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Hello from Brussels. Enthusiastic about global and vaccine-related issues, we are now catching up with local news, especially the trade agreements being negotiated between the UK and Australia.British journalists last week A sure break In the EU’s stance on agriculture that it inherited (despite us) Goding, We do not claim credit) And for more than 15 years, we meet Australia’s request to reduce tariffs on farms to zero. Wait a minute, you say, the British government has promised to protect its farmer-sensitive sector.Now, those peasants can join the crowded “Boris Johnson shouldn’t have been trusted” enclosure with the British. Fishery, Business Northern Ireland, The company to deal with Technical barriers When exporting to the EU and numerous political and personal acquaintances.It doesn’t seem they didn’t have Literally decades Of warning.Someone else about it Apparently yesterday.

In the context of its UK-Australia trade, a major part of today focuses on the often misunderstood issue of food and agricultural standards. Chartered Waters We will revisit how “Phase 1” transactions between the United States and China are conducted without the slump in the manufacturing industry due to the pandemic.

We want to hear from you.Send your thoughts to trade.secrets@ft.com Or email me at alan.beattie@ft.com

A stadium where Britain is difficult to level

It is a category that we analyze the UK’s view of Australia’s bilateral agreement, not part of the spectacular stage of the global British free trade yose, singing and dancing all, but primarily as an economic project. I am aware that it is a mistake. However, since it is our brand that carefully ignores entertainment and pays attention to details, we will bow down.

Some Brexitters are now cheerfully wondering what they have signed up for, I complain The UK is trying to sell out farmers by allowing them to fall below the norm. Australian agriculture uses processes and techniques (export of live animals, herbicides such as paraquat) to produce commodities that are banned or phased out in the UK (old fellow chemically washed chicken and hormone beef). Certainly you are allowed to do so. The UK government has reportedly countered this by proposing that the zero tariff system is only available for products that meet British agricultural standards.

There is a mess here that needs to be sorted out. From a standard point of view, Australian trading is less worrisome than critics think. However, the UK Government’s obvious solution does not make a big difference to these challenges it poses.

First, chemical chicken and hormonal beef are a little red herring, if you allow the mixed metaphor of cooking. Food safety is “Hygiene and phytosanitary(SPS) states that according to the rules of the World Trade Organization, any country can require all agricultural products sold in its market as long as these standards are based on accepted science.It’s not a trivial condition: the United States has won WTO case Opposing the 1997 EU ban on hormonal beef, Brussels had to acquire the United States by initiating a new import quota for non-hormonal beef. However, signing a trade deal with Australia does not automatically force the UK to accept hormone beef or chemically washed chicken. UK SPS rules will continue to apply unless you choose to change. In fact, the same is true for very strict SPS measures for products such as Australian pork.Australia has another already established Hormone free Beef sector with new market access to the UK.

The tricky problem is requiring foreign farm exporters to meet broader animal welfare or environmental standards.Process and manufacturing method“. The standards here are difficult to justify under WTO rules because they are vulnerable to protection trade principle abuse, but writing them in bilateral or regional trade agreements, higher welfare or more sustainability We can offer lower tariffs on possible produce. There are some precedents here. Switzerland has a trade agreement with Indonesia, giving priority to palm oil. Certified as sustainable: The EU draft with the Mercosur block in South America does the same for eggs laid by Brazilian hens enjoying European-level welfare. Administratively it’s a bit annoying, but it’s not impossible, as exporters need to separate different batches of the same product under a single tariff classification.

So are Australian exporters conforming to UK standards, leveling the competition and everything is going well? Hmm. It is not clear if there will be a lot of leveling. Show British consumers a photo of a vast Australian feedlot in the blazing sun. It looks pretty tough when compared to the fairy tale pictures of the cheerful Mukau children mowing the grass on a Cheshire farm. But try writing a deal that imposes high standards on imports. I don’t know how it makes a big difference.

