Free Trade Agreements: letter to UK Government

I am writing to you to express my deep concerns with the recently signed UK-New Zealand Free Trade Agreement (FTA) and its negative impact on Scotland’s agri-food sector. I am also writing in response to your letter received on 02 March 2022, concerning the UK-Australia FTA. 

UK-New Zealand Free Trade Agreement 

I wrote previously to your colleague, the Secretary of State for International Trade, on 27 October 2021, to highlight my significant concerns with the UK-New Zealand trade deal and that it would prove highly damaging to Scotland’s agri-food sector. The final agreement confirms this view. My colleague, the Minister for Business, Trade, Tourism and Enterprise, Ivan McKee MSP, will write to you separately about the wider implications of the deal, but this letter focuses on the impact on the agri-food sector.

It is not just the Scottish Government that is concerned with this trade deal. The view from industry is clear: trade deals that the UK Government have signed, which provide Australian and New Zealand exporters unfettered access to the UK market following a short transitional period, despite operating to lower cost and regulatory standards, will undercut domestic agri-food producers. 

Analysis by Quality Meat Scotland has concluded that New Zealand beef farmgate prices are 25-30% lower than Scottish farmgate prices. Likewise, New Zealand sheepmeat farmgate prices are 10% lower than their Scottish counterparts. 

The President of the National Farmers Union, Minette Batters, commented: “Once again, there appears to be extremely little in this New Zealand trade deal to benefit British farmers. UK farm businesses face significantly higher costs of production than farmers in New Zealand, and margins are likely to tighten further “.

The view from the Scottish Government and industry is backed up by your Government’s impact assessment. The assessment concludes that GVA in the agriculture and semi-processed food sectors will fall 0.35% and 1.16% respectively. To put it bluntly, this deal will shrink the size of the UK agriculture and semi-processed food sectors, which are larger as a share of the Scottish economy than for the UK as a whole.

As you cite in your letter of 01 March 2022 to my colleague, the Minister for Business, Trade, Tourism and Enterprise, this is the second FTA negotiated from ‘scratch’ since EU-Exit. Your Government’s impact assessment confirms that this is the second post EU-Exit trade deal that will see growth fall, relative to what the sector would have seen otherwise prior the FTA, in the UK agriculture and semi-processed food sectors. 

I am seriously concerned about the cumulative impact of the FTAs that have already been signed, along with those that are in the pipeline, on Scotland’s agri-food sector. To date, we have seen no economic analysis from the UK Government that assesses the cumulative impact of these FTAs. Therefore, what reassurance can you provide to this end?

We have consistently called for a full role for the Scottish Government in all areas of FTAs, including the crucial decisions that are taken on tariffs and quotas. This is the only way we can be sure that Scotland’s interests are protected and that trade policy works for the whole of the UK.

UK-Australia Free Trade Agreement  

Thank you for your letter of 02 March 2022, in response to my letter addressed to the Secretary of State for International Trade on 07 February 2022, in which I raised my significant concerns with the UK-Australia FTA.

You said in your recent letter that the FTA contains tariff-rate quotas (TRQ) for sensitive agricultural imports from Australia and I recognise this. However, the increase in TRQs is significant from day one of the agreement, with one of the most export orientated agri-food producers receiving unfettered access following a short transition period. Therefore, the Scottish Government and industry do not believe that the significant TRQs agreed in the FTA will provide the necessary safeguards for domestic producers. 

The President of the National Farmers Union of Scotland, Martin Kennedy, has said: “Under the deal, there is to be a cap on tariff-free imports from Australia for up-to 15 years. That is merely a journey to the Australians getting unfettered access to UK markets”.

I do welcome that the UK’s SPS import controls (that prohibit the import of chlorinated chicken and hormone treated beef) will apply but I remain concerned that this FTA will facilitate the mass import of Australian agri-food produced to lower production standards.  Therefore, this deal will provide Australian agri-food exporters an economic advantage over domestic producers, within the UK agri-food market. For example, Quality Meat Scotland has said that Australian prime cattle production prices were consistency lower than the UK’s over the period January 2017 - January 2021. 

Whilst I welcome co-operation on animal welfare provisions in the UK-Australia FTA, these fall short of the ambition demonstrated in the UK-EU Trade and Cooperation Agreement (TCA).

The Scottish Government has consistently said that, should a FTA partner qualify for preferential access to the UK market, this must be contingent on producing to equivalent standards of production as domestic producers are required to meet. 

I am also concerned that the animal welfare non-regression clause does not go near far enough. Australian farmers adhere to lower animal welfare standards than their UK counterparts therefore, the non-regression clause incorporates Australia’s lower welfare standards into the agreement. In addition, the clause is based upon Australia’s best ‘endeavours’ not to derogate or waiver from its animal welfare standards and the clause is not subject to a FTA dispute mechanism. 

Whilst an article on ‘Cooperation on Antimicrobial Resistance’ (AMR) in the UK-Australia FTA is welcome, it is regrettable again that the level of ambition from the UK-EU TCA has not been replicated in the UK-Australia FTA, particularly given the scale of antibiotic use on Australian farms for non-therapeutic purposes.

I am interested to know what impact the UK Government believe the cooperation provisions on AMR will have. As you may be aware, the World Health Organisation (WHO) has declared that AMR is one of the top global public health threats, and recent research published in The Lancet found that AMR was associated with 4.95 million human deaths globally in 2019. We have made clear that we expect all FTAs to include meaningful action to tackle this serious health threat to human and animal life and health. 

All in all, it is hugely disappointing that these first “from scratch” trade deals have compromised the interests of Scottish farmers, crofters and food producers so comprehensively and in so many different ways. These trade deals are evidentially not delivering the outcomes that people were promised if they voted to leave the EU. 

This letter is copied to the Secretary of State for International Trade, the Secretary of State for Environment, Food and Rural Affairs, the Minister for Rural Affairs and North Wales in the Welsh Government, the Minister for Agriculture, Environment and Rural Affairs in Northern Ireland and the Scottish Minister for Business, Trade, Tourism and Enterprise. 

Mairi Gougeon