Wednesday 16 June 2021

Brexit Trade Deals and the Tory Class Interest

Asked about the government's brand spanking new trade deal with Australia, Liz Truss might have said "Just rejoice at that news and congratulate our forces and marines." I'm sure she would have meant negotiators, but it doesn't matter. The Tories are pleased as Punch to have their first piece of paper that says Brexit was worth it. Having withdrawn from the world's largest trading bloc and flushed the country's fishing communities down the toilet, at least we can raise a glass to saving British consumers £34m/year. That's 50p each to you and me.

The full details haven't been finalised. This is an agreement in principle, so the trade secretary says. It might be small beans now, but Australia is in that part of the world rapidly becoming the centre of gravity for the global economy. The UK needs to be where the action's at. As Truss is fond of saying, we've got to stop treating current trade volumes - worth some £12.9bn - as a static figure and think about what the numbers are going to look like 15 years from now. Whatever the case one hopes the balance of trade would be somewhat better, considering under existing arrangements the UK imports twice as many goods and services than it sells to Australia.

Still, it's great news for everyone, right? Having tried to assuage UK farmers rightly fearful for their livelihoods seeing recent Tory moves against them, we learn the government are going to screw them. Details the Tories have kept out the press here, the fine print Boris Johnson wanted keeping under wraps has been published in Canberra. Turns out they lied. From day one Australian farming concerns have tariff-free access to the UK market, and the quota designed to manage the transition to unlimited trade places the cap at 60 times present levels. This is a terrible deal for UK farming and for what? There isn't a single discernible advantage for the British economy, but it is bedding in competitive disadvantage. How do we begin to explain the enthusiasm with which the government have embraced this shoddy piece of work?

It comes down to a confluence of a number of things. Brexit might be done and dusted, but for the rest of this government's time in office it has to permanently persuade chunks of its coalition that it was all worth it. Getting a quick and dirty deal done, any deal, plays well in the editorial offices who aren't about to scrutinise the specifics and tell their readers they've been sold a pup. Closely aligned with this is a peculiar but particular species of gesture politics. Sign trade deals, talk bewildering numbers, don't pay EU-stan criticisms any mind, and portray a stuttering recovery from Covid and Brexit as if it's a sovereign, independent Britain going from strength to strength. A deception, but one in full accordance with the hopes millions have invested in this false prospectus. It's easy to believe if you want to believe.

And there are the economics. It's true enough Tories wanted to escape the EU to avoid new regulations curbing tax dodging, and because the bloc was always potentially an impediment to their untrammelled power and desire to push down living standards of a workforce they hold in contempt. But in addition to and cutting across is a lazy perception that British or, rather, City of London interests are best served by making the UK the offshore hub and playground for the emerging powerhouses of East Asia. Hence the government submitted its application to join the Trans Pacific Partnership in January, despite being some 8,000 miles from the ocean. Still, if Australia can be in Eurovision ...

Getting a deal at any price with Australia and, in short order, New Zealand is about telegraphing to Pacific nations that the government will bend over backwards to be let in. It doesn't matter if the terms of trade entrenches a disadvantageous position for the UK because the sorts of interests the government are closest to - commercial and financial capital - have the most to gain. As per Tory custom and practice, levelling up in the context of "global Britain" means advantage for some and free market competition for the rest. But the real prize, the holy grail of the Brexiteers, is still the trade deal with the United States. The UK's admittance into TPP on a supine prospectus, they calculate, makes a transatlantic deal much more likely. And while the standing and influence of the UK is bound to diminish, the position and the wealth of the class the Tories organise and serve grows more secure.

A reminder then that Tory economics are about numbers second. In the first instance, whether Brexit, Covid, trade deals, it's always about class. Their class.

Image Credit


Kamo said...

I'm not convinced about this piece, perhaps I'm wrong, but it seems to position the interests of British farmers as consistent with the general British public? As long as it is safe to consume, the British public having access to cheaper produce from Australia is not a bad thing. Nor is it a bad thing for Britian to try and position itself with the growing parts of the global economy, the British economy having been based on overseas trade for hundreds of years. As for farmers losing their livelihoods, this is unfortunate, but it is a trend that has been ongoing since the advent of industrialisation.

I voted Remain, but not every Leave argument was a dud. And this is at least a step in the direction of one of their more sound arguments. The EU's petty protectionism is one of it's weaknesses and one that will scupper the UK rejoining in the future.

Dipper said...

with Kamo on this.

