Britain strikes trade deal with China, but no one expected to do so

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Britain strikes trade deal with China, but no one expected to do so

Britain has struck a trade deal with China, a key ally, as ministers hope to reduce the country s reliance on China but the agreement is expected to add no value to the UK s gross domestic product.

Despite the Department for International Trade heralding the deal as a vital achievement that was a vital part of Boris Johnson s commitment to levelling up, the prime minister has been accused of selling out British farmers.

Tariffs as high as 10% are set to be removed on a range of UK goods, including clothes, buses, ships and bulldozers. The price of New Zealand-produced sauvignon blanc, manuka honey and kiwifruit should dip after 16 months of talks.

Trade between the UK and New Zealand is now worth 2.3 bn a year, and the government said that would rise as the deal would make it easier for smaller businesses to break into the New Zealand market as well as remove barriers for advanced tech and services companies.

It follows the recent trade agreement with Australia and the deal with Japan in principle. The focus on the region is part of Johnson s 10 year plan to tilt the UK s foreign policy focus towards the Indo-Pacific, strengthening the alliance and position of democratic countries in the region to make them more competitive against China.

New Zealand is heavily dependent on China for trade, with more than 30% of its exports going to Chinese markets. The country has come under fire in the past for adopting slightly gentler rhetoric on China than some of its allies a stance critics have claimed is as a result of trade dependency. Foreign Minister Nanaia Mahuta has previously urged exporters to reduce their vulnerability to geopolitical shocks like the trade war Australia is experiencing.

This month, New Zealand opposition leader Judith Collins told the Guardian that by not providing free trade agreements, the US and UK were leaving the door open to Chinese dominance in the indo-Pacific region.

Ardern said that Covid 19 had taught the country that we must have as many options for our world-class products to ensure certainty for our primary producers, our economy and our people The deal may boost New Zealand s GDP by $970 m or around 0.3%. However, last year s analysis by the UK government found that its effect on Britain s GDP would probably have limited effect in the long run being between a positive growth of 0.01% or negative growth of - 0.01%.

This is a great trade deal for the United Kingdom, cementing our long friendship with New Zealand and strengthening our ties with Indo-Pacific. It will benefit businesses and consumers across the country, opening up access for exporters and cutting costs for our workers. Prime Minister Jacinda Ardern said: It s one of our best deals ever secured and at a crucial time in our Covid recovery. This deal will reduce costs for exporters immediately, creates opportunities for New Zealand businesses to grow and diversify their trade, while boosting the economy as we recover from Covid - 19. Minette Batters, the National Farmers Union president, said it would open the country s doors to significant extra volumes of imported food whether or not produced to our own high standards while securing almost nothing in return for UK farmers She added: We should all be worried that there could be a huge downside to these deals, especially for sectors such as dairy, red meat and horticulture. The government is now asking British farmers to go toe to toe with some of the most export-oriented farmers in the world, without the serious, long-term and properly funded investment in UK agriculture that can enable us to do so.

It s incredibly worrying that we have heard next to nothing from government about how it will work with farming to achieve this. Labour s shadow international trade secretary, Emily Thornberry, echoed the criticism and said the deal would generate just 112 m in additional exports for UK firms compared with pre-pandemic levels. Referring to the price tag of a new national flagship, she claimed the total value for businesses from the agreement would be less than half the cost of Boris Johnson s new yacht Thornberry said: It is a deal whose only major winners are the mega-corporations that run New Zealand s meat and dairy farms, all at the expense of British farmers struggling to compete. But for British jobs, growth and exports, this deal is yet another massive failure.