Why are so many Brexiteers excited by a trade deal with Australia? In advance of the relevant cabinet committee meeting which determined the UK’s negotiating position, our broadcasting studios and newspaper columns were full of Brexit-backing commentators arguing that this matter is of vital importance. One anxiously tweeted that “if the government caves on scrapping tariffs… on Aussie food then Brexit wouldn’t have been worth it. Simple as that.”
The government’s own economic analysis hardly suggests that this is a first order issue. A beneficial deal would increase GDP by around 0.01 to 0.02 per cent. To put that into context, at best this is 1/200th of the Office for Budget Responsibility’s estimate of the cost of Brexit (4 per cent of GDP).
There are political risks. Not only will Conservative MPs in rural constituencies face a backlash, the perception of “selling out our farmers” will be a gift to the Scottish nationalists. Any deal on agriculture might make it harder to resolve issues under the Northern Ireland protocol and there are questions about animal welfare and the environmental costs.
Nonetheless, the decision has apparently been made to seek to conclude a deal with Australia this month. In truth, the substance of any such agreement will not be earth-shattering one way or another but the decision to proceed tells us a lot about the government’s motivation.
First, the importance of the deal is not really about Australia but about setting the template for future agreements, whether for New Zealand, the wider Trans-Pacific Partnership or, the supposed big prize, the US.
Second, it locks in Brexit. Many Brexiteers worry that unless we properly break free of it, the gravitational pull of the EU will result in the future relationship becoming ever closer. They tell themselves that the political momentum might be with divergence now but, just you wait, the Remoaner establishment will be pushing for convergence all too soon. By signing up to new trade deals and creating new facts on the ground, the Brexiteers’ hope is we will move further, faster and irrevocably away from the EU.
For some there is a third motivation, which is a distinct emotional attachment to what no one quite calls any longer “our kith and kin”. There is talk of our oldest relationships, wartime alliances, a common language and a shared head of state. The Australians, New Zealanders and Canadians are not really foreigners.
Fourth, the strongest advocates of this deal genuinely see themselves as free traders in the tradition of Peel and Gladstone, Cobden and Bright. When they hear critics of a deal complain that Australia’s climate and size makes the country much better suited to beef farming than the UK, and that this constitutes unfair competition or that Australian exports will increase by more than UK exports, they hear the arguments of protectionists, apparently putting the interests of producers over consumers. It has to be said, they have a point.
The case for free trade is a powerful one. It lowers costs and increases choice for consumers; it allows greater specialisation and efficiency; it has driven extraordinary growth in prosperity across the world in the last 200 years. The irony is that most of those cheering on a free trade deal with Australia were also enthusiasts for Brexit and ripping up a far more advanced trade deal with a far more important market with far greater benefits to producers and consumers.
Deep down, the more realistic free-trading Brexiteers know this. Perhaps they are comfortable prioritising “sovereignty” over minimising trade barriers or maybe they tell themselves that non-tariff barriers don’t really matter and therefore we do not need regulatory coordination to eliminate them. But they found themselves arguing for a course of action – leaving the EU – that was inconsistent with their sincere belief in free trade.
With the row over tariffs on Australian beef, they can be the Manchester liberals, internationalists and radicals they want to be – their views on economics and the UK’s place in the world once more aligned.
The Brexiteer free traders consider themselves to be the upholders of Thatcherism, an economic project that was all about rolling back the state, deregulation and free markets. We can argue over the economic record (and I suspect I have a more positive view than the average New Statesman reader) but what is not in doubt is that the objective of the Thatcher governments was to make the UK economy more open, dynamic, competitive and efficient.
Modern British Euroscepticism was born in the late 1980s as a consequence of the perception that the European Community (as then was) was an impediment to this project, an imposer of bureaucracy and an obstacle to deregulation. And yet the consequences of leaving the EU – especially the single market created in large part by Thatcher – has been the imposition of red tape, barriers to trade and a Conservative government that will not pursue deregulatory policies for fear of offending its new coalition of voters.
If you see yourself as a bold economic reformer – whether a Peel or a Thatcher – what is your economic justification for Brexit? There is no viable deregulatory agenda and the £350m a week promised for the NHS was always bogus. The fifth and most important reason for the emphasis placed on the Australian deal is that, however meagre it may be, it is all you have got left.