I can walk into my local Waitrose and buy 'beef', 'Hereford Aged beef', 'Aberdeen Angus beef', and 'Wagu beef'. All at different prices. This is nothing new, in the EU days you could buy battery-farm produced Danish pork, or free-range UK pork. Food is a branded tiered market. Farmers should have no problem surviving and even prospering.

Brexit for me was a process of swapping problems we couldn't solve (open borders, federalisation) for problems we could solve. We can solve the problem of making sure farmers can earn a living from and in a way that benefits the environment. If we can afford to pay Diversity co-ordinators, we can pay farmers to manage land.

Right now, as a Brexiteer, I'm looking at wages going up for working people due to restrictions on European immigration and cheaper food to benefit poorer people. Tangible benefits. Needless to say Labour are against both.

We cannot live in a state of fear, that any change may bring disaster. To live a full and prosperous life individuals must learn to embrace risk; to make judgements, to consider the likelihood of risks materialising and have contingency plans, but ultimately, to back yourself to rise to the occasion and do what is needed to grab opportunities. Moaners and perma-pessimists are set on taking us on a road to poverty and misery. Ignore them.

Blissex said...

«it's always about class. Their class.»

What some people argue is that Labour is also “always about class. Their class”, the working class. But there are some fundamental differences:

* There are many more people in the working class than in the rentier class.

* Most working class members have much worse living standards than rentier class members,

* It is thus much worse for a rentier class member to fall into the working class than for a working class member to rise into the rentier class.

Therefore protecting the interests of the working class means also protecting the interests of the rentier class against the risk of a potential fall into the working class, and this enables rentier class members to take more risks if they wish by limiting their downside.

The Labour coalition thus should include all those, usually small, rentiers who already are partly working class, or that are at greatest risk of falling into the working class. If the Labour left were not so much into posturing, and the New Labour Militant Mandelsoncy entrysts were not so much into the interests of big rentiers.

TowerBridge said...


There are reasons for voting brexit, but this is not one and on balance you were right to vote the way you did.

What happens in a free trade zone is that the biggest country wins. Every time. Take, for instance, the computer market. Thanks to the insistance of the US, when it was able to throw it's weight around and really before the a union of countries got together to stop it, initially put massive tariffs on computer equipment as the biggest threat to the establishment of its own companies were Japanese companies. These tariffs were huge and protected a newly forming industry from being bought out. Once the US industry was big enough the US insisted on other countries signing up to a treaty to ensure that computer related things got 0% import tariffs. You will have heard of some of those US based computer manufacturers and such equipment. I'm using a US manufacturer's computer to type this.

In the UK we have no such industry. Sure, there's the odd exception, but mostly when they get big enough a US corporation buys them or destroys them when they are in the nascent stage.

This kind of thing happens on the international stage a lot. A few years ago the EU wanted to put large anti-dumping tariffs on chinese steel because subsidised (and some argue poor quality) Chinese steel was putting European businesses out of business. One country vetoed that proposal and paid with the shutting down of their steel industry plants and sadly people's jobs - you will note that steel is needed for defence so it is not like a country can willingly give such operations up with no consequence. That country of course was the UK under Cameron/Osborne.

Agriculture products are responsible for the vast majority of international trade. Not only should you think about food safety, some would argue you need to think about animal welfare, carbon emmissions and sustainable land use. A country must always also carefully think about its situation if things went wrong or if war broke out, hence many subsidise their food production sector- to make sure they can feed themselves if the fan was hit by agricultural byproducts. There are therefore solid reasons for taking care of the agricultural sector.

However, when the UK was part of the EU it made a right mess of the common agricultural policy. Much of the money that came from the EU to subsidise food production ended up in the hands of the artistocracy and the rentiers. I would not regret the end of their gravy train if that was a consequence of brexit, but I doubt that will be as effectively brexit gives those guys more power. They are the Tories and who the Tories stand- and have always stood- for.

Anonymous said...

Could you comment on how this Australia-UK deal might further foul up the situation in Northern Ireland? (Or perhaps ripen the situation there--I guess one chooses metaphors based on one's opinion of the United Kingdom... )

My understanding is that quite a lot of Australian produce does not meet and never has met EU standards--and that therefore this deal will open UK markets up in a way that, for Australian agri-business, represents a big advance on their pre-Brexit situation. In other words, Australia will be able to export goods to the UK which it couldn't while the UK was still in the EU. Again, I am a long way away from the action; but my understanding is that "getting Brexit done" has not yet, for the UK government, meant getting down to brass tacks and undertaking all the hard, tedious work of slashing UK safety and quality standards to something crummier than the EU standards--and, therefore, that the EU standards are, for the moment, more or less de facto in place. Until the ships from Australia tie up and start unloading, that is.

