First report - Australia FTA: Food and Agriculture

We understand the concerns that UK cattle and sheep farmers have raised about the impact of additional competition from Australian imports under the UK-Australian FTA, but other witnesses advised us that the immediate risk appears to be limited. However, as recent events in Eastern Europe have demonstrated, circumstances can change rapidly leading to sudden shifts in food production and trade patterns. We therefore welcome the Government’s commitment to regular monitoring of the impact of the deal and the information they provided about how this monitoring would be carried out.

While the Government has argued that it has secured three safeguards to protect farmers it appears to us that only the general bilateral safeguard mechanism offers any real protection. The volumetric safeguards would only kick in if there were a truly massive increase in Australian red meat imports and, crucially, would only prevent the arrival of further imports rather than address any damage already caused by export permitted within the tariff rate quotas. We call on the Government to publish the tests it will use to decide whether and when the general bilateral safeguard mechanism in the UK-Australia FTA should be triggered. Ministers should also set out the policy interventions it would consider using to address any harm that was being caused to the agri-food and farming sectors.

In future negotiations the Government should ensure that its approach to negotiating changes to tariff free access to the UK meat market is more sophisticated than just weight of gross products and can differentiate between different cuts of meat—by using a carcass weight equivalent approach or similar—to mitigate the risk that the focus of new imports entering the UK markets is on the cuts where UK producers make the majority of their profit.

While the potential for increased agri-food exports from the UK-Australia FTA deal appears modest, the UK Government must support the food and farming industry to take maximum advantage of the opportunities that do exist. We welcome the Government’s plans to develop a network of agri-food trade attachés to support the industry in exporting its high-quality products around the world.

Given the Government estimates that the net impact of the deal across all agriculture and food related sectors is a reduction of £278m, we believe the Government should aid the sector to increase the value of UK food and drink export by at least £278m in the trade strategy being developed by the Agriculture, Food and Drink Exports Council. The Government should also produce an analysis showing what increase in trade it reasonably expects its current investment in trade promotion for agri-food role to yield. If this is less than the £278m by 2030 then the Government must commit to making further investment in this area. (Paragraph 34) Australia FTA: Food and Agriculture 37 Animal Welfare, Sanitary and Phytosanitary (SPS) and Environmental Standards

We welcome the innovation of including an animal welfare chapter, in the UK- Australia trade deal but we believe that the Government should have pushed further on improving animal welfare standards. This was a missed opportunity for the UK and Australia, together, to show moral leadership in this area. Given that it appears that few meat products from animals reared to standards not acceptable in the UK will enter the UK market in practice, it is disappointing that it was not possible to agree more ambitious language.

The Trade and Agriculture Commission has concluded that there is likely to be an increase in the import of products from Australia produced at lower cost by using pesticides that would not be permitted in the UK. We call upon the UK Government to review its Maximum Residue Levels (MRLs) for pesticides and bring its import tolerances for imported products into closer alignment with domestic requirements.

We welcome the approach that the UK Government has taken to protecting the UK’s SPS requirements within negotiations on the UK-Australia FTA. It will be essential that the UK robustly maintains this position in negotiations with future trade partners who may have a greater offensive interest in challenging the UK’s SPS regime. It is also essential that the Government can enforce these rules and that sufficient checks are conducted on imported food products. We call on the Government to publish its plans to resource a verification system as part of its new Target Operating Model to ensure these bans are being enforced and to monitor animal welfare standards.

We welcome the commitment that the Minister made to ensuring that UK trade deals protect the natural environment through a non-regression obligation on relevant regulations and standards that is enforceable with sanctions for non-compliance. We call upon the UK Government to include such provisions in future FTAs to help ensure that trade partners do not competitively undercut UK producers by deregulating environmental protections. We call upon the UK Government to include such provisions in future FTAs to help ensure that trade partners do not competitively undercut UK producers by deregulating environmental protections

However, it is regrettable that these provisions are not enforceable through the dispute resolution process if changes are made at the state level. In future deals the Government should seek to ensure environmental provision are binding on all levels of government in the countries that the UK negotiates with—as is the case in the UK.

