Thread by @DmitryOpines

1/ The debate over the Australia-UK FTA exposed that we don't quite know how the UK government thinks about tariffs.

A thread to try to lay out the options and trace the UK Government's journey so far. 👇

2/ Option #1: Optimistic Libertarian

Crude Summary: "Tariffs are bad, and it's not worth having them even as bargaining chips. Remove them all unilaterally, then use active trade leadership to secure market access abroad the way Singapore or New Zealand do."

3/ Option #2: Strategic Libertarian

Crude Summary: "Tariffs are bad but other countries may be reluctant to get rid of theirs and they're the primary 'chip' traded in negotiations. Keep some tariffs but then get rid of them by trading them away in negotiations."

4/ Option #3: Keyhole Protectionism

Crude Summary: "While generally tariffs should be low or zero, there are a small handful of places where for very specific reasons we want to keep tariffs or quotas to limit the level of foreign competition in our market."

5/ Option #4: Blanket Protectionism

Crude Summary: "Tariffs are a useful tool to incentivize our domestic consumers to buy locally produced goods, supporting those producers and their workers. We should not be shy about using them where we have a domestic industry to protect."

6/ During the WA negotiations, the UK released a temporary tariff schedule that looked very Option #1, eliminating tariffs on virtually everything.

This was likely driven by fears about No-Deal price rises, but was still notable.

gov.uk/government/new…

7/ Then, during the TCA negotiations, the UK released its new UKGT which looked a lot more like Options #2 and #3.

The new UKGT largely kept the (mostly low) EU tariffs in place, removing them primarily where there was no UK domestic industry to protect.
gov.uk/government/new….

8/ The UKGT suggested either the government believed that some of its tariffs were worth keeping, or that it needed something to trade off in the trade negotiations it was about to undertake with partners like the US, India, Australia and New Zealand.

9/ The UK's two 'original' FTA's with the EU and Australia both eliminate (we understand) all tariffs in both directions.

This certainly suggests a strategic libertarian approach, but it may not be conclusive proof.

The EU deal was about continuity, and Australia is far away.

10/ Still, the fact that the UK abolished all tariffs for Australia when it likely could have gotten away with keeping some keyhole protection in place (through say, quotas) is telling.

11/ With that said, we still don't really have a coherent view of where the government sits on tariffs because it has simultaneously argued:

a) It believes in free trade;
b) Giving Australia market access won't lead to a flood of imports.

12/ Believing in free trade when your domestic producers aren't seriously at risk is easy.

What happens when they are?

There are certainly FTA's on the horizon with parties like the US, China and Brazil where the government won't be able to have its free trade cake for free.

13/ So where does the government fall between Options 2 and 3?

Does it feel some UK Tariffs serve a valuable purpose, or are they all simply bargaining chips to secure access to the markets of others?

I suspect @NFUtweets would love an answer.

14/ If you found the above at all interesting, you might enjoy the recent episode of All The Goods Puns Were Taken where @SamuelMarcLowe, @Annaisaac and I spent an hour breaking down the Australia-UK FTA news and addressing some common questions.

twitch.tv/videos/1033954…