What does this mean, then, for the inspection regimes in the Irish Sea and along the land border between the UK and the Irish Republic? Is the EU likely to push for more vigorous port inspections on Merseyside or in Belfast Harbor? Or for a hardening of the land border? I see no evidence that the Johnson government has a plan--any more than they had a plan for Northern Ireland in the event of Brexit--but I would be interested in your thoughts about how they might react to any pushback from the EU or from the Irish government.

And one wonders what the political players in Northern Ireland will be up to. The Irish government too, for that matter: are they likely to raise hell about this further upset to the Good Friday Agreement?

Anonymous said...

If I may comment on the comment from "anonymous" the answer to the question of "what would this mean for the NI border" is: Quite a lot.

At present, in order to preserve the good friday agreement the EU has effectively entrusted the UK with preserving an EU customs border. The border is now down the Irish sea. That matters, because once an item is in free circulation in the EU it can go anywhere and there is no way to effectively track it (unless it is a particularly sensitive piece of equipment). Excise fraud happens in this way, in that a factory might produce 8 lorries of vodka, they might go into the EU and whilst one might be tracked the other 7 might just disappear.

Therefore your instincts are right. The EU will expect high standards of inspection by UK officials for goods coming from the UK into NI. The UK is not good at doing high standards of inspection (or any for that matter) as this costs money (even though it prevents fraud and therefore losing money in other areas). The Tories don't like giving money to the public sector to improve public services, so we will be at an impasse. If you recall, this whole Brexit venture was supposed to save money so we could spend it on the NHS.

There is no way the EU will allow australian hormone treated beef (for example) into the single market, but also no way that they will want to set up barriers in Ireland.

Something will have to give at some point. My belief is that the current crop will want to "see what happens" or fudge the issue somehow but I can't see how that is possible. Perhaps the best solution is for NI to join Ireland. Either that or the UK simply joins the customs union, but that would mean no Australian or US deal.

Anonymous said...

Thanks for the reply!

I suspect you are correct that all the major players will fudge--in the short term. To take just the question of beef, it is pretty clear that

1.) the Johnson government is fudging, as with the NI Protocol in general, and will continue to fudge for as long as they can get away with it. In fact, in between moments of naked repression, fudging seems to be the Tories' main method. Hard to know what they'll do when the conflict with Brussels sharpens, but they have certainly made it abundantly clear that they couldn't care less about NI. (Scottish secession strikes fear into the hearts of British militarists; Irish unity might make Whitehall breathe a sigh of relief.)
2.) Ditto the EU bureaucracy. The whole NI Protocol is one big kick into the long grass, given that the mandarins of Berlin and Brussels aren't stupid enough to believe that the UK government is truly going to do a sincere or competent job of inspecting cargoes between Great Britain and NI. But Brussels may have to toss the ball back into play when the big beef-producing interests/rural social base in Denmark/France/Italy/Poland/Spain start raising hell. (They haven't forgotten about the scandal a few years back of Irish horsemeat transhipped through GB and sold on the continent marked as Polish beef.)
3.) This probably goes for Fine Gael too. It's not their MO to rock the boat, and they certainly have no loyalty to their traditional core social base of rural capitalists; but Irish politics are not English politics. Since the breakdown of the old Irish party system, FG faces real multi-party competition; and if they were seen to betray their core voters, they could face consequences Johnson has not had to face.
4.) Sinn Fein will see opportunity here, notwithstanding their pieties about how much they hate the thought of a hard border.
5.) And the broad Left in the Republic of Ireland would be motivated to raise a ruckus for reasons we would share. If FG, SF, and the Left all saw a confluence of interest, that starts to look like a social majority in the ROI, and we might see real action out of the Irish government.
6.) The DUP will fudge as if their lives depended on it--since their political life as a party does seem to depend upon it at this point.
7.) As with other aspects of the DUP's crisis, it will be interesting to see what hay the other unionist parties can make.

Those are some of my guesses. I would be interested to hear any disagreements or other thoughts.

One note: it's interesting to see such a well-informed writer employ the phrase "goods coming from the UK into NI"--as if the UK and the island of Great Britain were coterminous. Am I right that this slippage is pretty universal among the English? If even the most thoughtful Englishmen forget from time to time that NI is still, in fact, part of the UK, I can't imagine that this bodes well for Northern Irish unionism.