We’re not allowed to have a Productivity Commission assessment of Scott Morrison’s managed trade deal with Boris Johnson and we can’t trust Foreign Affairs and Trade officials to either negotiate in the national interest or properly mark their own homework, but we do know what economists at the Moody’s ratings group thinks about it.
In a note in a weekly credit update, Moody’s looked at the deal and concluded “the economic impact of the trade deal is negligible” and translated into “less than a pound per person each year”, though there were reasons to suspect the “benefits” wouldn’t even be that great. From an industry point of view? “The benefits are similarly underwhelming”.
Much has been made about the impending onslaught of cheap beef into the UK market. In 2019 the UK imported around 1766 tonnes of Australian beef and veal, equivalent to 0.6% of all beef and veal imports. Under the deal, quotas will limit the amount of Australian duty-free beef exported to the UK for 15 years, with a maximum amount of 170,000 tonnes permitted at year 10. Based on current levels, this would represent 54% of all beef imported by the UK.
But growth in Australian beef is likely to go to regional markets closer to us first. “Australian exporters garner higher prices for their beef products in countries like South Korea, Japan and the US. Also, Australian beef exports recently dipped because of drought conditions. Such conditions are expected to occur more regularly in the future and could restrict exports.”
The only important trade deal for post-Brexit Britain, Moody’s argues, is with the US, and that’s not coming anytime soon under Joe Biden.
This is why the Coalition has refused to ever let the Productivity Commission (PC), or any respected independent body, near its trade deals to examine them properly: the actual benefits are trivial at best. And as the PC likes to point out, any “modest” benefits (its term) from them are often swamped by extra paperwork required to meet bureaucratic country-of-origin requirements for accessing the deal.
“Given the trivial economic impact of the UK-Australia free trade agreement, we won’t be updating our growth forecasts for the UK economy,” said Moody’s. Ouch.
Let’s hope Morrison had a nice meal with Boris over the signing, because that’s about the only thing anyone will get from it.