This feels rather like the Brexit political economy chickens coming home to roost. 👇
As experts stressed before & after the referendum, the politics of trade deals comes down not just to aggregate economic outcomes but industrial/sectoral interests...
As experts stressed before & after the referendum, the politics of trade deals comes down not just to aggregate economic outcomes but industrial/sectoral interests...
https://twitter.com/pmdfoster/status/1394555513497661440?s=20
...In theory everyone wins economically from reducing trade barriers.
In practice the economic impact is uneven across different sectors of the economy - and that's often a political barrier to doing trade deals...
In practice the economic impact is uneven across different sectors of the economy - and that's often a political barrier to doing trade deals...
...The government's own modelling analysis shows a positive (albeit small - 0.01-0.02%) long run impact on UK GDP from a UK-Australia free trade deal...
assets.publishing.service.gov.uk/government/upl…
assets.publishing.service.gov.uk/government/upl…
...but UK agriculture experiences a negative impact in the government's (completely standard) modelling...
...why?
Because Australia has a comparative advantage when it comes to agricultural production (think land, weather but also, perhaps, lower standards)...
Because Australia has a comparative advantage when it comes to agricultural production (think land, weather but also, perhaps, lower standards)...
...Which is why the government's analysts concluded that:
"Australian producers may be able to supply domestic retailers and downstream producers at lower cost than domestic [UK] producers"....
"Australian producers may be able to supply domestic retailers and downstream producers at lower cost than domestic [UK] producers"....
...So we really shouldn't be surprised that the agricultural lobby is fighting hard (via Defra) against this US-Australia free trade deal - the government's own analysis says it will be harmful to UK farmers....
...And the apparent power of that lobby arguably shouldn't be surprising to a government that prioritised the interests of the economically tiny but politically influential fishing sector over the vast financial services sector in the Brexit negotiations.
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