U.K. Tweaks the Math After Trade Study Shows Pain for Northern Ireland
U.K. Tweaks the Math After Trade Study Shows Pain for Northern Ireland
(Bloomberg) -- Faced with the unpalatable conclusion that the U.K.’s free-trade deal with Australia would further harm Brexit-hit Northern Ireland, Boris Johnson’s officials simply changed how they crunch the numbers.
The result is the government’s yet-to-be published analysis of the Australia accord will now show a positive impact, a person familiar with the matter said on condition of anonymity.
Britain announced an agreement-in-principle on a trade deal with Australia in June, but the full text is yet to be finalized. An analysis showing a negative impact on Northern Ireland would likely exacerbate tensions, with the region at the center of a post-Brexit spat between the U.K. and the European Union.
According to the person, that would have been the case had officials taken the same approach as they did analyzing the 2020 U.K.-Japan accord.
Switching methods is consistent with the style of Johnson’s government, which has repeatedly tried to change Brexit rules when it doesn’t like the outcome. A de facto customs border in the Irish Sea has caused trade between Northern Ireland and the rest of the U.K. to decline, and Johnson’s government is now seeking to re-write the terms of the Brexit settlement for the region.
It’s also a sensitive time for Johnson’s administration, which is struggling to contain the fallout from his failed attempt to rip up rules on standards for politicians to protect a Conservative colleague found guilty of paid lobbying.
“We have been clear from the outset that our trade deal with Australia will boost the economy, increase household wages and deliver benefits and opportunities throughout the U.K.,” the Department for International Trade said in a statement, when asked about the methodology change. It did not give a reason for why a different methodology was used.
But a preliminary U.K. scoping assessment of a deal with Australia in 2020 predicted economic output would fall in Northern Ireland over the long run, due to its high exposure to agriculture and vulnerability to cheaper imports.
Sensitive Issue
The Australia deal would lead to a “flood” of “cheaply-produced, low-welfare meat, undermining the competitiveness of farmers all across the U.K.,” Emily Thornberry, trade spokeswoman for the opposition Labour Party, said in an email.
“Those are the facts, and no cynical change in methodology is going to hide them,” Thornberry said. “Yet again with this government, when they don’t like the results, they try to change the rules.”
The impact of Brexit on Northern Ireland has become one of the most sensitive issues since Britain’s left the EU. The region voted to remain in the bloc by 56% to 44% in the 2016 Brexit referendum, but has found itself at the center of wrangling and controversy ever since.
Johnson’s attempts to make the case that divorcing the U.K.’s biggest trading partner will prove beneficial have been undermined by trade disruption and tensions as Northern Irish politicians cry foul over new rules.
Trade Spat
Meanwhile the EU is weighing tearing up its trade agreement with the U.K. if Britain reneges on its treaty commitments in Northern Ireland. U.K. Brexit minister David Frost travels to Brussels Friday for talks with the European Commission Vice-President Maros Sefcovic.
In May, Northern Ireland’s Agriculture Minister Edwin Poots wrote to U.K. Environment Secretary George Eustice to oppose the prospect of an Australia deal, saying it would damage the Northern Irish beef and sheep trade.
The agreement would phase in full tariff- and quota-free access for Australian agricultural imports to the U.K. over a number of years.
“Australia has a number of distinct advantages over Northern Ireland, and the rest of the U.K., in terms of the land available for farming, climate and lower standards that allows its farmers to be able produce at a considerably lower cost,” Poots said.
He also criticized the U.K.’s trade accord with New Zealand, saying this week it would put “severe pressure” on Northern Irish farms.
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