MPs warn Government against overselling benefits of Australia trade deal

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• Read the full report

The International Trade Committee today publishes its verdict on the UK’s trade deal with Australia.

In a landmark report, the cross-party Committee of MPs warns the Government against overselling the benefits of trade deals, and calls for a full assessment of the winners and losers across all economic sectors and nations of the UK.

The MPs point out that lifting almost all tariffs (import taxes) on agricultural imports is a significant change, and potentially sets an important precedent for deals with major food-exporting nations. While the Government has sought to cushion negative impacts on the UK agriculture sector with phase-in arrangements, the Committee notes farmers’ concerns that these protections are not adequate.

The Committee cautions that, while tariff reductions on processed food and drink may benefit consumers, they are unlikely to make a noticeable difference at supermarket checkouts. Products such as Australian wines could become cheaper by just a few pence.

The MPs express disappointment that tariff-free Australian food will not be required to meet core UK food production standards, for example regarding pesticide use. Noting concerns by farmers that this could lead to unfair competition, the Committee calls on the Government to outline how it will monitor this and what it will do in response.

The Committee points out that the Government has failed to secure protection for the names of iconic UK food and drink exports, such as Melton Mowbray pork pies, Scotch whisky, Welsh lamb and Irish cream liqueur. As a result, it remains legal in Australia to impersonate these products. With such large concessions being given to Australian agricultural imports, the MPs argue this protection for UK exports should have been an easy win.

They welcome the fact the Government has assessed the environmental impact of the deal, but call for future assessments to go further, considering changes in emissions due to deforestation or changes in land use.

The Committee also welcomes the inclusion of provisions on forced labour, modern slavery and human trafficking in the agreement, but note these have limitations, given they are not enforceable where such activity occurs further down the supply chain.

Commenting on the report, Angus Brendan MacNeil MP, Chair of the International Trade Committee, said:

“The Government must level with the public – this trade deal will not have the transformative effects Ministers would like to claim. The Government’s own impact assessment shows an increase in GDP of just 0.08 per cent as a result of the deal, and the balance of gains and losses varies between economic sectors and nations of the UK.

“We have also found multiple examples where the Government’s flat-footed negotiating has led to significant concessions being given to the Australians without securing all possible benefits in return. For example, the Government has increased access for food produced to lower standards than would be legal in the UK, yet did not secure geographical protections for iconic British goods, such as Melton Mowbray pork pies or Scotch whisky. This means there is nothing preventing UK goods from being impersonated ‘down under’.

“As the first wholly new trade deal since Brexit, this agreement sets a precedent for the future. It is vital that the Government learns from this experience and negotiates harder next time around to maximise gains and minimise losses for all economic sectors and parts of the UK.”

The Committee will be questioning the Secretary of State for International Trade, Rt. Hon. Anne-Marie Trevelyan MP, on the UK-Australia free trade agreement at 1pm on Wednesday 6 July.

Given the Secretary of State cancelled the scheduled appearance before the Committee last week, and the Government has started, but not agreed to extend, the short Parliamentary scrutiny period on the deal, the Committee has taken the decision to publish its report before hearing from the Trade Secretary. This is to ensure MPs have time to consider the report before holding a debate on the agreement, which the Committee has called for.

Summary of the report’s key conclusions and recommendations:

Agriculture and food

• The Committee welcomes the liberalisation of trade in processed food achieved. Insofar as tariff cuts are passed through, this will benefit UK consumers – and UK exporters should also benefit. However, the gains are likely to be modest, and the removal of tariffs from Australian imports will not make any noticeable difference at supermarket tills (Paragraph 80).

• The almost complete liberalisation of unprocessed agri-food trade with Australia is a significant step, especially given the UK’s strong defensive interests and minimal offensive interests. The Committee acknowledges the Government has sought to cushion negative impacts on UK producers with long-lasting phase-in arrangements. However, the duration of those arrangements is not necessarily a long period for the sectors concerned, given their lengthy planning horizons(Paragraphs 94-95).

• The Committee notes the concerns of UK agri-food producers that the agreement increases access for food produced in ways that would be illegal in the UK, making for unfair competition. The Committee also notes the Trade and Agriculture Commission’s conclusion that, while such concerns have generally been overstated, this is apparently not the case in respect of goods produced using pesticides not permitted in the UK and canola oil produced from GM crops(Paragraph 163).

• The Trade and Agriculture Commission and Henry Dimbleby’s National Food Strategy review suggested making liberalisation of agri-food trade conditional on the other party meeting core UK food production standards. The Committee are disappointed that the Government has not acted on this suggestion. The Government must say what it will do to monitor the impacts of any unfair competition for UK producers. It must also say how it will act to mitigate adverse consequences for UK producers’ interests, and UK consumers’ wishes and choices, arising from such competition(Paragraph 164).

• The Government has failed to secure any substantive concessions on the protection of UK Geographical Indications in Australia. This is another example of the Government failing to secure an obvious benefit in exchange for the extensive concessions it has given on liberalising agri-food imports (Paragraph 174).

Labour rights

• The Committee welcomes the inclusion of provisions on forced labour, modern slavery and human trafficking, but notes the limitations of those provisions – notably that they do not extend to supply chains (Paragraph 331).

Impact Assessments

• The Committee welcomes the Government's initial assessment of the environmental impacts. However, the Impact Assessment could go further. The Government must ensure future assessments take account of changes in emissions due to deforestation or land use change(Paragraph 443).

• The Government must beware of overselling trade agreements. Impact Assessments must clearly communicate a realistic assessment of potential winners and losers (across different sectors and different parts of the UK) under each agreement (Paragraph 460).