Friday 15 May 2020

Trade conundrums and worried farmers

This week the government published its 'approach' to negotiating a free trade deal with Japan. This is the one we've already got via the EU but will lose at the end of the year. We actually want it to continue and therefore we have to re-negotiate. I don't think it will be too difficult but the sad fact is that (a) it's not worth much - about £30 billion in total  both ways and (b) whatever is agreed will be worse than we have now.

But more than that the foreword to the document has this little gem :

That is why we will use our voice as a new independent trading nation to champion free trade, fight protectionism and remove barriers at every opportunity. The government’s ambition is to secure free trade agreements (FTAs) with countries covering 80% of UK trade within the next three years, to become a truly Global Britain

We apparently want to have 80% of our external trade under FTA's within three years and we plan to start by walking out on the deal which governs 50% of it - over £600 billion. The government's offhand approach to the EU and threats to walk out seem at odds with its own declared ambition. If we do not get a free trade agreement with the EU, deals with the USA, Japan, New Zealand, Canada, South Korea will never make up for it. 

It's a snakes and ladders game where there are no winners and we are deliberately setting the odds to make landing on a snake far more likely anyway. It makes no sense to me.

None of this is going to be helped by a WTO on the verge of collapse. DG Roberto Azevedo has announced plans to quit with a year or more of his contract still to go. This is as a Democratic party bill enters the House of Representative in the USA to begin the process of withdrawing from the WTO altogether. The Americans are already paralysing the appeals function that rules on disputes between nations by blocking new appointments to the appellate panel and will likely block Azevedo's successor as well, assuming the fractious 160 member bloc ever manages to agree on a replacement candidate anyway. Reuter say the WTO has been hit by an array of crises and is "already on the brink".

The FT had a piece yesterday from our old friend Peter Foster, formerly of The Telegraph, about the Department of Trade apparently shaping up to make a "big concession" to the Americans in order to secure a free trade deal. He tweeted about it:

It involves dropping all agricultural tariffs but keeping EU standards.  George Eustice at DEFRA is not happy about it and the farming lobby see it as a wedge that will eventually lead to a lowering of standards and the destruction of many UK farming businesses.

Even a lowering of tariffs will make a deal with the EU even harder I would have thought.

Farmers may well be worried since an amendment to the Agriculture Bill, tabled by a Tory MP, Neil Parish (Tiverton and Honiton), would have prevented the import of agricultural and food products into the UK after Brexit under a trade agreement unless they are “produced or processed according to standards which are equivalent to, or which exceed, the relevant domestic standards and regulations in relation to - (i) animal health and welfare, (ii) plant health, and (iii) environmental protection.” This was New Clause 2 (NC2) which went to a vote at the report stage on Wednesday this week.

The result was the government defeated it by 328 – 277.

One has to question why 328 mostly Tory MPs vote against and amendment that would have put onto a legal footing something they have already committed to anyway?

The NFU are right to be concerned. Eliminating tariffs seems to be just the beginning.
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