Thread by @DmitryOpines

1/ Since no one asked, here's a thread on the UK-Australia FTA.

Biases on the table:
- I was an Australian trade negotiator
- I have trained many of DIT's negotiators, likely including some of the ones working on this FTA
- I'm neoliberal scum who generally thinks tariffs = bad

2/ Like we all warned, most Free Trade Agreements, and all Free Trade Agreements including Australia, come down to agriculture.

Australian trade policy tends to be laser focused on getting beef, lamb, dairy and wheat into markets it's currently locked out of.

3/ Reports suggest that Liz Truss, with the Prime Minister's backing, is pushing to give Australian products complete tariff and quota free access to the UK market, phased in over 10-15 years.

Another faction, lead by Eustice and Gove is pushing back arguing for "TRQs" instead.

4/ Quick explainer break: TRQ's "Tariff Rate Quotas"

TRQ's are another way of doing tariffs, where instead of reducing a tariff (from say 25% to 0%) you reduce it to 0% but only for the first X tonnes of the product every year.

Every tonne beyond that has to pay 25%.

5/ TRQ's are about allowing in foreign products to compete with local producers, but in a very controlled way.

The EU makes extensive use of them, and so do many others (including the UK, at the moment).

6/ So who is right, Truss/Johnson or Eustice/Gove?

Kind of neither, in that while both choices are probably fine, the arguments being made to support them are weird.

7/ Truss and Johnson seem to argue that a TRQ outcome with Australia won't demonstrate a sufficiently large break with EU policy and could hamper UK's accession to the TPP.

That's certainly... a take.

8/ First and most obviously, performative divergence from the EU is a stupid basis on which to make any kind of policy.

Offer Australia tariff and quota free access if you want to, but only if it makes sense for the UK, not to prove you're nothing like your father.

9/ Secondly, the TPP argument is a bit weird.

Getting FTA's done with Australia and New Zealand is a critical step to membership, but they've accepted less-than-full-market-access with every other partner they've ever FTA'd with... and can push for more in the TPP negotiations.

10/ The argument for giving Australia tariff free access that makes sense is that Australian products are good, UK consumers want them and shouldn't be taxed for buying them.

This needs to be balanced against the impact of increased competition on UK farmers...

11/ Almost everything you hear about trade's impacts on farmer livelihoods is hyperbolic or abstract.

It is really, really complicated to calculate how much increased competition tariff elimination would actually mean for a Welsh lamb farmer or Scottish beef farmer.

12/ However, it is fair to say that British farmers are on the whole not doing great, and were struggling even before the UK left the EU.

Increased competition from Australia may not 'wipe them out' but it's another pebble on the rockslide.

13/ Exactly how much additional pressure Australian competition will apply on struggling farmers is a matter for study, using firm-level data and actual market prices.

I'm hoping the UK has actually done some.

Hoping... hoping...

14/ Eustice and Gove are correct to flag the potential precedent here.

Australia holds very few cards in this negotiation. The UK can barely even articulate what it wants from Australia, and so giving it full market access does not bode well for future negotiations with others.

15/ A typical place trade negotiators start when planning what to push for in a trade negotiation is looking at what the other side has given someone else.

If they've done it for one partner, they'll have a much harder time defending why they can't do it for you.

16/ This doesn't mean the UK would automatically have to give the US, Brazil, or the TPP parties full market access.

The final decision is still in UK hands, but giving it to a huge agricultural producer like Australia makes it much harder to convince others they can't get it.

17/ A lot of questions have arisen over Australian hormone use.

The EU bans hormone growth promotants (HGP's), and the UK has the option of keeping that ban or not. It seems unlikely they'll remove it as part of the FTA.

foodstandards.gov.au/consumer/gener…

18/ As @SamuelMarcLowe points, lower tariffs for Aussie products isn't likely to reduce your weekly shop but may give you more options, which is nice.

Anyone pretending this is going to impact UK food poverty is wildly exaggerating.

19/ So, what's the tl:dr here?

Tariffs are, as a general rule, bad. They are a tax on consumers for insufficient patriotism in purchasing and tend to hit the poor harder.

HOWEVER, some UK industries do rely on them and removing them will hurt.

20/ If the UK wants to remove all tariffs for Australian goods, it should do so because it has made a policy decision on the merits, the precedent, and fully considered the impacts on farmers (and put plans in place to mitigate).

Insecurity about Brexit is no basis for policy.

21/ FAQ Addendum: The Environmental Impact

Calculating the precise carbon of importing a sheep from New Zealand or Australia vs growing it locally is complicated, but certainly shipping something across the world isn't carbon neutral (yet, the shippers are working on it).

22/ However, trying to tackle climate change by keeping out Australian agricultural products with tariffs would be a very strange approach.

Here's what the UK's shipping imports look like 👇.

Agriculture is a tiny fraction, and Australian agriculture would be a sliver of it.

23/ If the UK decides it wants to start pricing freight carbon into imports, it can certainly explore that (though it would be absurdly complicated and hit consumers pretty hard), but you're not going to beat climate change by charging people more for a New South Wales steak.