The recent Politico story about finalising the UK Australian trade agreement adds some interesting colour to the UK’s first free trade deal since 1973. Its scathing account has been instantly picked up by the anti-Boris crowd and gleefully shared on social media as an apparent example of Johnson’s incompetence as a negotiator.
However, I suspect the then PM had a much better idea of the UK’s comparative trade advantages than most of his detractors. I also suspect they underestimate his shrewd political instincts.
The key thing to appreciate here it that it would have been very hard to fully leave the EU’s orbit if the UK still relied on European farmers to feed our population. As Henry Kissinger once said, ‘control food and you control the people’. What the Australian deal offered Johnson was a way to get out of the EU’s control of the UK’s food supply.
Although the popular press like to pretend that the UK is a large agricultural nation exporting food all over the world, that is far from reality. The UK is a small country, with a large affluent population, which was importing food from its far-flung colonies and then the Commonwealth for hundreds of years before it joined the EU. Since 1973, however, the UK has relied heavily on imported food from the EU to feed its population.
At the time the UK-Australia deal was being negotiated, selling British manufactured products to Australians tariff-free would have been extremely interesting to British companies. Although Australia exports a lot of coal, gas, precious metals and other minerals, the only thing that Australia had of interest to the UK was its agricultural goods. I believe Johnson recognised this was also his way out of the UK’s over-dependence on EU producers, who supplied over a quarter of our food and drink.
When is a tonne only 550 kilos? – when the EU is weighing it
The hoo-hah about the Politico article has been centred on how UK negotiators intended to measure Australian meat exports. Most normal countries believe this is easy – you weigh it. Indeed, successful exporting nations like New Zealand now divide a sheep’s carcass and sell different cuts to up to 40 different purchasing nations. Everyone gets to buy the cuts they prefer. This is good for the environment as there is little waste and people are not paying to import bones that will later be discarded. It is also good for farmers of exporting nations who can find markets that value every part of an animal.
But that system is no good for the protectionist EU. They believe it means more competition for their farmers, even though it would also mean better prices for their consumers. Instead, the EU calculates its quotas for imported meat by adjusting the actual weight to what it would have been had it still contained bones – which they call ‘carcass weight’. This reduces the agreed import quantities by up to 45%. For boneless sheepmeat, one real kilo is counted by the EU as either 1.67 kilos of ‘carcass weight’ for lamb or as 1.81 kilos of ‘carcass weight’ for adult sheepmeat.
This is also why international trade statistics for meat exports by weight never match ONS/Defra or EU trade statistics. In short, ONS/EU trade quantities are overstated. This may have helped EU farmers when their CAP payments were based on production quantities, rather than land size, but now it just looks silly, underhand, or both.
I suspect that Johnson knew that leaving the EU also meant embracing the real-world way of doing things, especially things as simple as measuring trade – and when other countries negotiate trade deals, they use product weights.
The Morrison dinner
The Politico piece hinges on a dinner between Scott Morrison and Boris Johnson, which was apparently held on June 14, 2021. A Memorandum of Understanding (MOU) was announced the day after by both the British and the Australian governments.
The Australian press release on June 15 spelled out the UK’s reductions in agricultural quotas for Australian goods in full, without any mention that the quota tonnes used for imported sugar and dairy products would somehow be heavier than the tonnes used for beef and sheepmeat.
As tonnes are used for all products in the press release without qualification, it’s hard to believe that anyone reading it understood that a tonne of meat could only weigh 550 kilos. Product-specific safeguard amounts are also specified in the press release, so these were obviously not a ‘carcass weight’ compromise included in the final documentation, as stated towards the end of the Politico article. Nor does the final trade agreement mention carcass weights for Product Specific Safeguards. (See Section 2B, subsection 2B-3-2 here.)
I therefore doubt Politico’s story is all it’s cracked up to be. It is more likely that the small quotas for all Australian agricultural products were already agreed before the dinner, and would have been negotiated using product weight, as that is how Australians (and everyone outside of the EU) calculates exports. It seems more likely that if there was any wrangling about the use of carcass weights after the MOU was announced, then it would have been UK officials or NFU lobbyists who were trying to pull a fast one on the Australians, not the other way round.
This thought was confirmed when I read a tweet by John Clarke, Director of International Affairs at the European Commission’s Directorate General for Agriculture.
According to Clarke it was ‘people in the NFU’ who wanted to ‘limit the damage’ (of the Australia deal) and Clarke advised them to try to at least ensure the agreement uses carcass weight rather than product weight, principally because that reduces the amount of imported meat by 30%.
That raises a couple of questions: first, why is the National Farmers Union (NFU) apparently turning to the EU Commission for advice on how to undermine a trade deal that will eventually benefit the whole UK population. Moreover, why would British farmers take advice from Brussels, when EU farmers are their main competitors. Remember, there are no quotas on EU meat entering the UK in the UK EU Trade and Cooperation Agreement, either in carcass weight or real weight – yet somehow this is never described as ‘selling out British farmers’.
Clarke’s tweet is also a shining example of the EU’s attitude to trade outside the bloc. The EU’s primary aim has always been to restrict competitive imports but maximise exports in what they quaintly call their ‘trade deals’. They are nothing of the sort. A deal has to be win-win, where both sides import what the other can produce more efficiently.
For the Australians a win-win UK trade deal was simple: import cars and machinery from the UK, export beef and wine to the UK. For the UK it should have been equally simple. But after nearly 50 years in the EU, the protected and inefficient UK farming lobby cannot imagine a world where they have to be proficient or innovative or even export-orientated.
The NFU did not even see Australia as a potential market for Britain’s cheeses, or butter, or pork. Walk around any Australian supermarket and you will see butter from Ireland and Denmark, cheeses from France and Italy, ham and prosciutto from Germany, Spain and Italy. But only manufactured food such as biscuits, mustard, chocolates and tea from the UK.
Consequently, by the time that the details of the trade deal were published in December 2021, instead of UK negotiators trying to ‘paper over the Prime Minister’s last-minute giveaway’ as Politico claims, it was Australia’s cheesemakers who gained additional protections by insisting that their government mimic the UK’s six-year tariff reductions and quota limits on cheese imports – a protection that was not mentioned in the MOU details published in June.
There is another problem with the Politico story. In the New Zealand Trade deal being negotiated at the same time, they also use product weight for beef imports and only use carcass weight for sheepmeat. (This is possibly because New Zealand already had a very generous carcass weight sheepmeat quota from when the UK joined the EU.) That makes the claim that the use of product weight was a blunder by Johnson even harder to believe.
What also seems to have been lost in the haze about Johnson’s dinner with Morrison is that last week New Zealand dropped all – and Australia almost all – of their tariffs on UK imported goods. Not like the UK, with its years of complicated reductions of tariffs, small increases in tariff free quotas and retained ‘safeguards’ for producers, but bang, overnight – zero tariffs.
Far from the ‘selling out’ that the Politico piece conjures, the reality of these post-Brexit trade deals is quite different: genuine win-win agreements that mean more choice for consumers and new markets for our exporters – and all, despite the NFU’s best efforts, while reducing Britain’s dependence on the EU for our food supply.
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