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George Eustice sees the light

The minister who helped negotiate the Australia trade deal now admits it was rubbish. Might Sunak be heading for a similar revelation – on Brexit itself?

Photo: Jonathan Brady/PA Archive/PA Images

There might be little festive cheer on offer in strike-ridden, recession-bound Britain these days, but ‘tis certainly the season for Brexit turkeys to come home to roost. And how they are coming.

From the decline in the UK’s status as a leading financial centre, to the rising crescendo of voices admitting that Brexit is the real reason we are facing another round of bruising austerity in this week’s autumn statement, the true cost of Britain’s decision to leave the European Union is finally being exposed, as fib-fed fantasy collides with economic reality. 

George Eustice became the latest Tory to see the light when he took to the floor of the House of Commons on Monday. He lambasted last year’s trade agreement with Australia, the very deal his one-time boss Boris Johnson said showed Global Britain at its best. That deal was negotiated by a certain Liz Truss, trade secretary at the time, and the then environment minister, one George Eustice. 

Eustice declared that the freedom of the back benches meant he no longer had to put “such a positive gloss” on the deal. This seemed to suggest that ministers were now obliged to make misleading statements about policies – to lie, in other words. In his new role as a servant of truth, Eustice admitted that the deal was “actually not that good for the UK,” and that it “gave away far too much for far too little in return”.

He told the Commons: “We did not actually need to give Australia or New Zealand full liberalisation of beef and sheep. It was not in our economic interests to do so. And neither Australia nor New Zealand had anything to offer in return for such a grand concession”.

It was not quite a mea culpa, as Eustice mainly blamed Truss, who fired him during her brief time in No.10. Apparently also freed of the need to be modest, he claimed that most of the “good” elements of the deal were negotiated by Defra, his department.

“The UK went into this negotiation holding the strongest hand, the best cards, but at some point in early summer 2021, the then trade secretary (Truss) took a decision to set an arbitrary target to conclude it by G7. From that moment we were on the back foot,” he said. “At one point the then trade secretary asked her opposite number from Australia what he would need in order to conclude an agreement by G7 and of course he then set out his terms which eventually shaped the deal. We must never repeat that mistake.”

And so Eustice becomes the latest Brexiteer to succumb to a serious case of 20/20 hindsight, although unaccompanied by the usual remorse or contrition. He joins others, like Lord Wolfson, the prominent Brexiter and boss of Next, who now suddenly recognises the damage being done by Britain’s decision to leave the EU.

Eustice’s comments raised eyebrows – not least because he tore into the interim permanent secretary for the Department for International Trade, Crawford Falconer. But his analysis came as no surprise to Angus Brendan MacNeil, the Scottish National Party MP who chairs the International Trade Committee which scrutinised the Australian and New Zealand deals. He said Boris Johnson had been keen to brandish pieces of paper and talk of “trade deals in our time”. But the detail never matched the hype. 

“The urgency to get these trade deals means that people like the Australians and New Zealanders saw (the British) coming. It would be very difficult not to take advantage of such a naive and gullible government and the Australians obviously didn’t look a gift horse in the mouth,” MacNeil told The New European

“The Tories seem to think you can have one view of the trade deal when you’re in office and then when you come out of office, you can tell the truth about it,” he said. He also noted that Rishi Sunak, who was chancellor at the time of the deal, criticised the agreement for being one-sided when he ran against Truss in the summer leadership contest. 

Farmers, and the fishing industry, are now stuck with a bad deal. In MacNeil’s view, “They have been ill served by a government trying to patch up the big hole in UK GDP of about 5% – due to Brexit – with tiny trade deals.” 

The Free Trade Agreement (FTA) with Australia removed tariffs on certain goods, reduced red tape and was, significantly, described at the time by Australia as a “great win” for Australian agriculture. The deal, which the UK said would unlock £10.4bn of additional trade, stated that Australia would be able to send a certain amount of agricultural goods per year to the UK without any payment of tariffs. Over time, these limits, or quotas, would increase. After 15 years, there will be no quotas or tariffs on beef and sheep; tariff-free quotas on sugar and dairy will be eliminated sooner. 

Professor Lorand Bartels, the chair of the Trade and Agriculture Commission, examined the environmental and animal welfare standards in the deal. He described them as “unique”. 

“It is clear that the FTAs with Australia and New Zealand were extremely generous in granting, after the multi-year transitional periods, full market access for agricultural products into the UK,” Bartels told The New European. “It is unusual for a country with an agricultural sector which is uncompetitive, without government protection or government support to open up its market in this way in an FTA. I can’t think of another example of a country that has done this.”