It is regrettable that the Government chose to engage in this negotiation without first articulating the core standards that the food imported into the UK must meet. Setting out core standards would have strengthened the hand of British negotiators, reassured the relevant sectors of the Government’s commitment to such standards, and helped raise standards globally. However, we do welcome the fact that this deal does not prevent the Government adopting core standards—or other trade measures such as a carbon adjustment tax—in the future. We reiterate our previous call for the 38 Australia FTA: Food and Agriculture Government to adopt a system of core standards, which we believe would make it easier for UK negotiators to get of other countries agree to meet equivalent standards to those in place in the UK. Core standards should be in place before any further FTAs that cover the food sector are agreed.

While we believe the Government could have gone further in the UK-Australia FTA on standards, it has the opportunity, through the various forums created under the agreement, to continue to discuss environmental and animal welfare issues with Australia as part of its wider ambition of raising standards globally. The Government must produce a clear strategy for how it will use the forums created by the UK-Australia FTA to raise standards in the future. It should also set out how it will organise and resource the work of these committees to ensure they have sufficient senior buy-in on both sides to make further progress. Finally, it should set out what provision it will make for parliamentary scrutiny of the proposals of these committees. (Paragraph 81) Lessons for future trade deals

The Government risks negotiating with one hand tied behind its back if it does not take full advantage of the knowledge and intelligence that the UK sector can provide to support negotiations. The description of the agri-food Trade Advisory Group (TAG) given by the Deputy Chief Negotiator appears to confirm the industry’s description that the group was mostly about providing updates to industry rather than industry, and other stakeholders, providing advice and insights to Government. The Government must overhaul the way it engages with the relevant sectors and the devolved administrations during negotiations to provide for meaningful two-way engagement. We ask that it reports back by September on the changes it has made to how the group operates. The Government should also expand the membership of the agri-food TAG to provide it with additional expertise on animal welfare, health and environmental considerations.

As the Government has accepted, its Impact Assessment of the UK-Australia FTA is based on a relatively limited model of its likely consequences for farming and other sectors of the economy. We welcome the Government’s review of how to improve the quality of its impact assessment process and call on Ministers to take forward the improvements recommended in time to inform the impact assessments for all future FTAs. We welcome the Government’s review of how to improve the quality of its impact assessment process and call on Ministers to take forward the improvements recommended in time to inform the impact assessments for all future FTAs.

We found the TAC’s report extremely helpful and thank Professor Bartels, and his colleagues, for their work. We are concerned that Professor Bartels had to use university funds to support the TAC’s work on the Australia FTA. It is essential that the TAC has sufficient, independent, resources to carry out its work—particularly with large deals such as CPTPP on the horizon. We commend the Minister’s confirmation that she would look at its resourcing and her commitment to ensuring Australia FTA: Food and Agriculture 39 the TAC has enough funding to do its job well. We ask that the Government set out in its response to this Report what additional resources it has provided to the TAC. (Paragraph 96) Conclusion: Future trade deals

We welcome the Government’s assertion that the UK-Australia FTA does not provide a blueprint for future agreements. Nevertheless, we recognise the food and farming sector’s concerns that other major agricultural exporting nations may seek to use the existence of this deal to gain similar access for their goods, particularly for those markets that are geographically closer to the UK. To address these concerns, we highlight and restate our previous recommendation for the Government to publish core standards—which would reassure the sector that it is committed to protecting standards in future trade deals—and to transform its approach to engaging with the sector and devolved administrations during negotiations so they have meaningful opportunities to influence the outcomes of negotiations before final decision are taken. The Government should also look to learn lessons from the approach to setting quota levels and the timetable for tariff liberalisation in this deal and its implications for the viability of the UK agricultural sector as we negotiate future deals. (Paragraph 102) 40 Australia FTA: Food and Agriculture