations on the broad terms of a UK-Australia Free Trade Agreement were finalised on Monday, 14 June. The swift conclusion of this Agreement is considered important to the UK Government, both as a major first achievement in its “Global Britain” strategy and as a possible template for future UK trade agreements.

This brief analysis examines the main potential implications for the GB beef and lamb sectors. Australia is a major global exporter in these sectors, but current UK import tariffs (which are very similar in magnitude to EU import tariffs) are relatively high, and current imports from Australia are dependent on tariff rate quotas.

The author, Con Lucey, a former Chief Economist at the IFA, argues that Ireland will have a number of particular interests in this Agreement. In the case of beef, the main concern is that the GB market, currently Ireland’s largest and highest-priced market, will be eroded both in volume and price terms by Australian imports following the FTA. With respect to lamb, where the EU is Ireland’s main market, the main concern will be that that increased imports from Australia to GB will cause market displacement, i.e., increased trade from GB to the EU, thereby eroding prices in EU markets.

The Protocol on Ireland/Northern Ireland will mean that the Northern Ireland agri-food sector will be protected against lower tariffs and potentially lower food safety standards. However, while the UK may accept the food safety standards of imports from Australia, the author argues that these are unlikely to be accepted by the EU. This situation could add to the problems in implementing the Protocol with respect to trade from GB to NI.