By Paul Giles
Image by Meeeeting from Pixabay
The UK Trade (Australia and New Zealand) bill also known as the “substitute ratification vote” received Royal Assent on 23 March so it’s now “law”.
While we have yet to learn when the first shipment of cut price beef will arrive in Truro (!), much debris has been left behind.
The revised impact assessment of the FTA issued by the Department for International Trade (DIT) projects a regularly-quoted “£10.4bn” addition to total UK-Aus trade (i.e. exports + imports) and 0.08% to UK GDP from it by 2035. It also forecasts a revised exports growth 600% higher (!) than the original, mid-2020 FTA. The GDP increase is 400% higher. The astronomical size of these increases should immediately draw demands for explanation/justification.
One would expect the DIT to be ready to justify such huge changes, as it should be the first question from HM Opposition – as in fact it was, in the Commons, on 5 January 2022. Regretfully, the Secretary of State was unable to justify and neither were any of the DIT’s delegates, including the Permanent Secretary, at the subsequent Public Accounts, International Trade and International Agreement select committees. “There’s been a modelling change” was the best the Permanent Secretary could offer before apologising for his lack of knowledge.
Subsequent attempts through Freedom of Information requests to extract a justification from the DIT produced only highly technical, theoretical modelling responses. These are understood by few outside of the tiny cohort of DIT trade modellers. No business justification, one which might be understood by MPs – i.e. which specific industries/products will benefit, to what extent and by when – became available.
Even if all of the percentage growth deriving from the opaque trade modelling is accepted, the revised impact assessment bases this on out-of-date data. If latest UK-Australia ONS trade data (calendar 2022) is instead used we see an overstatement in total trade impact of 40% in 12 years’ time, meaning at best the above £10.4bn will be more like £7.4bn.
Justification of these stand-out, massive FTA gains remains outstanding with DIT and their “regulator”, the Regulatory Policy Commission. Meantime, we can only sit and wait to see which projections, if any, come to fruition. And in the meantime perhaps the DIT will help minimise the undercutting of Cornish animal husbandry!
