The government’s reticence on trade deals is proof that Brexit isn’t working

Editorial: Israel’s economy is roughly twice the size of New Zealand’s, so the gains might be commensurately larger, but the British government can’t say

British politicians are still not coming to terms with the damage Brexit has done to trade across the board (PA)

A few tumultuous years ago, when the Brexit Leave campaign was in its pomp, one of the major arguments in favour of the UK leaving the EU was the ability for Britain to forge its own trade deals. It was, at least, theoretically and partly true.

The EU had never managed to reach trade agreements with the United States, nor the then fashionable “BRIC” – substantial, fast-growing emerging economies such as Brazil, Russia, India and China. The “golden age” of a new relationship with China was almost upon us. With the UK hitched up to such powerful dynamos, it would soon make up for lost trade from leaving the single market and customs union. A few sentimental souls dreamed of reviving partnerships in the Commonwealth of Nations. It would all boost national income and prosperity. Global Britain beckoned.

It’s only fair to observe that it has not quite turned out like that. Indeed, so embarrassed is this “get Brexit done” government about a central failure of policy that it is too shy to share with the public the benefits of the new trade treaty with Israel. Though advanced in some important sectors, Israel remains a relatively small economy, so perhaps not so much can be expected of the deal in the context of the size of the UK economy.

But even so, some estimates might have been thought appropriate, allowing for everything. Recently, the government did publish the figures of its modelling for the recently concluded New Zealand trade deal. The overall effect of the agreement on the UK economy is likely to be very small. The government estimates that the long-run effect will be to increase UK GDP by 0.03 per cent – or £800m – by 2035.

Israel’s economy is roughly twice the size of New Zealand’s, so the gains might be commensurately larger. But the British government can’t say. The excuse is that the Israeli deal is targeted at certain specific industries, but that’s true of almost every such agreement with its different sectoral rules and exemptions. It’s also argued that it’s an extension of an existing agreement, but that was true of the Japanese and Kenyan agreements, for example, both largely “rolled over” from the previous EU treaties. Both, though perhaps surprisingly in the case of Japan, an economy much larger than Britain’s, had meagre net benefits.

The same goes for Australia. It’s said that the application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – extending existing links with Japan, Australia and New Zealand, and encompassing the likes of Vietnam, Mexico and Canada – will unleash more long-term benefits but progress is slow.

A trade agreement with India is apparently being held up by Home Office objections to the number of visas for students and newly graduated workers. Warm words from Donald Trump, the great deal-maker, never converted into anything like a hard treaty, and Joe Biden is using even the vaguest hope of trade talks as a bargaining counter over the Northern Ireland protocol – the great irony there being that Brexit is actually preventing new trade deals with the world’s largest economy. The truth is that a protectionist Congress is unlikely to pass any trade treaty under either party. When president Barack Obama advised the British people in 2016 that they’d be “at the back of the queue” for trade deals, it seems he was about right.

The official British reticence about the economic – and perhaps social and military – benefits of new partnerships isn’t consistent, however. Only the other day, the trade minister, Greg Hands, was on Twitter trumpeting the benefits of pork markets, slightly in the much-parodied style of Liz Truss. Accompanied by a mouth-watering image of pigs in blankets, Mr Hands trilled: “Great news for British farmers who can now sell pork to South Korea! We’ve removed a barrier which blocked exports of products such as bacon & pork sausages and could be worth up to £1m over five years.”

For context, that amounts to selling about one extra Solihull-built Range Rover per year to South Korea’s fashionable classes. It’s still excellent news for the sheep-rearing hill farmers of the UK, but perhaps doesn’t compensate for the loss of membership of the EU single market, which meant it was as easy to sell a chop in Brussels as in Barnsley.

Nor are the new trade deals uniformly good for UK businesses. George Eustice, the former agriculture minister, has now publicly admitted that the deal with Australia will damage the UK’s farmers – and that it was pushed through for political and presentational reasons by a government desperate to show some Brexit gains.

There remain concerns about waiving environmental and animal welfare standards, as well as ignoring workers’ rights and human rights abuses for the sake of more trade. While in the EU, the UK could enjoy the heft of the third largest economic bloc in the world to secure advantages; now agreements can be more “bespoke”, but not necessarily that much better. Besides, Germany exported to China perfectly well without a comprehensive trade treaty; trade deals are not a panacea for an uncompetitive economy.

British politicians are still not coming to terms with the damage Brexit has done to trade across the board. Britain, always a great trading nation, is now less “trade intensive”, meaning that both imports and exports with the EU and the world behind have declined in importance to the UK economy. Yet Britain still relies on trade to make its way in the world, and in a climate of growing protectionism, de-globalisation, “reshoring” and rising geo-political tensions, there is less scope for any kind of ambitious trade deal, let alone transformational ones. Brexit isn’t working.