Why George Eustice is Wrong (for the most part)

Trade policy should be about consumers, not Big Farmer

Last year I made a Twitter thread imagining what the UK would be like in 2031 (I had recently been made redundant and so had too much time on my hands). Boris Johnson had been deposed in a coup by Lord Frost, the paramilitary wing of the National Farmers’ Union (the Real NFU) was launching attacks on the government and had seized control of Norfolk, the Treasury was subsidising the price of fish (Eat Trout to Help Out), and Geroge Eustice had become Prime Minister.

Obviously it was very much tongue in cheek but was written at a time when the UK looked set to embark on a trade war with the EU over the issue of fishing. Essentially, the government was prepared to jeopardise economic growth and the wellbeing and livelihoods of us all in favour of an industry that is economically insignificant.

We’ve seen something recently with farming. George Eustice, who is unlikely to become Prime Minister (but who really knows these days), recently criticised the UK’s Free Trade Agreement with Australia. According to Eustice, the UK gave up too much by phasing out tariffs and quotas on agricultural products from Australia while getting very little in return. As such, British farming is at risk of being destroyed.

Will the FTA Destroy British Farming?

As someone who worked on the deal, I feel I can offer some insight. Unsurprisingly, there have been a lot of really bad takes on the trade deal from both sides of the Brexit debate. In the #FBPE crowd we had claims that the UK would be swamped by cheap Australian produce whereas Patrick Minford made the bonkers claim that the deal would boost UK GDP by three per cent, this was because the UK would be able to import all the food it needs from Australia which would essentially bankrupt British farming meaning the land could be used for something more productive such as housing. You can read my response to this nonsense here and here but it boils down to gravity which is something you can’t defy despite how much musical witches or certain economics professors might have you believe. Essentially, size and distance matter when it comes to trade and so a country is going to do a lot more trade with a large economy near to it than a smaller one further away. Therefore, the UK is unlikely to be flooded with Australian produce and so British farmers need not be worried.

On a side note, Eustice was probably right about the deal being rushed. For political reasons there was a self-imposed deadline. The government needs to stop doing this in the future. Trade secretaries should take their time and have a clear idea of exactly what they want to get out of it and make sure it isn’t rushed. The photo opportunities and the nice headlines can wait.

We should be careful to not disparage the deal though. Perhaps the UK could have pushed for more market access for businesses and farmers, but the fact that we managed to get any deal in such a short space of time all while negotiating other deals is an achievement in itself. The impact on the economy won’t be huge but it’s an important milestone for the UK as an independent trading nation and is something I was proud to work on. What is more, it’s worth remembering that the FTA won’t grow the economy in a significant way because most FTAs just don’t anymore. I’m with the always sensible Sam Lowe of Most Favoured Nation on this one; all things considered, the deal is fine.

Eustice was also wrong to publicly attack Crawford Falconer, knowing full well that civil servants cannot defend themselves by responding to criticism from politicians. Falconer is a recognised expert in trade and has done a great job training up a team of world class and dedicated trade negotiators. Graham Floater, for example, is excellent and was a real help to me when I was overseeing the negotiations with Singapore on a Digital Economy Agreement.

It’s also important to point out that while we may have not got as much market access as perhaps we could, we have managed to inflict Matt Hancock on Australia, so who is the real winner in all this?

Who is Trade For?

George Eustice has argued that DEFRA should have control over trade matters relating to food and agriculture in order to protect farmers. Eustice is wrong. His remarks about the UK making too many concessions and granting too much market access for Australian producers reveals that his mindset is one of viewing trade as a zero sum game where exports are a win and imports a loss. 

This is the wrong way to think about it. Obviously it’s important to push for greater market access for British producers because, to coin a phrase, Exporting is Great. However, imports are great as well – it’s win-win. Imports mean lower prices and greater choice for consumers and force businesses to be more efficient and productive thanks to foreign competition. Free trade is a wonderful thing and we need much more of it.

Unfortunately, Eustice’s view is the one shared by many other politicians of all parties. As Alan Partridge found out, it’s not a good idea to annoy the farmers. The NFU lobbies the government for more protectionist policies while teaming up with the likes of Jamie Oliver and the Mail on Sunday to stir up scare stories about potential trade deals. As politicians want an easy life and dislike headlines accusing them of selling out British farmers, they all too easily cave into the demands of lobby groups.

Farming is incredibly hard work and I have a lot of respect for those who toil the land. However, this does not mean that the NFU – or any other lobby group – should be able to dictate trade policy or hold negotiations hostage. The government should of course work with producers to push for greater market access, challenge unfair trading practices, and help businesses make the most of export opportunities, but it should not try to shield UK farmers and businesses from foreign competition at the expense of consumers. We should instead embrace imports and place consumers at the heart of trade policy.