International Trade Secretary Liz Truss is currently holding talks with counterpart Dan Tehan to secure tariff and quota-free trade between the two countries. Mr Tehan has been holding daily talks with Ms Truss in a bid to finalise details before the end of the G7 summit.
Under the deal, products such as Scottish Whisky could be exported to Australia tariff-free in a boost to UK producers whilst cheaper meat and wine products could be exported by Australia to the UK.
But speaking today, Mr Tehan made clear that Australia’s agricultural industry needs to have sufficient access to the UK market despite concerns the deal could have a detrimental effect on British farming.
Mr Tehan added: “I’m confident that we will get there but in the end, if the ultimate agreement isn’t in our national interest, then obviously we won’t be signing up to it.”
He stressed the deal would need to offer British consumers the choice of being able to get access to “more of our beef, more of our lamb.”
Mr Tehan said agriculture access is one of the outstanding issues Australia was “still seeking to resolve” with the UK.
A free trade agreement (FTA) with the former British Commonwealth nation could increase UK exports to Australia by up to £900m, which would increase total trade to more than £20bn a year.
But alongside the National Farmers Union, the UK’s devolved administrations said the full liberalisation of tariffs on key exports including beef would see British farmers severely undercut by their Australian rivals.
SNP MSP Jim Fairlie told the Scottish Parliament a trade deal in its current form would mean “hugely damaging consequences” to farmers and crofters.
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Speaking in Holyrood, the Perthshire South MSP said: “As the UK Government enters into negotiations on new trade deals with our trading partners around the world, it is important that sensitive sectors are considered.
“The cumulative impact of complete market liberalisation in future trade deals could be devastating to rural economies that rely on the industry and the jobs that it brings, and once the precedent has been set, it will be difficult to avoid it in any future trade deal.
“In many communities, including in my constituency, farming is a way of life and the prospect of a tariff-free deal could mean many family businesses which have been passed on through the generations going out of business.”
A senior UK Government source said the trade deal will “include protections for the agriculture industry”.
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They stressed it would not “undercut UK farmers or compromise” the UK’s “high standards.”
In a statement, Ms Truss added: “This is Global Britain in action: seizing new opportunities around the world as an independent trading nation in huge markets such as Australia while paving the way to prosperity across the UK, especially in Scotland.”
It comes as Australian Prime Minister Scott Morrison will push G7 nations to overhaul global trade rules to stop powerful countries using economic coercion.
In a speech today ahead of his visit to the summit in Cornwall where he will meet Boris Johnson, Mr Morrison said the global rules-based order is “under serious strain”.
He added: “The most practical way to address economic coercion is the restoration of the global trading body’s binding dispute settlement system.
“Where there are no consequences for coercive behaviour, there is little incentive for restraint.”