torsdag 17 januari 2019

More Project Fear

Checks on both sides of Irish border ‘mandatory under no-deal Brexit’

So runs a Guardian headline today, which continues ‘Customs expert says extra costs and delays will harm small businesses and WTO rules would kill UK farming’.

The customs expert, described as a world leading expert, turns out to be a Michael Lux, a former head of customs legislation and procedures at the European commission, who said the UK would have to impose customs checks and tariffs on the northern side of the border, despite claims to the contrary by Brexiters.

He would say that, wouldn’t he? If you read on, you will see that this is not the case anyway, as the article explains that, ‘Under WTO rules, the UK could opt for zero tariffs, but it would be obliged to offer this free-trade deal to every other country. This would mean cheap food and dairy products, which currently attract high tariffs, from countries such as Brazil or New Zealand, and might also lead to chlorinated chicken from the US ending up on British supermarket shelves. “It would kill UK farming,” said Lux. He also said Brexiters who claim the UK won’t impose checks in Northern Ireland are naive.’

The bit about chlorinated chicken is obviously the Guardian adding its ha’p’orth to stir up readers’ indignation, which it has to do in its role as cheerleader for Remain.

The UK government might be sufficiently stupid to throw away the benefits of Brexit by imposing tariffs on imported food, and with Hammond as Chancellor, this is a likely outcome, but he will not get away with it without an almighty row.  The notion that cheaper food imports would kill British farming is fallacious. Farming is predicated on fluctuations in the prices of produce. If prices are too low, then some farmland become sub-marginal and the land goes into other uses. Rents on all other farmland fall, and there would be a change in the mix of arable/livestock.

This is the classic Ricardian analysis, but it is evident that Lux does not do Ricardian economics and so comes out with his baseless prediction. (Minford, who should have known better, did the same). There is always a cut-off point, and some farmland will go out of use. The land will not disappear. In the worst case it would be abandoned and revert to wilderness. There is nothing unusual about that. If you visit the Peak District of Derbyshire you will see lots of enclosed fields which were formerly in use but are now sub-marginal.

The article is not open for comment. What a pity.

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