Newton Emerson: Australia trade deal points to future for Northern Ireland

The UK-Australia trade deal, now in a decisive stage of negotiation, raises fundamental Brexit issues for Northern Ireland that have yet to even register in political debate.

Two years ago, the UK government published a report strongly advocating a free-trade agreement with Australia. It contained an economic analysis that found “less liberalisation” – keeping some tariffs and quotas – would add to long-term growth in every UK region. However, a deal with “greater liberalisation” would reduce growth in Northern Ireland, uniquely out of all UK regions, because agriculture and food processing are larger parts of its economy compared with Britain.

The report suggested developing the sectors in Northern Ireland that would benefit from free trade with Australia – vehicles, machinery and pharmaceuticals.

This is how London imagines the general future of Brexit. Talks with Australia are seen by both sides as a 'test run' for UK trade negotiators. The 2019 report says an Australian deal should be the model for further deals with the United States, New Zealand, Canada, Mexico and seven other trans-Pacific nations. Although the impact of each deal on the UK economy will be trivial, their cumulative effect could be substantial.

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The government claimed its report was “informed by one of the biggest consultations ever undertaken with the UK public, businesses and civil society”.

But Stormont had collapsed at the time and there has been no evident public discussion about swapping Northern Ireland’s farms for factories.

Few people are looking at where Northern Ireland might fit into a buccaneering future designed for the UK as a whole

The issue finally broke through this week with a UK cabinet split over how liberal the Australian deal should be.

Farmers across Britain fear for their livelihoods and farming, like fishing, has an outsized political influence. Sectoral bodies such as the UK Farming Roundtable, which includes the Ulster Farmers Union, receive a special hearing on trade deals.

While UK agriculture is speaking with one voice, it is not talking about the same things. Agrifood in Britain is a small industry, worth 2 per cent of GDP. Protecting farmers is seen as almost a conservation activity – defending Welsh hill farms from Australian lamb, in this instance.

Britain is dependent on imported food; securing cheap imports has been promoted as a key advantage of Brexit.

Northern Ireland is hardly an agrarian society: agrifood is only 4 per cent of its economy. However, the region is a food exporter and considers food processing an innovative, export-focused industry, which gives the issue a completely different context.

This does not mean the UK government’s vision is wrong. Northern Ireland already exports more vehicles, machinery and pharmaceuticals to Australia than food. Those industries might be where the region’s trade advantage lies; they might also offer more secure growth and better quality of employment.

The point is that Northern Ireland is barely having this conversation. It is talking about the symbolism of the protocol and the practicalities of the sea border, most of which can hopefully be resolved. The opportunities of dual market access are occasionally mentioned, more in hope than expectation. But few people are looking beyond this to where Northern Ireland might fit into a buccaneering future designed for the UK as a whole.

There is clearly hope in London and Belfast that potential trade partners will write off food sales to Northern Ireland as too small to scupper a UK agreement

How does Stormont imagine the North’s economy developing? What sectors should it prioritise? What can it realistically lobby London to protect? The matter goes beyond economics. Consider the cultural impact on a whole generation in the Republic from one wave of post-crash emigration to Australia.

These questions require asking what Brexit is for. Unionist Brexiteers in particular should be offering a coherent answer.

Admittedly, it is difficult to pin down answers when so much of how the protocol affects trade deals is unknown. The UK government’s report did not attempt to model the protocol’s impact in its analysis.

An agreement with Australia should provide essential clarity.

Northern Ireland has lopsided access to UK deals under the protocol.

In the case of an Australian agreement, the North could export on the same terms as the rest of the UK but goods from Australia would be obstructed at the sea border for various reasons, including tariff and regulatory differences. Most notably, there would be a complete ban on Australia’s hormone-treated beef and other agrifood not meeting European Union health standards.

This could result in a best of both worlds, at least from a Trumpesque perspective, where Northern Ireland could sell food to Australia but Australia could not sell food to Northern Ireland.

It seems certain Australia will want to address this, although it is uncertain how. Excluding regional products from a deal may not be practical or lawful.

There is clearly a great deal of hope in London and Belfast that potential trade partners will simply write off food sales to Northern Ireland as too small to scupper a UK agreement overall. We will know soon enough, as negotiations with New Zealand, even more focused on agrifood, are also at an advanced stage.

In the meantime, the lack of curiosity within Northern Ireland is remarkable.