Financial Times (18/02/2019) - The UK will struggle to conclude the same high quality free trade deals as the European Union due to its small size and continuing uncertainty over Brexit, the EU’s agriculture commissioner has said.

Phil Hogan, who was visiting Australia for talks on an EU-Australia free trade agreement, also warned that a no-deal Brexit would result in a big jump in food prices in the UK, a move that would cause the public to punish those responsible at the ballot box.

“Size matters in trade,” Phil Hogan told the FT in an interview.

“Five hundred million customers will always resonate more with a third country when they want to do a trade deal with the EU, rather than 65m. This is what Mr [Liam] Fox is finding out as he travels around the world. Japan recently told him: ‘Come back to us when we see the implementation of the EU deal’.”

Mr Hogan said the EU had 54 existing trade deals around the world and London would find they won’t be able to get the “same terms and conditions” when they have to revisit these agreements post Brexit.

Mr Hogan said Canberra wanted to conclude a free trade deal with the EU this year and was giving priority to these negotiations, rather than talks with London over a future trade relationship. He signalled a political agreement on a deal could be in place before May, when the European Parliament and Australia will hold elections.

“The uncertainty in the UK is not helping these [UK-Australia] negotiations . . . They [Australians] don’t know what regime will be in place with the UK and when it will be available to intensify these negotiations or if there will be a transition period or not in the future relationship between the EU and the UK,” he said.

“In the meantime, they [the Australians] are intensifying the negotiations with the EU with the intention of doing an FTA deal this year.”

Australia’s government has said it is pursuing EU and UK trade deals, although it cannot formally begin talks with London until it has formalised its plans to leave the EU. In the event of a no-deal Brexit, Canberra has indicated it wants to negotiate a fast track trade deal to minimise disruption for business.

The EU is Australia’s second-biggest trade partner with bilateral trade in goods worth almost €48bn in 2017. Bilateral trade in services is worth an extra €27bn. The UK is Canberra’s fifth-largest trading partner — with two-way trade valued at A$27bn ($19bn) — and the second-biggest foreign investor in Australia, after the US.

Alan Oxley, managing director of ITS Global, a trade consultancy based in Melbourne, said confusion over the UK’s Brexit position would probably prompt Australian negotiators to sit on the sidelines until London’s path forward became clearer.

He said Canberra wanted to liberalise investment flows between the two countries, particularly since the UK was the second-biggest investor in Australia. But he said agriculture could be a sticking point.

“Australian beef farmers will want greater access to the UK market, which will be a sensitive issue for farmers. This will prove to be a tricky issue to settle.”

Mr Hogan warned that the UK would probably experience a “major increase in food prices” in the event of a no-deal Brexit, with no transition period during which existing EU rules and tariffs would remain in place.

“The UK is 60 per cent self-sufficient in food — if they don’t get a frictionless trading arrangement on food between the EU and UK in place then you will have a major increase in food prices for the UK. I don’t think this will be politically popular.

“The people that will cause any difficulty about bringing this situation about will not be rewarded by their constituents when it comes to the election.”

Read more at https://www.ft.com/content/1f8cbbf2-334b-11e9-bd3a-8b2a211d90d5