UK’s Liz Truss was warned of blow to food sector under Australia and New Zealand trade deals

LONDON — Conservative leadership hopeful Liz Truss was given detailed warnings by her own officials in 2020 that post-Brexit trade pacts with Australia and New Zealand would shrink the country’s farming and food sectors, newly obtained government figures reveal.

Data from the U.K.’s trade department — shared with POLITICO and prepared for both deals ahead of the launch of negotiations in 2020 — for the first time details the relative losses and gains expected for each part of the British economy before Truss, then-trade secretary and now running to replace Boris Johnson as U.K. prime minister, forged ahead with pacts that have proven highly controversial with farmers.

The disclosure has already sparked anger from the U.K.’s farming lobby, which has long argued the deals — held up as a key prize of Britain’s freedom from the European Union — will hit its members hard, while campaigners argue it shows tighter scrutiny of those deals is needed.

“It’s simply infuriating that the government ploughed on in its negotiations while, as these own government department reports show, ministers knew that British agriculture was likely to be the most impacted sector, putting at risk hundreds of millions of pounds and thousands of jobs,” said Minette Batters, president of lobby group the National Farmers’ Union.

The trade department said it does “not sign trade deals which do not work for U.K. producers and businesses.”

The data was obtained through a Freedom of Information request lodged by former Shadow Trade Secretary Emily Thornberry and shared exclusively with POLITICO, which has separately interrogated and verified the data.

It shows that:

— Officials advised Truss an Australia deal would spark a 3.44 percent shift in employment away from the semi-processed foods sector over 15 years, making it the hardest-hit part of the U.K. economy in employment terms.

— At the same time, the department projected a 0.46 percent drop in the value of that sector to the U.K. economy under the Australia deal.

— For the New Zealand pact, Truss was warned to expect a 2.69 percent shift in employment away from semi-processed foods to other sectors, and a 2.97 percent hit to its economic value.

— Agriculture, forestry and fishing were also set to take a hit, the analysis showed. The department projected a 0.69 percent long-term shift in jobs away from agriculture, forestry and fishing under the Australia pact, and a 0.16 percent dip to the sector’s value over the same span.

— For the New Zealand pact, Truss was advised agriculture, forestry and fishing would see a 0.60 percent shift in employment away from the sector, and a 0.85 percent blow to its gross value.

The data was obtained through a Freedom of Information request lodged by former Shadow Trade Secretary Emily Thornberry | Dan Kitwood/Getty Images

The projections were made under the department’s “Scenario 2,” an outcome that most closely resembles the final deals struck with each nation.

Backstory

British ministers have long held out the prospect of wide-ranging free-trade deals with Australia and New Zealand as a key post-Brexit dividend, but domestic food producers have been wary.

Truss, who formally launched her candidacy to become the next prime minister this week with an article talking up her trade experience, laid the groundwork for the deals with Australia and New Zealand after being appointed trade secretary by Johnson in July 2019. She oversaw negotiations until her appointment as foreign secretary in September 2021.

She reached a preliminary deal with Australia in June of last year. Her successor Anne-Marie Trevelyan sealed the pact with New Zealand in early 2022, although negotiations happened largely on Truss’ watch.

The Department for International Trade (DIT) released public assessments of its deals with Australia and New Zealand in 2020 when the talks were launched. However, these public assessments only outlined whether the impact to each part of the economy would be “negative” or “positive,” without revealing the underlying numbers.

It’s those projected changes that are revealed by the underlying internal data, and show the level of insight the department under Truss would have had over the trade-offs.

That the deals would hit British agriculture and food production the most has been an open secret in government, according to a former Department for International Trade (DIT) official who helped lay the groundwork for the deal with Australia.

In a meeting attended by DIT, Treasury and Department for the Environment (DEFRA) officials “it was made clear that trade deals would prioritize more profitable sectors of Britain’s economy,” they said, adding that such comments appeared to be aimed at DEFRA officials in the room.

A DIT spokesperson said in a statement: “Our trade deals with Australia and New Zealand include robust safeguards to protect our agricultural sector while also unlocking billions of pounds of bilateral trade, and paving the way to join the £9 trillion combined GDP Trans-Pacific Partnership.”

Labour’s Shadow Environment Secretary Jim McMahon told POLITICO ministers had been “warned these deals were likely to damage our farming communities, and now it looks like the government knew all along that it was risking thousands of jobs and huge value to the British economy.”

It is difficult to directly compare the 2020 analysis to more recent government work on the economic impact of the final deals agreed with Australia and New Zealand, as the department changed the way it calculates the figures in 2021, in a move it argues has brought it more into line with international standards.

The most recent impact assessment for the now-signed Australia deal shows a 0.70 percent hit to the value of the agriculture sector, and a 2.65 percent fall in value for semi-processed food. Yet it anticipates only a 0.01 percent and 0.02 percent shift in jobs away from each sector respectively.

The final deal with New Zealand fares better than projected in 2020 under the new methodology. It shows a 0.35 percent fall in GVA for agriculture and a 1.16 percent fall for semi-processed food. It now forecasts no change in agricultural jobs’ share of employment and a modest 0.01 percent drop for semi-processed foods.

The DIT spokesperson said: “We have significantly improved our modeling methodology to be more robust than our early scoping assessments and are transparent about how we model the impacts of a trade deal.”

But Tim Lang, a food security expert and professor emeritus of food policy at City University London, warned that “whatever comes from the new Tory PM process or the next election, food matters won’t go away.”

“The danger is that by downgrading U.K. food production, it puts the U.K. at risk of future price or supply disruptions,” he said. “If you drive workers away, put farms out of business, you reduce options ahead, and you make crisis intervention later all the more likely.”

Batters, the top farming lobbyist, said free-trade deals “can provide opportunities for Britain and its farmers,” but said those deals “must be balanced and offer benefits for both sides, including safeguards for sensitive sectors, something the Australia and New Zealand deals did not.”

The publication of the data also comes amid a bitter row over the scope afforded to U.K. lawmakers to properly dig into the detail of both agreements. The Australia deal is expected to pass parliament on July 20, but the government has not called a debate in the House of Commons.

Orla Delargy, head of public affairs at food and farming group Sustain said: “It seems extraordinary to us that the first post-Brexit deal, which will disadvantage U.K. farming communities, is going to be ratified by default. Parliamentarians should be calling for a debate and refusing the ratify the deal until it has been scrutinised properly.”