Boris Johnson, the British prime minister, frequently talks about the UK having a Canada-type trade deal as the preferred option but that if it comes to it, an Australian-type arrangement is fine.
At present this is in fact no deal - trade between the EU and Australia is done on WTO terms, the same as it will be between the EU and UK if a trade agreement isn’t reached in coming days.
Negotiation on a trade deal
What is interesting is that Australia has been in negotiations with the EU since 2018 to put a trade deal in place to replace the current trading terms, which a former Australian prime minister this week described as not one Britain would want. The big target for the Australian negotiators with the EU is access for beef and sheepmeat, with beef in particular extremely sensitive for the EU. Australia currently has a 7,500t beef quota and a 19,000t sheepmeat quota for the EU.
The UK has also opened negotiations with Australia having rolled over the EU agreement with Canada on an interim basis while a new UK-Canada deal is negotiated. Interestingly, the Canadian Cattleman’s Association is calling on the Canadian government to secure modifications to the rules for exporting beef, including reciprocal beef market access in the future free-trade agreement (FTA) with the UK.
The Canadians have long been frustrated by the EU only granting access to non-hormone-treated beef and most Canadian farmers simply don’t see giving up using hormones in order to sell to the EU as worthwhile.
UK government accepts agriculture would lose out
In June of this year, the UK government published its strategic approach to trade negotiations with Australia. This identifies agriculture as the sector where Australia could increase exports by up to 83% in a comprehensive trade deal, identifying beef and sheepmeat in particular.
The strategy also recognises that “in the long run, Australian producers may be able to supply domestic retailers and downstream producers at lower cost than domestic producers”, and that “Australia has a strong comparative advantage in its exports of livestock meat, dairy products, wheat, swine, poultry and other live animals compared to the UK”.
The UK government recognises that Australian agriculture would benefit at the expense of UK farmers in a UK-Australia trade deal. It follows that the most vulnerable products in such a deal would be Irish beef which currently supplies 80% of UK beef imports and to a lesser extent sheepmeat.
We might also expect that domestic UK production would retain a premium in the market but that premium is likely to be on top of a lower base price.
Above all this is a reminder that Irish farmers involved in beef production will lose even if there is a last-minute deal between the UK and the EU; they just lose even more if there isn’t.