Most Favoured Nation: Peppa Pig World

To TRQ (carcass weight) or TRQ (net weight), that is the question.

First, just to get this out of the way, Peppa Pig is a brilliant example of global trade in the modern era.

Right, now let’s talk about 20th century trade problems.

Some of you might have noticed that the UK-Australia trade deal, despite being announced to much fanfare at the beginning of the summer, has not been concluded yet. I’ve wanted to write about what’s holding it up for a while, but was waiting for a journalist to pick up on the story first.

Thankfully the top trade hacks at Politico Pro Morning Trade UK (worth convincing your employer to shell out for, btw) have done just that. They observe that:

Some believe negotiators are still haggling over the fine print of the deal, in particular over the rules around different cuts of meat.

Yup.

You see, the UK-Australia agreement in principle commits to the following (emphasis mine):

“full liberalisation of Australian originating goods entering UK, while taking account of UK product sensitivities. This includes but is not limited to:

• increasing TRQ volumes on beef over 10 years, with access to a duty-free transitional quota of 35,000 tonnes on EIF, rising in equal instalments to 110,000 tonnes in year 10. In the subsequent 5 years (year 11-15 after entry into force) a product specific safeguard will be applied on beef imports exceeding a further volume threshold rising in equal instalments to 170,000 tonnes, levying a safeguard duty of 20% for the rest of the calendar year. Out of quota tariffs will remain at MFN until year 10 and then be eliminated”

BUT, slightly amusingly, when Prime Ministers Johnson and Morrison thrashed out this agreement they forgot to do one thing … specify tonnes of what.

Now the UK and Australia are arguing about whether the quota tonnage should be applied to carcass weight (the total weight of a dead cow minus the head, hide and organs), or net weight (the weight of the edible meat).

The UK wants to use carcass weight, because in practice this leads to less edible cow meat being covered by the quota. The Australians want to use net weight, because in practice this leads to more cow meat being covered by the quota.

So here we are. And it’s all a bit silly. Because the ultimate end-point is duty-and-quota-free trade anyway. And the transitional quotas are pretty big no matter how you approach them.

But then again, the silliness also provides great content for this newsletter. So swings and roundabouts.