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The UK-Australia trade deal contains the most eagerly awaited SPS chapter of recent times

Niall Moran (Middlesex University)

On June 15, a UK-Australia trade deal was announced two days short of the first anniversary of the launch of negotiations. While the texts of the UK’s first post-Brexit bilateral deal have yet to be released, it has been confirmed that the deal provides for duty and tariff-free trade, phased in over periods of up to 15 years. The agreement may smooth the UK’s path towards CPTPP accession, but the National Farming Union fears the deal could cause the demise of many beef and sheep farms throughout the UK. In light of the larger context surrounding these negotiations, it is fair to say an SPS chapter of a trade agreement has rarely been so eagerly awaited. SPS standards concern areas such as food safety and animal welfare and the main question surrounding this SPS chapter is whether, or to what extent, it will oblige the UK to diverge from EU standards in these areas.

If this deal provides for divergence from EU standards, it will have an impact upon the implementation of the Northern Ireland Protocol, agreed between the EU and the UK as part of the Brexit Withdrawal Agreement. To briefly recap, tensions surrounding the NI Protocol have mounted in recent months with DUP leader Edwin Poots denouncing the Protocol as “unworkable”, while the UK has unilaterally extended certain grace periods. The EU has proposed a temporary “Swiss-style veterinary agreement”, which would remove the need for 80% of the checks from Great Britain to Northern Ireland overnight. This temporary alignment would facilitate the development of the necessary infrastructure, such as databases and border control posts, for the proper implementation of the NI Protocol. Divergence from current standards in the UK-Australia deal would likely eliminate the possibility of reaching such a veterinary agreement or the UK’s preferred option of an equivalence arrangement with the EU.

Divergence from EU standards in the UK-Australia deal would underline the independence of UK trade policy post Brexit. However the gains of streamlining food export procedures or relaxing the frequency of checks for food products would likely be outweighed by complications arising elsewhere in UK trade policy. Eliminating the possibility of reaching a veterinary agreement with the EU may of course be the point of such divergence, but the UK should keep both sides of the ledger in mind. If the UK-Australia deal does not diverge from EU SPS standards, this would give the UK greater flexibility in implementing the NI Protocol in the short to medium term. It would keep the possibility of a veterinary agreement with the EU alive, as well as the possibility of an equivalence arrangement.

Remaining aligned with EU standards would also come with another strategic advantage. The big prize of an independent UK trade policy is a US-UK free trade deal. One of the reasons the EU has found it difficult to conclude a free trade agreement with the US has been its SPS regime, which for example prohibits hormones in meat production. The UK’s ability to set its own standards and diverge from the EU’s SPS regime has long been touted as potentially providing the leeway to conclude a US-UK trade deal. However, on June 3, the US issued a demarche, or formal diplomatic memo, to the UK stressing its concern about the stalemate on implementing the NI Protocol.

Yael Lampert, the most senior US diplomat in the UK, said that if Britain accepted demands to follow EU rules on agricultural standards, President Biden would ensure that the matter “wouldn’t negatively affect the chances of reaching a US/ UK free trade deal”. Agriculture is typically the most difficult area of any trade negotiation and such an assurance is significant. On the other hand, if a UK trade deal were seen to undermine the NI Protocol, this could call into question the prospects of a US-UK trade deal.

In pursuing its independent trade policy, the UK should see the potential advantages of temporary alignment with EU agricultural standards, where they do not act as an impediment to a deal with the US and facilitate the implementation of the NI Protocol. (EU negotiators would see the acceptance of its SPS standards at the start of trade negotiations with the US as a welcome development.) The UK could take advantage of such opportunities, particularly where lowering standards is not in the UK’s interest and where this could have potentially serious consequences in relation to its existing obligations. Unfortunately, it is not easy for UK citizens to make this case as the deal has been concluded without the texts being made public or MPs having a vote on the deal. With marching season less than one month away, the UK government should carefully consider any steps that could exacerbate current difficulties with the implementation of the NI Protocol.

 

Niall Moran is a Lecturer in Law at Middlesex University in London, where he specialises in international economic law. He has previously worked on trade negotiations at the European Commission.

The views expressed in this blog reflect the position of the author and not necessarily that of the Brexit Institute Blog.

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