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November 15, 2019


Australia wants compensation from EU, UK over beef export losses due to Brexit complications

 
 

Australia has called for compensation from the United Kingdom and the European Union for Australian beef and lamb exporters' losses, Financial Review reported.


The demand came in light of complications arising from post-Brexit import quotas.


On November 14, Australia, which is negotiating a free-trade deal with the EU and 'pre-negotiating' one with the United Kingdom, castigated the pair during a meeting at the World Trade Organisation.


The country's fellow beef exporters also criticised the EU and UK in Geneva, Switzerland.


The US, New Zealand, Canada, Uruguay and China immediately backed up the demand for compensation over losses to what in Australia's case is a $366 million annual export trade with the EU and UK.


In its statement to the WTO Council for the Trade in Goods meeting, the Australian government said beef farmers have had to make difficult decisions to curtail shipments three times ahead of a potential Brexit cliff-edge: in March, April and most recently October, the latter of which has crimped exports destined for Britain's Christmas tables.


"Compensatory concessions should be provided to affected WTO members for loss of market access," an Australian official told the meeting. "Australia cannot accept the assertion by both the EU and the UK that no compensation is required."


Australia has now filed a formal proposal for compensation to address the losses its meat exporters have suffered.


The problem Australian beef and lamb exporters have faced is a complicated consequence of Brexit. It starts with the fact that the EU curbs imports by allowing only a limited amount of other countries' agricultural output to come into the European market at reduced or zero tariffs.


Above that quota, the tariffs are so punitive that further exports to the EU aren't viable. With Britain leaving the EU, these quotas have to be divided between the two sides.


Every time a Brexit deadline is reached, Australian exporters can't be sure what size their permitted tariff rate quota (TRQ) with each partner might be.


Compounding the uncertainty, the UK and the EU have proffered two conflicting methodologies for calculating the divvy-up of tariffs. And these could kick in midway through a quota year.


Australia and its allies in this fight also are worried that the calculation methods for splitting the quota might amount to a smaller total level of shipments than the full cross-Channel quota they enjoy now.


The government's official intervention emphasised that Australia wanted to take a constructive approach to fixing the issue. But the statement gave the impression that patience was wearing thin.


"It is clear the proposed modification to TRQs will lead to significant economic loss, by not only removing flexibility in where product is sent year to year, but also by rendering some TRQ allocations too small to be commercially viable," the statement said.


"The onus is now on both members [the UK and EU] to move beyond their position of 'no compensation'."


The US called the current Britain-EU proposal "unjustifiable" and New Zealand said it undermined the general principle that no change to existing WTO commitments should leave WTO members worse off.


It's not the only gripe Australia has with the EU on agricultural trade. Some Australian beef exports enter the EU under a 45,000-tonne quota shared with other major beef exporters.


Australia typically grabs about a 25% share of this quota, but in June the EU, under pressure to offer concessions to US President Donald Trump, agreed to give the US exclusive access to a significant and growing slice of the quota - eventually 35,000 tonnes of it - leaving Australia potentially at a disadvantage.


Australia has been negotiating an FTA with the EU for more than a year, but it's not yet clear the extent to which negotiators will be able to loosen the Europeans' restrictive regime.


The EU offered significant concessions in its recently concluded FTA with the Mercosur group of Latin American countries, but a political backlash immediately arose in Ireland, France and elsewhere - and it may yet send that deal back to the drawing board.


- Financial Review

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