A CERTAIN dreary and dismal familiarity has developed around the Tories’ desperate efforts to secure trade deals with countries outwith the European Union, having decided to turn their back on the UK’s biggest export market.
And the familiar pattern has manifested itself again in recent days with Secretary of State for Business and Trade Kemi Badenoch’s efforts to drum up a trade deal with the Gulf Cooperation Council, comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
So how does this pattern go? Firstly, we have a lot of hype around what it is hoped will be achieved.
This narrative develops a life of its own in the Brexit-supporting sections of the media, and is amplified by the UK Government, with what seem like some big numbers bandied about.
However, crucially, these are not actually large figures relative to the UK’s overall economic output, or to the massive drag on gross domestic product from Brexit.
Then whatever senior Tory happens to be leading the drive to land the trade deal - and there have been a good few over the years - jumps on a plane.
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A quick look at the “scoping assessment” for the trade deal in question confirms just how tiny a benefit it would actually deliver. And on and on the circus goes.
The Department for International Trade’s scoping assessment for the UK Government’s desired free trade deal with the Gulf Cooperation Council declares: “An FTA could boost UK GDP by around £1.6 billion to £3.1 billion in 2035 depending on the depth of the negotiated outcome (in 2019 prices). This is equivalent to an increase in UK GDP of between 0.06% and 0.11% in the long run.”
This is contained in the Department for International Trade’s ‘UK-Gulf Cooperation Council Free Trade Agreement: The UK’s Strategic Approach’ document, which notes: “The Cooperation Council for the Arab States of the Gulf (GCC) is an economic and political union of the Kingdom of Bahrain, the State of Kuwait, the Sultanate of Oman, the State of Qatar, the Kingdom of Saudi Arabia, and the United Arab Emirates (UAE).
“A free trade agreement with the GCC is an opportunity to boost trade with an economically and strategically important group of countries, support jobs and advance our global interests. It supports the Government’s strategy of continuing to develop the United Kingdom’s status as an independent trading nation which seeks trade and investment opportunities, champions free trade, and supports the levelling up agenda in all regions of the UK.”
Again we have the tiresomely familiar rhetoric: “independent trading nation”, “supports the levelling up agenda”, etc.
The trade talks with the Gulf Cooperation Council were launched by the UK Government in June last year, since which time the Department for International Trade has morphed into the Department for Business and Trade. The name and structure may have changed with the UK Government’s latest rearrangement of the deckchairs but the song remains the same – loud and celebratory but not chiming in any way at all with reality.
The latest hype over the Tories’ desired trade deal with the Gulf states has been triggered by Ms Badenoch’s visit this week to the UAE, Qatar and Saudi Arabia.
There has not surprisingly been plenty of controversy, as well as hype, over the trade talks.
Paul Nowak, general secretary of the Trades Union Congress, said: “There is absolutely no reason to be entering trade talks with countries like Qatar and Saudi Arabia, where human rights, women’s and LGBT rights and workers' rights abuses are so widespread.
“Kemi Badenoch should do the right thing and walk away from negotiations until fundamental rights are respected.”
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Mr Nowak’s comments surely deserve consideration by the Conservatives as they rush headlong into their latest international trade adventure.
Notably, no one had to worry about such crucial issues in the context of the UK’s previously frictionless trade arrangements with the EU, which the Conservatives decided for reasons best known to themselves were not a good idea.
More generally, following Brexit, the Tories have seemed desperate to drum up new trade deals.
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And they have seemed happy enough to ignore the fact the greatest amount of trade is done with nearest neighbours, as they have pursued agreements with far-off lands, including nations in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Prime Minister Rishi Sunak seemed at pains to make as much as humanly possible of what the Conservative Government billed as the UK striking its “biggest trade deal since Brexit”, when it was announced in March that the country had reached agreement to join the CPTPP.
The UK Government’s own assessment is that joining the 11 nations in the CPTPP will boost the country’s annual GDP by just 0.08% in the long run. This is no great surprise, given the Indo-Pacific region is somewhat further away from the UK than the EU.
Speaking to BBC Radio 4’s Today programme in March, Ms Badenoch said of the CPTPP benefits: “When I asked [civil servants], ‘How did we arrive at these figures?’ they said, ‘Oh well, it was just a scoping assessment and we did it two years ago. It was based on figures 10 years ago - 2014.’”
She added: “I think civil servants are doing different types of modelling from what is very easily understandable to the public. When we carry out the modelling, it’s just to do comparisons. But what this is really about is the projection for the future.”
In spite of appearances to the contrary, it appears the UK Government does understand how paltry the percentage boosts to GDP are from its trade deals, which is presumably why it prefers to wax lyrical about the likes of the percentage rise in trade with the countries in question expected as a result of agreements. The fact of the matter though is that these percentage rises in exports are insignificant in the scheme of things because the countries with which the deals are being done are small trading partners relative to the huge EU bloc. With Ms Badenoch’s trip to the Gulf states this week, we also had an inward investment figure trotted out, which seemed most irrelevant. Perhaps this was because this number might have seemed big to the public.
It is the effects on overall GDP which speak volumes about the UK’s dismal trade situation, and the foolishness of the UK Government's policy.
Forecasts drawn up by Theresa May’s government in 2018 showed Brexit would, with an average free trade deal with the EU, result in UK GDP in 15 years’ time being 4.9% lower than if the country had stayed in the bloc if there were no change to migration arrangements. Or 6.7% worse on the basis of zero net inflow of workers from European Economic Area countries.
Compare that with the tiny net benefits the UK Government has calculated will arise as a result of joining the CPTPP, or from the sought-after Gulf states deal.
You would think on this basis that the Brexiters would surely think it is a good thing if the electorate does not understand, or is not excited by, impact assessments expressed as percentages of GDP. These calculations, which in spite of how Ms Badenoch might like to paint them are very solid pieces of work, tell us about the reality of the situation. And this actuality could hardly be in starker contrast to the Tories’ tall tales.
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