After Eustice’s exposé, Minette Batters, president of the National Farmers’ Union, said her organisation had made it very clear at the time that it would be “irresponsible” to sign a deal that eliminated tariffs and quotas on sensitive products. The NFU warned that many British farmers could be forced out of business. 

“We would welcome any renegotiation of the terms to make the deal more beneficial to the UK,” she said. “If renegotiation is ruled out, then the government must, at the very least, ensure that there are much more robust procedures in place to allow better, rigorous parliamentary scrutiny of any future trade deals.”

In fact, the two deals are yet to be fully ratified. The Trade (Australia and New Zealand) Bill, which would enable the implementation of the FTAs, has completed the committee stage but is awaiting the report stage. MacNeil says he expects the deals to come into force in late spring.  

Bartels said he did not expect Sunak’s government to seek to modify the deals, mainly because the FTAs are clearly linked to progress on the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – one of the largest free-trade groupings in the world. Britain’s membership is currently being negotiated. 

“It is virtually guaranteed that if the government does something that Australia or New Zealand don’t like, in anything other than good faith, that this would disrupt the possibility of acceding to the CPTPP,” Bartels explained. “There is a clear link, because both Australia and New Zealand agreed with the UK that they would not ask for more in the CPTPP negotiations than they achieved in the FTA negotiations. So on that basis, I can’t see it would be very easy for the Sunak government to change or not ratify this agreement without imperilling its CPTPP negotiations,” he said.

The Australian government said on Tuesday it was working to get the FTA with Britain in place as soon as possible, adding that the deal would deliver benefits for both countries.

Though there is something distasteful about seeing Truss’s former team kick her when she’s down (her former chancellor Kwasi Kwarteng was first to do so last week), the picture Eustice paints pours a hefty bucket of cold water on the notion of “Global Britain”. This idea arose under Johnson, when Truss was travelling the world, ostensibly drumming up trade, and posing for photos on a Brompton bike under a Union Jack near the Sydney Harbour Bridge. 

MacNeil, who has invited Eustice to appear in front of his committee next week, is not only worried about the Australia deal – he also worries about what it means for future trade negotiations. “One of the bigger problems going forward is having liberalised so much, what do you give other people? Other people are going to be wanting much the same stuff.”

And then there is the potential long-term damage to food security in the UK. “(The government) has given Australia and New Zealand parachute markets, so if they have some problem with another country and they need a market, they’ve got a market,” said MacNeil. But in relying on the imports from another country, Britain will effectively “wipe out production here”. And once that has happened, there is increased risk to food supply. What happens if Australian exporters then decide to export elsewhere? 

“You can’t turn up that capacity here overnight. Flocks of sheep and herds of cattle… are not commodities that you can get out of a factory,” said MacNeil. “There is a slow burn to livestock and so food security needs to be thought of sensibly and seriously and (this government) have given no thought to it whatsoever.”

Even “good” trade deals will struggle to make up for the loss of the UK’s biggest market through Brexit, and all the consequent losses that stem from that cataclysmic event. 

“The Tories alighted on trade deals in some sort of joy and delight that they’d found something that would show we didn’t need to be in thrall to the Europeans. But the numbers never stacked up. They thought they could do it with a bit of hype, and the hype was so great that nobody could question that the emperor had no clothes,” said MacNeil. “Johnson’s trade deals are a sorry sop for the damage of Brexit.”

That damage is getting worse. This week, Bloomberg reported that London had lost the title of Europe’s largest equity market to France, as the value of companies listed in the French capital overtook that of the City. Paris’s rise was also helped by the fall in sterling’s value after Truss and Kwarteng’s disastrous September mini-budget. 

And as inflation soared to its highest level in 41 years, hitting 11.1% in October, the Food and Drink Federation called on the government to cut the cost of trading with the EU by, for example, simplifying regulation. Last month, food inflation rose to a 45-year high of 16.4% and the producers say trade problems, alongside soaring input costs, are to blame. 

In Bali for the G20, Sunak called inflation “the enemy that we need to face down”, and said his number one priority was “making sure that we deal with the economic situation that we face at home”. If that is the case, the former boss of Siemens UK and now vice-chair of the Northern Powerhouse Partnership, Jürgen Maier, has an idea for the new prime minister: let’s rejoin the single market and customs union.

“It was the biggest lie of them all: that we could replace the economic upside of being part of the most advanced free-trade zone in the world. No independent trade deal can replace its economic upside. It is time to face up to this as a country,” Maier wrote in the Observer on the day Sunak took office. 

The question is whether Sunak now has the courage to acknowledge the facts. Or will he, like Eustice, only see the light one day in the far future from the deep, dark shadows of the back benches?

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