Australia trade deal shows what the future holds for Britain after Brexit

The speed of the deal reflects that, since the repeal of the corn laws, the UK is, by and large, a free trade nation. Instead, other European governments often require significant protection of the agricultural and manufacturing interests of non-EU countries or exclusivity for the use of “geographic indicators” such as “Parmigiano-Reggiano olives”. Or “Kalamata”. Add to this the different “interests” of the 27 EU countries and negotiations are slowed down by a medley of protectionist demands and red lines.

Barriers to cross-border trade are economically destructive, raising prices and protecting inefficiency. So any self-respecting free trader, Brexiteer or otherwise, would have to approve a deal making it easier to import sporting equipment, biscuits and wine from Australia, which removes national agricultural protections and sees Australians removing tariffs from Australia. customs on cars, whiskey and ceramics.

But no. In a tedious and predictable way, a group of commercial lawyers this week got rid of their free trade in good faith and have become mercantilists. The UK turned around and gave Australia everything it wanted in agricultural access, they said – implying that good trade policy is about getting access for exporters while protecting industries from imports. Ignoring basic trade economics, it seems, is a price they are willing to pay for flagging their anti-Brexit credentials.

In reality, Australians will simply benefit from UK farming conditions similar to the EU, albeit after 15 years. Economists know that tariffs damage the rocks of our own port, not currencies to protect. The British public agrees. Adam Smith Institute polls have shown they are overwhelmingly in favor of the Australian FTA. The British have long wanted cheaper and more access to food, goods and services. The shrill cries of vested agricultural interests, stirred up by specialist lawyers, will not dampen this enthusiasm.

Nor, indeed, the erroneous claims that this deal is economically insignificant. Critics of the deal point to the UK government’s 2019 assessment that an FTA with Australia could increase GDP by just 0.01% to 0.02% after 15 years. But this type of analysis seriously underestimates the dynamic impetus to activity that free trade brings.

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