Will the UK Government give away the farm?

The last Government (and Liz Truss in particular) concluded farm trade deals with the likes of Australia which were seen to potentially disadvantage UK farmers.

However, a more serious threat has always been a trade deal with the US with its mega food and farming corporations.   Much of the focus has been on the notorious chlorinated chicken, but if it was labelled properly, UK consumers could avoid buying if they wished (although it might be more difficult to avoid in takeaways and the catered food sector more generally).

The hope of a bespoke UK trade deal with the US may be a mirage.   However, it is clear that the UK Government has been prepared to make concessions on farm trade to secure a deal.   For its part the US administration needs to offer something to its rural base which may suffer from other measures.

Admittedly, the Government has been reluctant to make concessions on what are known as sanitary and phytosanitary measures, for example it is not willing to give ground on animal welfare or food hygiene standards.  This means that hormone treated beef will not arrive in the UK.

Britain is a major exporter of salmon, chocolate and cheese to the US.  Cheddar shipments have grown from about 4,500 tonnes in 2020 to more than 6,000 tonnes last year.   These are generally price sensitive products.

However, it does seem prepared to give ground on tariffs of up to 12 per cent on US chicken, pork and beef.   That could have significant implications for the UK food industry.

New Zealand trade has more political significance

The trade deal with New Zealand concluded after 16 months of negotiations has more political than economic significance, showing that the UK can negotiate post Brexit trade deals quickly.  It is hoped that it will ‘pave the way’ for the UK to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The deal envisages that tariff-free sheepmeat quotas will grow by 35,000t/year for the first four years (on top of the country’s existing 114,000t WTO quota) and then by 50,000t/year from year’s five to 15. This will give New Zealand a combined tariff-free access of up to 149,000t of sheepmeat in year one, rising to 164,000t in years five to 15 – quantities the country has failed to fulfil in recent times.

For beef, New Zealand currently has just 545t/year of duty-free access to the UK, but the planned deal will see this increase steadily to 38,820t by year 10, and 60,000t by year 15. 

The National Sheep Association argued that in addition to the increase in access by Australia, in just over a decade, these two countries will have access to the UK’s entire volume of lamb consumption.  Despite fears that the red meat market will be hit, Asian markets are a priority for Australia and New Zealand as they are closer and more profitable.

Cabinet row over Australian trade deal

A battle royal is in progress in Cabinet on whether Britain should agree a tariff free trade deal with Australia.  Brexiteers think that if a trade deal cannot be concluded with Australia no deals will be possible for the new 'Global Britain'.

However, farmers - already reeling from the phasing out of support payments - are concerned that it could hit their markets and be a precedent for future deals, particularly those with the US and New Zealand.

On one side of the argument is international trade secretary Liz Truss.   On the other side is Defra secretary of state George Eustice, backed up by Michael Gove.   Gove is concerned that rural areas in Wales and Scotland would be hard hit, further undermining the union.   Reports are suggesting that Boris Johnson may come down in favour of the deal.

Beef and sheep meat would be the main commodities affected, although Australia is also interested in exporting more cheese.   There is a 20 per cent tariff on beef at present which would be phased out over 15 years.   

Australian farmers benefit from greater economies of scale, allowing them to undercut on price.  The writer well remembers visiting a huge drylot beef farm in New South Wales.

The RSPCA said Australia had lower standards on chlorinated chickens, sow stalls that confine pregnant pigs and growth hormone treatment for beef.

What will the Biden presidency mean for a trade deal with the UK?

This is a slightly updated version of an article published in South East Farmer:

What will the Biden presidency mean for the trade deal with the United States, particularly in relation to agriculture?   One thing that is clear is that it will not proceed as quickly as it would have done in the absence of a change of administration.  

There are a number of reasons why this is the case.  First, Joe Biden has made it clear that the emphasis in the early phase of his presidency will be on domestic issues, specifically the Covid-19 pandemic.  One key international priority will be climate change.  International trade be less of a priority. 

Second, a new administration means a change of personnel.   A new US Trade Representative will need to be appointed to run what is in effect the US’s Department of International Trade and that will take at least two months after the inauguration.   Once that person has been approved by the Senate, they will need to work out their strategy.   Trade relations with China will be an early focus.

It is the case that there have been quite detailed technical negotiations between the UK and the US and it is understood that draft chapters of a potential agreement have been mapped out.   However, the issues have always been political rather than technical.  If there is political agreement, the legal language to fulfil it can be provided.

The biggest obstacle here was the effect of Brexit on the Good Friday agreement, about which Joe Biden has expressed concern.  Not all issues in relation to Northern Ireland have been resolved by an means, to put it mildly.  Biden identifies strongly with his Irish heritage.   Asked a question by a BBC reporter, he replied: ‘BBC?  I’m Irish.’   Ireland is also a concern for the House of Representatives which would have to approve any agreement and which still has a Democrat majority.

It is unlikely that a UK–US deal will be reached before the president’s 'fast track' authority to sign trade deals (formally Trade Promotion Authority, TPA) expires on 1 July 2021. Its absence makes the congressional approval procedure much longer and more troublesome. Biden may find that he has more important things on which to use his limited capital with Congress than trying to renew TPA.

