Richard North, 18/03/2017  

A little while back, I published a blogpost about the EU-South Korea FTA, a pivotal agreement in the contemporary world trading system, as the first example of the "new generation" of free trade agreements.

Not least of its distinguishing features was it length, running to 1,432 pages, reflecting the subjects covered and the complexity of the deal. But the agreement took on an extra dimension when Matt Ridley chose in his Times column to compare it with the Australia–South Korea FTA.

Of this, he made two specific claims, now subject to an IPSO complaint. The first was that it was agreed in a shorter period of time than the EU version, and the second was that it concentrated on "trade" and thereby was "considerably simpler in respect of standards, regulations, etc, than those the EU has been trying to agree".

Unlike the EU treaty though, which is published in a single coherent document, the Australian version is split between 48 separate files, each of which have to be opened and a .pdf file downloaded before the page length can be determined.

Yesterday, I carried out this tedious exercise and did the count. With 23 Chapters, 21 Annexes and three Roman numeral annexes, together with side letters and schedules, it comes to 1,827 pages – nearly 400 pages longer than the EU version.

As to the timing, we reported earlier that, although Ridley implies it took six months to negotiate, we found that the process started with a feasibility study in April 2008. The deal was signed in April 2014 – not six months, but six years after negotiations had started.

By contrast, negotiations on the EU-South Korea FTA started in 2006 and the final agreement entered into force on 1 July 2011. In Flexcit, however, I pointed out that the current trading agreement was accompanied by a broader-ranging 64-page framework agreement on political cooperation.

What was particularly significant, though, was that the negotiations that had led to the agreements were only the last stage of a process which had started in 1993, with negotiations on a customs cooperation agreement. But, in strictly comparable terms – like-for-like with the Australian deal, it took five years. Effectively, the Australian deal took longer to negotiate, even though it did not include the deal on political cooperation.

As regards its content, we see chapters on such things as Customs Administration and Trade Facilitation; Technical Barriers to Trade; Rules of Origin and Origin Procedures; Cross-Border Trade in Services; and Audiovisual Co-Production. This is in every way comparable with the EU trade treaty, including the comprehensive dispute settlement procedures.

The same goes for the China deal. In November 2014, it was described by Australian Trade Minister Andrew Robb as: "by far the most comprehensive and ambitious agreement that China has struck with any country in the developed world".

The take-home point here is that modern trade deals are complex affairs, covering a wide range of issues. There are no short cuts and they are always going to involve long and complex negotiations. In the Australian-China deal, one of the key sticking points had been investment thresholds, limiting the ability of state-owned Chinese enterprises to buy farmland in Australia.

A review of the agreements shows that the issue of regulatory harmonisation was by no means central. One of the main obstacles to an agreement with South Korea had been its insistence on investor-state dispute settlement provisions, following the legal dispute over plain packaging with tobacco giant Philip Morris. Thus, the UK expectations that a swift agreement with the EU can be reached, purely on the basis of notional regulatory convergence, is entirely unrealistic.

Much as the "hard brexiteers" would wish otherwise therefore – to say nothing of the Government – there are no reasonable grounds for expecting a trade agreement to be reached within two years. No amount of fantasising or manipulation by the likes of Matt Ridley will make any difference to that.

In actuality, only by resorting to distortions and self-delusion can any case be made for achieving a trade deal within a two year period, other than one involving a craven surrender which would leave us considerably worse off than we are now. Even Lamy's estimate looks generous.

That then leaves us with the idea of a transitional deal, but we are no further in our pursuit of clarity than we are with other issues. A Government which continuously tells us that it is possible to reach a deal in two years is not one that can be relied upon to craft a workable interim solution.

When we add to this the latest intelligence, that the EU will seek a resolution to the financial issues before moving on, things start to look extremely grim. But still we get idiots such as Jacob Rees Mogg prattling about the merits of the WTO option, insisting that countries such as China and the United States work exclusively under WTO rules.

We have reached a situation, though, where facts no longer seem to have relevance. When people like Rees Mogg, and Ridley, Peter Lilley, John Mills, John Redwood and many others, are confronted with facts that contradict their beliefs, or pose obstacles to their desired solutions, they simply ignore them. 

In other respects, we see either an inability to tease out the facts, or a culpable ignorance, where people do not seek out facts they might not want to hear. It is instructive, in this context, that when I gave evidence to the Treasury Select Committee, Rees Mogg was present but did not ask me a single question.

When you have people who are ignorant because they prefer it that way, wilfully ignoring good evidence because they don't like what they are hearing, it changes the dynamics of the debate. It's no longer a question of the best arguments. It becomes an issue of who can should the loudest, who has best access to the media, or who has the most "prestige".

Nevertheless, facts are still facts, and one fact is that we've comprehensively caught out Matt Ridley. His "shorter" Australia-South Korea deal is actually longer then the EU equivalent and, on a like-for-like basis, took longer to negotiate. When it comes to timing of any trade deal we might agree with the EU, Ridley hasn't got case. His answer, doubtless, will be to shout louder and ignore the facts from low-born upstarts.

But one might recall that this is the man who eventually admitted to a "catastrophic black mark" when describing his leadership of the failed Northern Rock Bank.

And this is the man who is telling us that we can do a trade deal inside two years – all on the basis of a "conversation" with an Australian politician. Such predictions are no more safe with Ridley than were the unfortunate depositors of Northern Rock.

comments powered by Disqus

Brexit - the first year - New e-book by Richard North
Brexit - the first year - New e-book by Richard North
Buy Now

Log in

Sign THA
Think Defence

The Many, Not the Few