2. THEMES
• British agriculture and the vulnerability to free trade
• Defining trade and why it is a good idea
• A level playing field
• Standards and regulation
• Carbon border taxes
• EU, US & other trade deals
• Hard BREXIT in December 2020 – a big shock to come
3. BRITISH AGRICULTURE
& ITS VULNERABILITY TO FREE TRADE
• Very little currently internationally competitive
• Corn Laws in 19th century past example
• Small fields, lots of hedges
• One of the most variable geologies in the world
• Lots of uplands with uneconomic sheep
• Shaped by subsidies, not markets
4. DEFINING TRADE
& WHY IT IS A GOOD IDEA
• Absolute advantage – avocados & pineapples
• Comparative advantage – wheat in the Ukraine
• Allows specification – specialisation – cheese, wine
• Avoids the huge costs and price of food of self-sufficiency
• Little problem with physical security now – cyber war much quicker than starvation
5. LEVEL PLAYING FIELDS
• All externalities priced – polluter pays principle universalised
So:
• Common carbon price (China)
• Common pesticide taxes (US)
• Common treatment of biodiversity loss (Brazil)
Implication:
A level playing field would produce a very different outcome.
6. STANDARDS AND REGULATION
• Standards refer to: food quality, animal welfare, environmental and social practices
• In trade, tend to be in “blocks” – EU, Japan & US standards
• UK aligned with EU standards
• Will require complex border checks and assessments
7. CARBON BORDER TAXES
• Unilateral carbon targets need border adjustments to work
• Agricultural produces tend to be bulky – lots of transport emissions
• Long supply chains
• Full carbon pricing will decrease the volume of trade
8. EU, US AND OTHER TRADE DEALS
• Trade deals are always about agriculture
• EU & CAP and French interests and protection
• Regulatory convergence
• US – focus on protecting farming interests and large-scale intensive production
• Brazil – focus on beef & soya
• NZ – focus on sheep, Australian beef
• No level playing field free market exists in any of the targets for trade deals.
9. HARD BREXIT – A BIG SHOCK TO
COME
• EU + especially US trade deals essential for overall economy.
• Agriculture = 0.6% GDP supported by lots of subsidies
• Get ready for a big shock: international competition ↑ and BFP ↓.
