We still do not know the final details of the Australia trade deal signed off by cabinet last week – but what we do know is the ‘shape of the deal’.
Australia is to obtain tariff and quota free access to the UK market in agricultural goods – with domestic farmers protected by having this access phased in over 10-15 years. Additionally, Britain’s less-intensive farmers will be protected from the more ‘industrial methods’ (for example, the use of hormones in livestock rearing) used down under by the strict adherence of the UK’s existing farming and sanitary and phyto-sanitary (SPS) restrictions to imports.
So far so good, argue free trade Brexiters.
However, scratch the surface and there is a whole host of problems here, many of which encapsulate both the difficulties – and the delusions – of Brexit.
The first issue, it is not even clear the UK can keep out hormone-injected beef from the UK – even if it wanted to. The fight on access to the EU market by the big meat exporting countries who use hormones in livestock is now well into its 4th decade. And the reason why the EU has been successful in this has far more to do with its immense size & heft as a trade bloc than on any accepted international consensus. Indeed the World Trade Organization (WTO) has tended to rule against the EU on this matter.
What does this mean for Britain?
It means that the UK’s ability to keep out hormone-injected beef and other such products, that are both more competitive and (according to all consumer surveys) unwanted by the British public, rests on the government’s capacity both to resist WTO consensus as well as withstand the immense pressure from the very countries it so desperately seeks trade deals from. In other words, the much-heralded sovereignty case for Brexit – being able to do one’s own deals – is leading to outcomes where the UK is forced to submit to standards it itself has rejected.
Which brings us to the next problem.
This ‘desperation’ for trade deals – to prove that leaving the EU was the right policy – is leading to a perverse outcome that the UK is now the only country in the world undertaking trade deals for political, rather than economic, reasons. If anything guarantees other states viewing the UK as an “easy touch” this is it.
Economic case for deals barely discernible
The next point is that the economic case for many of these trade deals is barely discernible. The government’s own research posits a potential 0.02% boost to the economy of a trade deal with Australia, while under some measures a free trade deal with New Zealand could actually turn out to be negative. This is logical given their distance from the UK, size and competitive advantage in the high tariff agricultural sector. However, essentially what the UK government is asking farmers to do is to sacrifice themselves for trade deals that will at best deliver an economic gain equivalent to less than a ‘rounding error’.
There is also the added problem that the more urbanised, high density England relies much less on farming compared with the less populous ‘Celtic fringe’ of Scotland, Wales and Northern Ireland. In other words, the very places that have experienced the greatest secessionist pressure post 2016 are those parts of the UK that will be the most negatively impacted by these trade deals. Indeed, Northern Ireland is likely to suffer doubly as not only is its beef/lamb sector relatively large, but the more standards diverge from the EU, the more complex the border issue becomes – regardless of whether one speaks of a GB-NI or NI-Ireland one.
Where does this leave the UK and its farmers?
In all likelihood, without serious political pressure being applied, UK farmers face higher competition, at the same time as it loses its EU market, and the UK itself faces immense pressure to lower farming/SPS standards to Australian & US levels. The only way out of this cul-de-sac is for the UK to bind itself to existing European regulations inside a European Customs Union.
But, then if it were to do that, what would have been the point of leaving the EU in the first place?