Australia and NZ trade deals to come into force at the end of May

The UK-Australia and UK-New Zealand trade deals will come into force at midnight on 31 May 2023 after being signed in December 2021 and February 2022 respectively. In this article, we look at potential implications for the UK red meat and dairy sectors.

Both the UK-Australia and UK-New Zealand trade deals will result in Australia and New Zealand obtaining tariff free access to the UK market via tariff rate quotas (TRQs) for beef, lamb and dairy as soon as the agreement comes into effect.

The volumes of product under the TRQs will increase gradually over either 10 or 15 years for beef and lamb and over five years for dairy, eventually resulting in complete liberalisation – the removal of tariffs

Here is some further information on the TRQs under the UK-Australia trade deal and the TRQs for the UK-New Zealand deal.

Impact of these deals on UK red meat and dairy sectors

We have looked at the impact of both of these trade deals on UK agriculture, using a trade model developed by Harper Adams University and Exeter University. The results of the trade modelling are summarised below.

Australia

For the UK-Australia trade deal, the results showed UK imports from Australia increasing by:

• 10,000 tonnes (81%) for lamb
• 12,000 tonnes (261%) for beef
• 1,100 tonnes (254%) for cheese

NB: The changes estimated by the model compare volumes entering the UK following tariff liberalisation with the volume of imports based on the 2018–20 average.

Overall, total UK imports of beef and lamb did not increase significantly as higher imports from Australia were offset by lower imports from other origins. An important caveat for these results is that the trade model assumes that all other external factors will remain equal, whereas in reality, there may be changes in production levels and geopolitical relationships.  

While for beef and lamb, there is negligible opportunity for UK exports to Australia, for dairy, the model identified potential for UK cheese exports of around 2,600 tonnes (199%).

Take a look here at the full trade modelling results and related analysis for the UK-Australia deal. 

New Zealand

For the UK-New Zealand trade deal, the modelling results showed UK imports from New Zealand increasing by:

• 5,800 tonnes (14%) for lamb
• 6,300 tonnes (740%) for beef
• 260 tonnes (194%) for cheese
• 1,700 tonnes (209%) for butter

Changes in trade flows between the UK and New Zealand were negligible for pork.

NB: The changes estimated by the model compare volumes entering the UK following tariff liberalisation with the volume of imports based on the 2018–20 average.

Advances in the trade model meant that alternative scenarios could be taken into account. If it was assumed that there was a break down in New Zealand–China relations and China banned New Zealand beef and lamb imports, then UK imports from New Zealand increased by:

• 7,400 tonnes (830%) for beef
• 29,000 tonnes (69%) for lamb

Full trade modelling results and related analysis for the UK-New Zealand trade deal can be found here.

Key points

While the agreements with Australia and New Zealand represent more of a threat than an opportunity for UK agriculture, our analysis and trade modelling results suggest that the UK is unlikely to be flooded with imports from these two countries as a result of these trade deals. This is because Australia and New Zealand already have access to lucrative markets in Asia, for example, and, all things remaining equal, are unlikely to divert product from these markets to the UK just because they will have tariff-free access. However, if circumstances change, then there is potential for more product to be sent to the UK, so there may be harmful consequences in the future.

Australia and New Zealand are part of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), which the UK is set to join. The trade deals with Australia and New Zealand have been seen as a ‘stepping stone’ to gain membership of the CPTPP, where there may be more opportunities than threats for UK agriculture. AHDB has worked with Harper Adams University to assess the impact of the UK joining this trade bloc and analysis and results will be available on the AHDB website by the end of this month.

Read full analysis 

The impact of a UK-Australia free trade agreement on UK agriculture

The impact of a UK-New Zealand free trade agreement on UK agriculture

Listen to related podcasts 

The impact of the New Zealand trade agreement: Part 1 UK consumer perception of New Zealand red meat imports

The impact of the New Zealand trade agreement: Part 2 The effect on UK agriculture and differences in New Zealand production systems