Business trade agreement
Deal with down under puts British farmer on edge
Now that the United Kingdom has cut ties with the European Union, there is renewed interest in the Commonwealth countries. Old Colonies, 54 in all. A free trade agreement with Australia is currently underway. This does not go down well, especially in the agricultural sector. Farmers fear being flooded with cheap cane sugar and beef that doesn't match their production standards.
Besides the cultivation of sugar beet, the United Kingdom is the largest European importer of cane sugar. A trade agreement with Australia allows the country to export sugar to the UK without restrictions. That is killing for beet growers, says the representative. "In trade deals between Australia and Japan or the US, an import tariff for Australian sugar remained," said Michael Sly of NFU Sugar representative. "It would be strange if there was a zero tariff on exports to the UK.
More cane sugar
London-based Tate & Lyle is the company benefiting from this potentially lucrative trade deal. British trade secretary Liz Truss hopes to get a signature under this trade agreement by mid-June. Tate & Lyle have always had to buy expensive cane sugar under the old EU rules, which sometimes made refining it loss-making. Now that the beet sugar industry is no longer protected by an import tariff, the company hopes to take advantage of cheap sugar on the world market, such as that from Australia.
If it's up to Sly and his fellow growers, it won't come to that, but for the time being Truss shows little enthusiasm for meeting their demands. Why she should do that, Sly explains: "Australian sugar cane growers have more than 30 active ingredients available for crop protection. All of these are not authorized in the UK. In fact, 13 of these have been actively withdrawn and banned. It is not justifiable. to import this sugar while British growers have hardly any opportunities to grow as efficiently as possible."
Decrease of imports
This isn't the first time Australian sugar has come to the UK. In the 70s, three quarters of all sugar in the country came from cane sugar. With EU accession in 1973, that changed and Tate & Lyle's share fell to a quarter. British Sugar and its beet sugar took care of the rest. Australia's tariff-free quota currently stands at 9.900 tonnes for the entire EU, out of a total of 18 million tonnes of sugar imported annually. Australian sugar is – because of the enormous distance – very expensive to import for Europe. On the other hand, it is of very good quality.
Apart from crop protection benefits, there are more things that play in favor of Australians. Although the soil has a lower supply capacity, it is available to a large extent at very low costs. Large livestock farms can produce and export beef very competitively. British beef farmers are therefore also not eager for a free trade agreement. There is also a dispute here about the production standards and whether they match the strict rules in the UK. For example, in Australia it is still allowed to administer growth hormone enhancers, although the British government says that import of beef based on hormone enhancers is not allowed under a free trade agreement.
Is importing sustainable?
In addition to the discussion about production standards, there are organizations that question the importation of food over thousands of kilometers. Yet they say that imports are necessary because the UK is not self-sufficient. It is therefore a question of looking for a sustainable way to get goods to the European continent. Meanwhile, the Australians themselves only see opportunities. According to various production organisations, the production methods are perfectly defensible, work is being done on CO2-neutral agriculture and it is a huge opportunity for both agricultural sectors.
Blueprint for future agreements
The trade deal between the two countries is significant in several respects. It could serve as a blueprint for future agreements between the UK and countries in Asia, Latin America and Oceania. In addition, it is a test for the British political and agricultural sector to find out how products can be imported without harming the sector at home. The details of this deal are likely to be hard work over the next 10 days. For example, will there be quotas or will all rates remain at 0? For arable farmers, cattle and sheep farmers in the UK it will be up or down.
Niels van der Boom
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