Even if an agreement was reached, there is no reason to suppose that it would be any more favourable to UK agriculture than one reached under President Trump.    Nick Clegg claims that Joe Biden said to him ‘very unsentimentally – in that folksy way he does – “‘We are not going to sign anything that the chicken farmers of Delaware don’t like!”’   Delaware is one of the largest chicken producing states in the US and the product is washed with chlorine.

Joe Biden’s personal links with chicken farmers aside, there are more fundamental reasons why any agreement is likely to favour US agricultural interests.    Unlike the UK, where Defra has a multitude of tasks and does not necessarily treat farming as a priority, the US Department of Agriculture is a powerful department with a focus on farming that has the lead on the agricultural dimension of trade negotiations.

Tom Vilsack has proved a controversial choice as nominee for Agriculture Secretary, being seen as too corporate and unacceptable to key Biden support bases: https://www.theguardian.com/commentisfree/2020/dec/21/joe-biden-tom-vilsack-agriculture-secretary   

Whoever gets the job will be backed up by the agriculture committees in each house of the Congress that usually have a preponderance of members from areas that have significant agricultural businesses, while the agribusiness lobby remains strong.   In summary, any agreement that is reached will reflect US agricultural interests, particularly given the willingness of the UK to make sacrifices on agriculture to make gains elsewhere.

As far as Brexit more generally is considered, Biden has made it clear that he thinks it was an historic mistake and he would have voted against it if he could have done.   There is wider disappointment in the US because the UK could be relied upon to bring a perspective to EU discussions that took account of American viewpoints.   However, that is largely water under the bridge for now.

Biden presidency will slow down US trade deal

An article I wrote for South-East Farmer on the Biden presidency and a US-UK trade deal:

What will the Biden presidency mean for the trade deal with the United States and Brexit more generally?   One thing that is clear is that it will not proceed as quickly as it would have done in the absence of a change of administration.  

There are a number of reasons why this is the case.  First, Joe Biden has made it clear that the emphasis in the early phase of his presidency will be on domestic issues, specifically the Covid-19 pandemic.    International trade will not be a priority. Second, a new administration means a change of personnel.   A new US Trade Representative will need to be appointed to run what is in effect the US’s Department of International Trade and that will take at least two months after the inauguration.   Once that person has been approved by the Senate, they will need to work out their strategy.   Trade relations with China will be an early priority.

It is the case that there have been quite detailed technical negotiations between the UK and the US and it is understood that draft chapters of a potential agreement have been mapped out.   However, the issues have always been political rather than technical.  If there is political agreement, the legal language to fulfil it can be provided.  The biggest obstacle here is the effect of Brexit on the Good Friday agreement, about which Joe Biden has expressed concern.   Biden identifies strongly with his Irish heritage.   Asked a question by a BBC reporter, he replied: ‘BBC?  I’m Irish.’   Ireland is also a concern for the House of Representatives which would have to approve any agreement and which still has a Democrat majority.

It is unlikely that a UK–US deal will be reached before the president’s 'fast track' authority to sign trade deals (formally Trade Promotion Authority, TPA) expires on 1 July 2021. Its absence makes the congressional approval procedure much longer and more troublesome. Biden may find that he has more important things on which to use his limited capital with Congress than trying to renew TPA.

Even if an agreement was reached, there is no reason to suppose that it would be any more favourable to UK agriculture than one reached under President Trump.    Nick Clegg claims that Joe Biden said to him ‘very unsentimentally – in that folksy way he does – “‘We are not going to sign anything that the chicken farmers of Delaware don’t like!”’   Delaware is one of the largest chicken producing states in the US and the product is washed with chlorine.

Joe Biden’s personal links with chicken farmers’ aside, there are more fundamental reasons why any agreement is likely to favour US agricultural interests.    Unlike the UK, where Defra has a multitude of tasks and does not necessarily treat farming as a priority, the US Department of Agriculture is a powerful department with a focus on farming that has the lead on the agricultural dimension of trade negotiations.   It is not yet known who the new Agriculture Secretary will be, but they are likely to have some kind of farm industry background.    

They will be backed up by the agriculture committees in each house of the Congress that usually have a preponderance of members from areas that have significant agricultural businesses, while the agribusiness lobby remains strong.   In summary, any agreement that is reached will reflect US agricultural interests, particularly given the willingness of the UK to make sacrifices on agriculture to make gains elsewhere.

As far as Brexit more generally is considered, Biden has made it clear that he thinks it was an historic mistake and he would have voted against it if he could have done.   There is wider disappointment in the US because the UK could be relied upon to bring a perspective to EU discussions that took account of American viewpoints.    However, Brexit will be completed one way or another before Joe Biden is inaugurated and his views are likely to be peripheral to any subsequent discussions between the UK and the EU.

Eustice wins trench warfare

Defra secretary George Eustice has won his battle with international trade secretary Liz Truss over protecting farmers from imports produced to lower standards than in the UK.  As so often the case, the devil is in the detail. 

An agriculture and trade commission will be set up to consider policies the Government should adopt in free trade deals to ensure UK farmers do not face unfair competition which would undermine high animal welfare and production standards.

Although the commission will be only advisory, it will report to Parliament.  Going against its recommendations would be awkward for the Government.   However, there remains a strong imperative to get a trade deal with the US and this will not be possible without concessions on agricultural trade.   President Trump is particularly reliant on votes from farm states.

It will be interesting to see who the chair.  I would expect the membership to include a working farmer with NFU connections and one of the few academics with expertise in international agricultural trade.