Talking trade deals – Presidential blog – 16 September 2020

With just over three months to go, Britain has struck its first post-Brexit trade deal and momentum is building quickly writes President Andrew McCornick.

The deal with Japan announced last week is the first since we left the EU in January, since when the Government has been pursuing Free Trade Agreements across the world.

The Conservatives, in their election manifesto of last December, said that it would have 80 per cent of UK trade as Free Trade Agreements within 3 years. Negotiations are progressing at different rates with different countries for different reasons.

The important thing to keep in mind is that if all the deals currently being negotiated were concluded by the 1 January 2021, which there is no hope of, it still could not make up for the trade we currently do with the EU both for imports and exports.

The Japan/UK deal is important and is historic, but it is no panacea and emphasises the need to have a deal with Europe, the biggest trading bloc in the world and our closest partner – both historically and geographically.

The UK/Japan deal should have been one of the easiest to deliver as it will be like the EU/Japan deal which we are currently part of until the end of transition on 31 December 2020. Government are pointing at multiple benefits from this deal and, as far as agriculture goes, there appears to be many.

It should be a net gain for agriculture with more generous access for malt, recognition of more Geographic Indicators - potentially up to 70 - which bodes well for pork, dairy, beef, arable and maybe sheep, with access of UK goods almost 99 per cent tariff free exported to Japan.

I am sure more details will follow but it may also be a stepping-stone to accessing the CPTPP (Comprehensive and Progressive Agreement for a Trans-Pacific Partnership) which includes Japan, Australia, New Zealand, Canada, Chile, Malaysia, Mexico, Singapore and Vietnam and equates to 13 per cent of world GDP.

Trade negotiations with the US have slowed partly because of the imminent November Presidential elections. It will not be simple.  Agriculture is much more sensitive and the Farm Bureau (NFUS equivalent but bigger!) hold a lot of influence over the Senate.  If farmers and ranchers are not listened to, there will not be a deal nor votes. The US ambassador in the UK, Woody Johnson made this very clear to me in discussions I had with him.

Recently the Farm Bureau set a series of questions for the two presidential candidates on international trade. Biden never gave any direct comment on UK/US trade negotiations and Trump said he was eager to finalise a new US/UK trade agreement that includes significant agricultural access and will pave the way for progress with the EU, which he described as “one of the most unfair markets to many of our America farmers”.  This came at the tail end of all his other trade comments and does not feel like a US priority.    

Nevertheless, negotiations are ongoing and entering round four.  The current thinking is we will be lucky if talks are concluded by next summer and it may be further away if Senator Biden gets elected as he has stated he wants a review of all current trade deals.

Separate negotiations with Australia and New Zealand are not as far forward as Japan and they should not be as controversial as a US trade deal.  We trade with both already through the EU and bilaterally.

These are both strong agricultural economies and pose more challenges for us as producers than Japan. I have been fortunate to have spoken with a New Zealand trade representative and twice with the Australian High Commissioner H.E. George Brandis QC.

Our position is well understood in these trade negotiations.  We already do trade with both these countries and they want to trade with us at the top end, most profitable part of the market.  If our prices were poor, they would be looking to move product to whichever of their many other established markets will pay more. Both talk about seasonality and infilling gaps in our own supply.

With New Zealand, we have round one over which started on 24 July and has agreed UK and NZ are aligned in many ways. No date has been set for the second round as NZ elections are ongoing, but it is expected in October.

With Australia, first round discussions were held in July and they are preparing a draft text for the different chapters ready for the next round in Sep/Oct.

Both these countries see large advantages in trading with UK for other aspects of market access, such as financial services and manufactured goods.  Both, as they are agricultural powerhouses like US, would have to have a chapter in any deal on agricultural goods. Both Australia and New Zealand are part of CPTPP as well.

We, as the UK, need to ensure we are not undersold in the quest for these other benefits of trade.

There is also a risk with the UK doing so many trade negotiations at one time that what looks acceptable as individual deals, when added together, is cumulatively damaging to our industry.

The EU/UK trade negotiation is not in the Department of International Trade’s portfolio but has most significance to our future as a trading nation.  

As of 1 August, the UK has secured 17 Trade Agreements with 49 countries through Mutatis Mutandis, rolling over already existing EU trade deals.

There are also 17 Continuity Agreements in discussion on the same principle as above but with variations which are being negotiated.  These are with more strategically significant countries and mostly larger economies.  

Progress is being made but there is a significant road to travel to secure a trading platform with EU and the rest of the world.

Author: Andrew McCornick

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About The Author

Andrew McCornick

Andrew, who is married with three sons and a daughter, was born and brought up on a dairy farm in Wigtown. Andrew and wife Janice farm their 230+ ha unit with 160 suckler cows and 600 breeding ewes with a small herd of pedigree Charolais cattle. Andrew's sons farm a nearby tenanted unit which frequently provides replacement breeding stock for Barnbackle. For as long as Andrew can remember, he has been a member of the Union, and got more involved when the consultation for Nithsdale NVZ came out. From there he went onto become vice chairman of the Dumfries branch, and then onto his previous role of Regional Board Chairman for Dumfries and Galloway. He also sat on the LFASS committee. Andrew was elected Vice President in February 2015.

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