Both British and Australian officials have pointed out that Australian agriculture is not an area of ​​illegal atrocities.Intergovernmental World Organization for Animal Health, in Latest report Regarding Australian agriculture, he said that animal welfare standards were not well-tuned (set at the state level rather than the national level), but veterinary standards were generally high.

Most of the different standards will not make a difference in preferential trading with Britain. Australia generally has looser rules regarding live transport of animals, but then they never send live animals to the UK anyway. Most Australian states allow pig farmers to use “sow stalls” that keep pregnant sows in small enclosures, but sell pork to the UK even with zero tariffs. Will not be competitive enough. In Australia, there is a widely criticized practice called “mulesing”. It cuts a skin patch from the back of the sheep to prevent parasites, but is almost exclusively used by merino sheep raised for wool. Zero tariffsMany Australian politicians Maintain forest coverage With Climate science, But it is not directly related to a particular export.

UK farm lobbies have complained that such practices have helped Australia’s agriculture grow into a globally competitive superpower without any particular reduction in export costs to the UK. I will. However, Nick von Westenholtz, Director of Trade and Business Strategy of the National Farmers’ Union of the United Kingdom, admits: “Australian agriculture can be based on values ​​that are very different from most UK farms when it comes to issues such as animal welfare and the environment, but it’s not easy to turn around. It is incorporated into a specific set of standards that the UK can demand in return for many market accesses. ”

There are pitfalls.As many have pointed out, Australia is a medium-sized country on the other side of the world, but their cows Not small, but far away — Trading may set an important precedent. If the UK wants to follow different tariff paths on higher standard imports, it can end up in a series of difficult conversations about exactly what those standards mean.In particular, it opens a whole new line of attack U.S. farm lobby If a UK-US trade agreement arises.

If not a British peasant, Britain may have found a way to sell Australian deals to the skeptical masses. However, there may be more difficult conversations in the future. This is a show with more action going on.

Chartered Waters

Chad Bown of the Peterson Institute for International Economics did a great job of tracking whether the Phase 1 deal that Washington had agreed with Beijing during the Trump era met expectations. The main expectation is that China has agreed to increase the purchase of certain US goods and services from the 2017 level by $ 200 billion between January 1, 2020 and December 31, 2021. ..

By 2020, US exports to China were modest and trading was inadequate. 58 percent Where they should have been. Of course, there was a somewhat compelling excuse for the pandemic that closed factories around the world during the spring.

So what’s happening with this year’s trading now that exports are back on track? Not good.

According to the chart, the US exports to China that are the subject of this transaction are only 60 percent of what they should be. If world trade is booming but they are still in short supply, we are certainly very skeptical that they will reach their goals by the end of the year. Claire Jones

Trade link

Relationship between Brussels and Bern I’m on a rock. The EU is trying to convince Switzerland to sign up for a comprehensive framework that will replace the patchwork of existing agreements.But Negotiations are stuck.Europe Express I will explain why.

Details Tariffs on steel and aluminum, This time courtesy British government, This determines whether to fine-tune (and perhaps reduce) retaliatory tariffs on US products inherited from the EU.

TeslaStung in Shortage of semiconductor chips,have Said Not only paying the stock in advance, but also buying your own foundry. Before the supply was tight, we were able to buy chips at the last minute, in line with just-in-time supply chain technology common in the automotive sector.

Game console maker Nikkei reports Sony as follows, which is a little better say it ($, subscription required) We aim to produce at least 22.6 million PlayStation 5s next year, surpassing the 1998 record for console sales. Global demand for their machines surged during the blockade.

in the meantime, Russia is Ramp up (Nikkei, $) Export of air defense systems To a neighbor in Central Asia as the United States prepares to withdraw its troops from Afghanistan.

Bloomberg Call ($) The United States participates Comprehensive and progressive agreement on the Trans-Pacific Partnership To fight the rising power of Beijing in the region.We can see the discussion, but (as we wrote) HereWe do not expect the United States to sign up for the CPTPP soon. Alan Beatty and Claire Jones

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Food and farming: the UK ponders lower tariffs for higher standards Source link Food and farming: the UK ponders lower tariffs for higher standards

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