How Delighted Should Brits Be at Liz Truss Securing a Deal with Australia Worth 0.02 of the UK's GDP?

The recent trade deal between the UK and Australia, valued at 0.02% of the UK's GDP, has sparked debate among economists and viewers of the Today's News. While some remain skeptical, others, including this proponent of the trade agreement, see it as a significant and delightfully impressive achievement.

Why I Am Delighted by the Trade Deal

I am thrilled with the outcome of the trade negotiations! It is a remarkable feat that the UK has managed to secure 37 trade agreements with 96 countries since leaving the EU. This success surpasses my own expectations. The minor GDP growth figure cited by some critics, such as Daniel Wicks and Richard Smedley, is insignificant compared to the broader economic benefits that may follow.

It is important to remember that this 0.02% growth is not a snapshot of our current economic state but an estimate of what could happen in the future as our economy continues to expand. Once we experience the growth that is yet to be realized, the value of this 0.02% will undoubtedly be more substantial.

Why Dropping 0.02% GDP is Worth It

The price of kangaroo steak at Aldi may indeed drop, and I am personally delighted about this! However, this deal is not just about selling meat. The trade agreement with Australia is a strategic move that weaves through various industries, from agriculture to technology. It demonstrates our commitment to growing and improving our economic ties with countries around the globe.

Furthermore, compared to the trading basis we had while in the EU, the deal represents only a 0.01% loss. While this might seem insignificant, consider that the EU trade deals were negotiated with some of the world's largest economies. Our trade deal with Australia allows us to fill the gap, albeit partially. It is disingenuous to compare the value of this deal to the full loss of the EU trade benefits, as we have yet to build a comprehensive network of agreements to replace those.

Australia's Economic Impact on the UK

Australia is the 13th best economy in the world, and by striking this deal with them, we are strengthening our global trade network. However, this should not be seen as a one-way street. The Australian beef industry stands to benefit far more than the average UK consumer, with a potential return factor of 10. This is because the Australian beef is hormone-treated, something that the UK market largely rejects.

On the flip side, this deal will inevitably ensure the replacement of UK beef farmers who can no longer compete with the influx of cheaper, hormone-treated beef. Similarly, the poultry industry may face deregulation to allow the importation of battery-raised, chlorinated chickens. While this deregulation may seem ironic given the previous warnings about Salmonella, it is a necessary step to remain competitive in the global market.

Trade Deal with New Zealand

While the UK-Australia trade deal is a positive step, a similar deal with New Zealand is expected to favor the Kiwi economy even more. The deal will depend on the continued honor of the Northern Ireland protocol. This trade agreement, like its predecessor, aims to gain entry into the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership).

Some argue that terms offer the potential for high-growth trading opportunities. However, the reality is that many of the nations within the CPTPP already trade with the EU under terms negotiated before Brexit. Unless the UK can negotiate new and significantly better terms, the gains are likely to be marginal and may come at the cost of regulatory protections designed to safeguard consumer, employee, and environmental interests.