After a full twenty months of tired heaving, it remains unclear whether the tug of war within government is being won by the Hard Brexit or Soft Brexit supporters. But that isn’t the only divide we’re seeing. As the government designs new domestic policy alongside the EU negotiations, a new split is emerging: between trade liberals and protectionists. And nowhere is that split clearer than on the issue of food and farming.
According to the trade liberalisers, whose current figurehead is Jacob Rees-Mogg, the problem with food and farming is that farmers have too long been prioritised in policy-making through tariffs that protect UK farmers against cheaper imports. This has resulted in higher prices in the shops, and a higher cost of living for everyone. Trade liberalisers believe that tariffs on imports should be minimal to keep food prices low and benefit UK consumers. However, the WTO requires uniform tariffs across all developed countries outside of trade deals – which means raising tariffs on EU imports to match those levied elsewhere.
In this context, one proposal is to remove all import tariffs to the UK to avoid having to impose new rates on agricultural imports from the EU, which account for 70% of the UK’s imported food. According to Rees-Mogg, post-Brexit shop prices would be lower, and society better off: “Unilateral free trade has worked in every country that has tried it, historically”.
According to the protectionists, represented by Michael Gove, the problem with food and farming is that the cheap price of food at the checkout comes at the expense of farms, the landscape, and the environment. Tariffs on imports are required to protect UK farms with higher standards and prices from being undercut by foreign imports. Gove was clear in his evidence to the Environment Food and Rural Affairs Committee that: “It would be better for consumers if there were not tariffs as food prices would fall, but it would put considerable strain on farmers… my preference would be that we would maintain tariffs”.
The question then, is: whose voice – in government and society – is more powerful?
Whilst this tension between camps is over the specific issue of import tariffs, the contrasting worldviews will no doubt create similar divisions in many Brexit negotiations to come. The question then, is: whose voice – in government and society – is more powerful? Those of food producers, or consumers?
It is partly due to the absence of Brexit impact assessments that this tension between producers and consumers has flown under the radar. Now, the only obvious way to satisfy these competing demands is to dig deep into public expenses to support British farming and food manufactures without the use of tariffs. We can also see now that any promise of a Brexit dividend – for example, more money for the NHS – is an implicit call to reduce farm payments, since it’s the single largest EU expense.
But neither camp is setting out such a joined-up view. For Gove, it is self-evident that British farms and British food products are superior, and thus deserving of financial protection that consumers alone do not provide. From Rees-Mogg, we hear very little about UK farms, the environment, or the balance of payments, but it is self-evident that the consumer is king.
Rather than what industries deserve protection; what standards require protection? It is an important question to get right.
Earlier this week, Gove launched a White Paper on a post-Brexit agriculture bill. If the big question being asked is whether farm payments are meant to provide “public money for public goods”, what exactly are the public goods we want to support? Both the trade liberals and the protectionists would be wise to apply this thinking to broader trade policy too. Rather than what industries deserve protection; what standards require protection? It is an important question to get right. The prices in our shops, the quality of the food we eat, and the state of our countryside hangs in the balance.
Rather than thinking about producers and consumers, the focus should be on standards in production – including animal welfare, habitat destruction, and pollution that seeps beyond borders – all issues Gove is seeking to address. While a ban on certain imports provides one way of limiting harmful production practices, tariffs provide a financial incentive that can level the playing field and could be a catalyst for change.
Currently, different tariffs seem to tell us more about the political power of industry lobbies than they do about the environmental, health or animal welfare practices of industries in different countries. The government should take a more honest approach to dealing with divisions in its ranks now and in future decision-making, by basing conversations on tariffs on principles before power.
This blog was originally published by the New Economics Foundation here.