Truss’s naivety about trade with Australia could put UK at risk | International exchange

Agriculture is the tail that wags the dog in all business negotiations. Agriculture may be worth less than 1% of GDP in the UK and Germany and less than 2% in France and Italy, but the emotional connection to food makes it a critical topic when negotiators sit down to strike a deal. agreement.

According to the latest World Bank data, the sector only contributed 3.3% to global GDP – and in Australia, which is in controversial and secret talks with the UK over a free-trade deal. trade (FTA), it was only 2.1% of GDP in 2018. But Dan Tehan, Australia’s Trade Minister, has put agriculture at the forefront by insisting that any deal with the UK must be covered by duty-free and quota-free agreements.

On Friday it emerged that he had succeeded with his hard line. the Sun reported Boris Johnson told cabinet colleagues he needed to agree on the outline of an FTA with Australian Prime Minister Scott Morrison after inviting him to be invited to the G7 summit in Cornwall next month.

An internal cabinet committee overseeing trade issues proposed a compromise in the UK that would delay the full effects of tariff-free, quota-free trade in agriculture for 15 years, the Sun mentionned. Neither No 10 nor the Commerce Department would comment.

One of the awards that UK Secretary of Commerce Liz Truss has awarded is joining the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), a trade agreement between 11 Pacific Rim countries, including the Japan, Vietnam, Singapore, Australia, Canada and Chile.

The text of the CPTPP consists of 30 chapters, covering tariffs on goods and services, intellectual property rights, e-commerce rules, employment and environmental standards, dispute settlement and many other aspects of trade. global. Joining the partnership will require complex negotiations.

A deal with Australia is not significant in itself: Truss admits it would boost the UK economy by just £ 500million over 15 years, or 0.02% of GDP – figures that explain why most of economists agree that trade is something that happens with nearby countries or that shares strong cultural ties. Almost 50% of trade remains with the EU despite Brexit, and the United States is the main destination for British goods.

But what Truss wants is to develop a model in talks with Australia that can be reused with the CPTPP, South Africa, Brazil and, its main prize, the United States.

It is the prospect of unfettered competition with these countries that frightens many Conservative and Labor MPs, who fear Truss will lose in the CPTPP negotiations and with all the other countries she is approaching after admitting that no UK industry does need protection in an agreement with Australia.

Not only will inefficient sheep farmers be wiped out by cheap foreign imports, but the steel industry and others sheltering behind protective tariffs and quotas negotiated by the EU when the UK was still member and renewed in the weeks before and after Brexit.

The concern is that Liz Truss, in her desperation to keep the Brexit flame on fire and the trade narrative on track, will rush to sign a deal with Australia that will cede the UK’s full weight in the future agreements with other, much larger nations. Said a Labor MP.

The Institute for Government think tank says the UK lacks the information it needs to negotiate deals after failing to collect trade data for 40 years. He believes the Truss team is desperately under-prepared for discussions with countries that would like to see such data.

Truss argues that the UK has a duty-free deal with the EU and that should be the model. But the UK is on a par with other EU countries after four decades of convergence. This is not the case for other countries. Australians, like Americans, use growth hormones on cattle which are banned in the EU and UK.

It is also unclear whether the founding members of the CPTPP would allow the UK to block a vote if it were to become a member. If a block vote is denied, then the US could join in and negotiate changes the UK is powerless to prevent. Environmental and poverty campaigners fear that large US companies, unencumbered by UK regulations, would like to gain access to the UK through a large backdoor without tariffs or quotas.

Shadow Trade Secretary Emily Thornberry of Labor asked the government why trade policy appears to be based on membership in the CPTPP. In April, she threw more than 235 questions to Truss in a letter to find out, and urged the government to reopen a pre-Brexit public consultation on trade “so we can all have our say”.

A forthcoming “scoping document” should set out the conditions for admission to the CPTPP. It remains to be seen if Truss will use it to provide answers.

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Nancy Owens

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