Department for International Trade (DIT) impact report on UK-Australia Free Trade Agreement predicts UK agriculture and semi-processed food sectors to take a hit financial hundreds of millions of pounds.
The DIT’s report on the FTA, which was signed last week, said overall output in the UK is expected to increase, service industries – especially wholesale and retail, utilities and business services – expected to make the largest contributions, as well as machinery and motor vehicle manufacturing.
However, the report also states that agriculture, forestry and fisheries will experience a reduction in gross value added (GVA) of 0.7% (Â£ 94million) while semi-processed foods will experience an impact of 2.65% worth Â£ 225million. Other processed foods are expected to grow 0.14% (Â£ 12million).
“Reallocation of resources”
According to the DIT, the FTA will generate an estimated GDP increase of Â£ 2.3 billion.
The report said: âIt is normal for trade agreements to lead to some degree of reallocation of resources between sectors. Some sectors are expanding to take advantage of new opportunities for higher returns resulting from lower trade barriers and are drawing resources from other sectors in the process. ‘
The paper continues: âThe magnitude of the changes estimated in the modeling leaves the sectoral composition of the economy relatively unaffected, albeit with a marginal reduction (0.01 ppt) in the share of output represented by the agriculture and semi-processed foods. . This reflects an increase in imports, increasing competition in these sectors; and resources moving over time to areas where returns are likely to be higher. ‘
Referring to the reduction in gross value added compared to the baseline scenario and the decrease in the share of these sectors in UK gross value added in the long run as a result of the FTA, the report has said, âThese results are due to increased import competition in the sheepmeat sub-sectors.
He went on to say that the modeling did not take into account factors such as future growth in other markets that might be attractive to Australian exporters, the impact of safeguards in the FTA such as the phasing of tariff reductions over several years, and the appeal of âBuy Britishâ campaigns in the UK.
“The farmers sold down the river”
The government has come under fire for the FTA by meat industry bodies such as the National Farmers’ Union and the National Sheep Association, which accused ministers of failing to protect the interests of British farmers.
Lib Dem spokesman for the environment, Tim Farron, said in response to the report: “This impact assessment proves what so many feared – hidden in the fine print is a $ 100 million hit. pounds sterling for our agriculture and fishing sectors which will hit rural communities the hardest. ” He added: âBoris Johnson sold farmers down the river to make a quick buck under a misguided trade deal with Australia. Now the reality of what is on the table is clear, it is vital that parliament can vote on the deal.