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The UK-Australia Trade DealA Tale of Brexit Insanity
Otto English dissects the disadvantages that a free trade agreement between the two countries would bring to the UK
Let me tell you the story of the proposed Australian-UK free trade deal. A tale so mad that once you get to the end of it, you will probably find yourself banging your head against the table in front of you in despair. So perhaps don a bicycle helmet before we proceed.
Ready? Good – let’s go.
Now, you might, very reasonably, think that you have better things to do than to read about the Australian-UK free trade deal. There’s probably a wall of paint somewhere that you would perhaps rather watch dry or a sock drawer to rearrange. But the tale serves as a fascinating and depressing illustration of where the UK is currently at with regards to Brexit, international trade and international relations and the Government doesn’t really want you to scrutinise things. It wants you to go along with the optics and question nothing.
Let’s deal with the numbers first of all.
Whatever you might have been told – or believed – about the ‘failing EU project’, it is the world’s second-largest economy and still, by far, the UK’s biggest trading partner. In 2019, the UK’s exports to the EU were worth £294 billion and accounted for 43% of all of our outward trade. Since leaving the EU, that figure has dipped, fairly dramatically, but it remains our biggest market and is usefully on our doorstep, so that makes sense.
Unfortunately, all of this poses something of an existential crisis for the Brexiters. Because leaving the EU, after all, was in part about ‘making trade deals with the rest of the world’. And, for some, like the Peruvian-born former Conservative MEP, Daniel Hannan, it was about reconnecting with the neglected Commonwealth and regaining our place as a top player in the world.
And that’s why Australia matters.
British people like Australia. Opinion polls consistently rank it in the top three of Britons’ favourite nations alongside Canada and New Zealand. When you say ‘Australia’ to Brits, they think of warm seas, sandy beaches, barbecues and nice wine; Kylie Minogue, clean cut soap operas and the comedy stylings of Dame Edna Everage. Australia also features the UK’s flag on its flag, has our Queen on its money and drives on the left. Australians speak our language and many – but by no means all – of them are descended from British settlers. Hannan calls them our “kinsmen”.
Boris Johnson needs a Brexit win – and Australia, a nation so beloved of British people, looks like the obvious candidate. It ticks all the boxes and makes for some great Sun front-page spreads. But there is a problem. Actually, there is a whole Pandora’s box of problems.
No Care for Logic or Economic Reality
Firstly, there’s the distance. It’s one thing to export goods tariff-free across the English Channel, quite another to send them 9,444 miles away.
Quite apart from the CO2 emissions, there are added costs and added logistics and all of that amounts to added headaches. As such, the UK doesn’t actually export that much to Australia. And – whisper it quietly – that is why it has never really needed an free trade agreement with it in the first place.
The proposed deal might help boost sales for the Scottish whisky trade and possibly the London beer trade, which exported £40 million worth of beverages to Australia in 2019. But the Government’s own figures show that the deal would, at best, only increase exports to Australia by some 7% and add 0.01% to GDP (about £500 million) over the next 15 years. That 0.01% is roughly akin to the GVA (Gross Value Added) to the UK economy by the Harrods department store in Knightsbridge in 2020.
Currently, the only people likely to benefit from the deal are Australian farmers. For while the rise in UK exports to Australia will be fairly negligible, the boost in trade the other way could be as much as 83%. Australia is the second-largest producer of beef and lamb in the world and the UK is a ready-made export market, ripe for exploitation.
Were Australian farmers to be granted tariff-free access to the UK, they would be able to flood the market with cheap imports that would undercut domestically-produced meat. That would have a devastating effect on farming and particularly on hill farmers in Wales and Scotland. At its worst, it could wipe out the market beyond rare breed and top end, for example, for organic meat.
As with poultry, British lamb and beef is produced to the highest standards of welfare in the world, courtesy of the UK’s years of EU membership. Australian meat, by contrast, is reared fast and cheap and treated with growth hormones that have long been banned in the EU.
So not only could British domestic production be decimated, but the UK could also be eating inferior beef and lamb, reared to standards previously outlawed in this country. All for the sake of a 0.01% injection into the UK economy – or, in the best-case scenario – 0.02% over 15 years.
No deal can replace the one that the UK had with the EU. That’s not ‘Remoaner’ talk, it is plain and obvious fact. And the Government knows that and its friendly stable of tamed tabloid journalists – who pretend otherwise – know that too. It is essential to both camps that you and I don’t work it out – that we are kept in ignorance and instead cheer ‘huzzah’ for the thin gruel on offer.
The free trade agreement with Australia is about optics and, yes, about tapping into those Hannan-esque yearnings for a world in which Britain headed a great big Empire and was top dog. Daniel Hannan and his fellow travellers believe in something called CANZUK, a fetishist nonsense in which Canada, New Zealand, Australia and the UK unite in a trade deal and sing Rule, Britannia! – or something.
It is not rooted in logic or economic reality – but in whimsy and fantasy. And, in that, we have the Great British Brexit summed up.
For, at the end of the day, none of this makes sense and none of this benefits any of us. Not even the most credulous Brexit believer. It is the politics of Johnsonism – a philosophy predicated on serving the ego and career of the Prime Minister and his acolytes.
The Government needs a trade deal with Australia because it needs a Brexit win. It needs to fuel the fantasy, much as the Aztecs believed that they needed to fuel the Sun with human sacrifice lest their whole world would fall apart. Logic and sanity play no part as long as it thinks it can get away with it – and the Government believes that it can. Depressingly, I think it’s probably right.
Now: permission to bang your head on that table.