The Australian trade deal has certainly created a lot of column inches considering it isn't even settled yet, with arguments raging Brexit-like, for and against. Dominic Lawson in The Sunday Times is, as you might expect, all for it and seems unperturbed by any potential negative impact on British farmers: A bogus beef with our Australian cousins. He says Australia exports only a small amount of beef (1567 tonnes) to the UK every year and anyway, he thinks people want cheaper food and that’s OK, no matter what.
Lawson is not an expert on beef (or anything else - he's the son of a former Conservative chancellor). The BMPA (British Meat Processors Association) who are, in a press release, say the amounts are of less importance than the type of cuts:
Aussie Free Trade DealThose in the know understand why a small volume of imported meat can have a disproportionately big effect on British companies.And it's something our trade negotiators may have missed.— BMPA (@BMPA_INFO) May 21, 2021
A container of frozen beef is 17 tonnes and if that was made up of cheaper cuts it might equate to meat from 60 animals. A similar shipment containing only boneless sirloins (high value) would have come from over 1000 animals. If it were fillet steaks it could be 3000 animals.
Australia has already talked about sending high end cuts and the BPMA point out that if this was all fillet steaks, it could have a big impact. The way the business works is that the low end products like mince are often sold below cost, with the more expensive cuts making up for it.
If our market is flooded with low priced high quality fillet steak, our farmers will be forced to compete at a loss, making their own domestic market unsustainable. The Aussies meanwhile sell their cheaper cuts to Asia on which they still make profit. I note Dr North recently mentioned a potential trade war with China, in which case we may get flooded with a lot more beef of all types anyway. The BMPA say:
"The kind of sustained competition from overseas imports for the products that make up the profitable component of Britain’s meat production will inevitably impact both processing companies and farmers, forcing some out of business and weakening the UK’s domestic food security."
Later, Nick Von Westenholz, Director of Trade and Business Strategy for @NFUTweets, who is a farmer (or at least lives on a farm) tweeted a long thread in reply which comprehensively dismantles Lawson's article:
I see Lawson is at it again. While I tend to think ad hominem arguments are generally a “bad thing”, given his personal attacks this morning I’m happy to suspend that belief briefly. 1/https://t.co/QyTDvZOWVr
— Nick von Westenholz (@nvonwestenholz) May 23, 2021
He makes some key points.
Lawson says Aussie beef, if it increased ten fold (as some Aussie producers have said it would) would be 18,000 tonnes, but Australia exports 1.4 million tonnes a year and who knows, once a trade deal is signed, what that 18,000 tonne total might become.
The deal also sets a precedent for others like the USA to follow. Mr Von Westenholz refers to Lawson saying British farmers are subsidised but fails to mention it is being phased out. He also says if we tried to subsidise British beef farmers separately the Australians and Americans would object and under WTO rules would have a good case.
Next, we learn that Australia has high SPS standards so it's all but impossible for UK farmers to export UK pork to Australia and they do a big trade in live animal exports which we are about to ban. This is a practice that gives Australian farmers an advantage that would eventually be reflected in the frozen beef they will be exporting here. He also says it's not black and white or a binary choice between free trade and protectionism, but fighting your corner in a trade deal, using tariffs and quotas to level the playing field to ensure both sides win.
We are simply sacrificing farmers in order to get a quick trade deal.
I see elsewhere, that a potential UK-Norway trade deal is "close to collapsing as Christian-Democrats block [trade] pact to protect farmers from British beef and cheese." If tiny Norway can do it, why not us?
The problem with Lawson’s argument is that you can say it about everything. We used to lead the world in shipbuilding and railways and have a sizeable machine tool, aircraft, car and motorcycle making sector as well as hosiery, and a host of other things too.
It was so easy to say if our own industries can’t compete, let them go to the wall and that is what they did. The PM now talks of the "huge opportunities" of Brexit but when you look around you find we haven’t got the strong domestic, British owned industries needed to compete and therefore we don't have the means to pay for all the stuff coming in from overseas. Hence the perisistent and growing trade deficit.
Trade deals are easy if your objective is to trample all over your own producers. In fact, one might say this is the central problem the UK. faces. Successive governments have prioritised low priced imports of virtually everything at the expense of our domestic industries.
Brexit is simply the continuation of that process since EU members don’t see the world in binary terms of protectionist v free traders and hence they tend to protect their producers more than we do - and seem better for it.
Finally, the diverting of the Ryanair jet to Minsk by Belarussian authorities yesterday to arrest a journalist was deeply shocking. It was an EU registered plane, flying between two EU (and NATO) states and was effectively hi-jacked. I wouldn't bet on the poor old journalist Roman Protasevich surviving very long unless very strong action is threatened.
This sort of thing is a reminder of how much more economic power Europe has if and when it acts together. This is a big test.
