UK-Australia tariff-free trade deal still on table as beef with farmers continues

Trade in goods and services between Australia and the UK was valued at £18.1bn in 2019/20, with expectations on both sides to expand this further. Photo: Getty (Catherine Falls Commercial via Getty Images)

The UK is risking angering British farmers, and some ministers, as it is on the brink of offering Australia a tariff-free trade deal with the backing of prime minister Boris Johnson.

A tariff-free, quota-free agreement means both nations would phase out taxes on imports over the next 15 years.

It comes after reports earlier this week that negotiations are ongoing between the pair, with the UK cabinet office reportedly split in the decision.

According to The Sun Johnson will offer the country a 15-year transition to a zero-tariff, zero-quota trade pact.

Meanwhile, the BBC reported it was understood the cabinet row over the matter had been resolved on Thursday night. The broadcaster said "the cabinet was now in agreement, while negotiations with Australia were still ongoing."

Under the agreement set to be offered to Australia, tariffs (taxes on imports) will be phased out over 15 years, with quotas on sales between the pair going over the same period.

Total trade in goods and services between Australia and the UK was valued at £18.1bn ($25.7bn) in 2019/20, with expectations on both sides to expand this further.

At the moment, wines, metals and machines form the biggest goods exports from Australia to the UK, Australia mainly imports cars, medicines and alcoholic drinks from the UK.

But, the trade in meat, produce and dairy has been a roadblock in negotiations.

While trade in meat between the countries is small, according to the Department for International Trade (DiT), Britain imports around 250,000 tonnes of beef each year. 91% comes from the EU (with 190,000 tonnes from Ireland alone). Less than 1% of Australia beef exports was for the UK market, accounting for 1% of UK beef imports.

In 2019, beef and veal imports totalled 1,766 tonnes worth £12.9m, according to HMRC figures.

The devolved nations of Scotland and Wales have both called on the PM to ensure UK farmers are not left exposed by any free-trade deal.

However, the UK government has been eager to strike as many trade deals as possible following Brexit, and International Trade secretary Liz Truss wants one in place with Australia by early June.

Watch: What are freeports?

A spokesperson for the DiT said any deal with Australia "will include protections for the agriculture industry and will not undercut UK farmers or compromise our high standards."

Adding: "Typically, any tariff liberalisation is staged over time, with safeguards built in. Australian meat accounts for a very low proportion of total UK imports, and is produced to high standards.

The department will "continue to work with the industry, keeping them involved throughout the process and helping it capture the full benefits of trade."

Britain signed a post-Brexit trade agreement with Canada at the end of last year, worth at least £23bn.

In December, the UK announced new trade deals with Singapore and Vietnam, rolling over trade terms previously agreed under EU deals. It sealed its first post-Brexit trade deal, in September with Japan.

Read more: 40% of UK firms expect fall in EU trade

The state of Brexit has been laid bare, with several reports showing the impact on imports and exports.

Earlier in May, the Office for National Statistics (ONS) revealed that imports of goods from the rest of the world in the first quarter of 2021 were higher than EU imports for the first time since it began collecting data in 1997.

A separate report showed four in 10 UK companies expect that their annual trade with the European Union (EU) will fall in the coming year in comparison to pre-pandemic levels, new research has shown.

According to figures from the Institute of Directors (IoD) some 60% of British firms are still finding it challenging to adjust to new trading arrangements brought on by Brexit.

Britain's exit from the European Single Market on 1 January 2021 led to new trading rules with the EU that slowed the movement of goods and left some businesses struggling.

Watch: Free trade deal with Australia could endanger livelihoods in UK, farming groups warn