June 19, 2020 1:05 PM

Tim Tams, sheep slashing and a $1m Trump donation: Some things Johnson didn’t tell you in that Aussie trade deal speech


By Kenny Campbell
Best for Britain's Director of Communications


Whether it made you chuckle or chafe, Boris Johnson’s theatrics with a bag of Aussie biscuits, as he hailed the opening of trade talks with Australia, were classic Johnson.

But, as is so often the case with this Prime Minister, the theatre masked some harsh realities. And what he didn’t say was far more important than what he did say.

The bag of Tim Tams – Antipodean cousins of our own beloved Penguins – was a prop to illustrate the superficial benefits of a trade deal with Australia: cut-price snacks from our old Oz muckers.

So far, so dumbed-Down Under.

But, scratch the surface of this stunt, and some genuine issues become immediately apparent, and they are relevant far beyond the walls of chocolate biscuit factories, be they in Stockport or Sydney.

It turns out that Tim Tams are an extremely useful way of shining a spotlight on some key issues around trade deals – though perhaps not in the ways Mr Johnson envisaged. 

1. What’s sauce for the goose: Whose rules matter? 

Check the ingredients on a packet of Tim Tams. You’ll find additives including e102, 110,129,133, which are banned in some countries though not the UK. For example, e133 is a brilliant blue colouring banned in countries including France and Germany.

E102, or tartrazine, is also banned in some countries, after being linked to hyperactivity in children. In fact, the UK Food Standards Agency recommended a ‘voluntary ban’ more than a decade a go.

Still, with appropriate warning labelling, Tim Tams are legal to sell in the UK.

But what if a trading partner has other rules that give them (or us) an advantage, or that are simply illegal in Britain?

This is where welfare and other standards for livestock is driving a wedge between UK farmers and the Government, and vast swathes of voters too – more than a million people have now signed an NFU petition calling on ministers to ensure all food imports adhere to Britain’s high standards.

Back to Australia which, as well as a thriving Tim Tams economy, is also home to 64million sheep. It sounds a lot but is in fact the lowest number since 1904, as farmers have been hit hard by drought.

They need export markets to help rebuild their battered industry, and it’s all but certain Australia will want better access to the UK for its sheep products under any trade deal.

But there are welfare issues. Australia still permits a process known as ‘mulesing’ in which crescent-shaped flaps of skin are cut from a lamb’s rear end – without anaesthesia – to create taught, smooth scar tissue that is less likely to attract blowfly infections, which can be fatal.

According to RSPCA Australia, up to 13.5million Merino lambs are mulesed annually, suffering great pain and distress in the process. In addition, short tail docking removes most of the tail, another process banned in the UK.

And it’s not just basic animal welfare that is causing concern: antibiotics are used to promote growth, and Australian cattle can be treated with hormones.

Hormone-treated beef is something the US wants Britain to accept under a trade deal, and Australia is believed to want the same.

Johnson’s performance with a bag of biscuits did not even hint at these extremely difficult issues, which are going to have to be addressed at some point, and not just with Australia.

In the US, it is legal to farm chickens and pigs in far more intensive environments than it is in the UK, driving down costs but impacting on animal welfare.

And, of course, it’s legal in the US to clean chicken carcasses in a chlorine solution, which critics say can mask poor hygiene earlier in the production process.

Something has to give: if the US demands that its chlorinated chicken, intensively reared pigs and hormone-treated cattle are allowed to be sold in the UK, then the UK is in a bind.

If it refuses, trade talks can stall. If it agrees, British farmers will be unable to compete with cheap US imports unless they are allowed to lower their standards.

And, of course, British exports will be at a price disadvantage in the US too.

Trade deals are complicated; there’s a reason they take years, not weeks, to agree properly. 

2. Crunch decisions: What’s in it for the companies?

Back to Tim Tams. The UK has a population of about 66.6million, and a growing biscuit market worth £2.7billion; Australia’s population is 25million with a biscuit market worth around $770million, and declining.

In other words, getting access to the Australian market is not nearly as big a deal as getting access to the British market.

And, lest we forget, the European market for cookies and crackers is worth something like £30billion, so sorting out our post-Brexit arrangements with the EU is going to be much more important than a deal that gets us easier access to Australia’s biscuit shelves.

One thing we should remember is that Britain’s biscuit giants are – like Tim Tams – largely foreign-owned. That’s right, Penguins are part of the massive Turkish Yildiz Holding family, a group that isn’t necessarily going to see everything through a red-white-and-blue lens.

So, would an influx of low-tariff tasty Tim Tams put British jobs at risk? Are you going to buy both Tim Tams and Penguins?

And would the damage to our domestic biscuit industry be offset by low-tariff opportunities in the much smaller Australian market?

The point here is not that international trade and deals are bad things, they most certainly are not.

Both sides should come out winners overall. But, buried within a deal of any complexity, there are likely to be winners and losers and, if you are employed in a vulnerable industry, you’re going to need time to adjust (as is your employer).

3. Follow the dough: What’s in it for the politicians?

Perhaps nothing at all. Perhaps the simple joy of saving biscuit eaters a few pennies as they munch on exotic foreign comestibles.

What could the humble Tim Tam have that political parties might want?

Tim Tams are produced by Australian biscuit company Arnott’s which, last year, was sold to US private equity firm Kohlberg Kravis Roberts, or KKR.

KKR became infamous for their leveraged buyouts of corporate America in the 70s and 80s, and were the Barbarians at the Gate in the book of that title, which chronicled their $25billion swoop on RJR Nabisco.

As of March 31st this year, KKR had $207billion in assets under management (for some context, before Covid-19 hit, UK borrowing was expected to be about £55billion) and co-CEO Henry Kravis alone is worth $6billion.

Kravis is no stranger to the world of politics, and gave $1million to Donald Trump’s 2017 inauguration campaign – enough, apparently, to entitle him to a ticket for a ‘leadership luncheon’ with members of the Trump cabinet.

So, while Boris Johnson’s choice of Tim Tams may have been completely random, it would be naïve not to ask if somebody in the corridors of power has dreams of dipping their paws into that gilded biscuit barrel.

4. The law of unintended consequences: Pollution, poverty wages, health

International trade is a good thing. Some countries are better at producing tea, others are better at producing oil, and economist David Ricardo explained the whole comparative advantage thing way back in 1817.

Trade can help bind nations together and offer consumers the sort of choice they could not have dreamed of a generation ago.

But how necessary is the international trade in biscuits? There is controversy aplenty about the environmental costs of shipping produce and it is an extremely complex topic.

For example, if Britons want tomatoes in the winter, because there is no fresh alternative, then it is likely to be less polluting to fly them in from overseas rather than heat greenhouses to grow them locally.

International trade can be good for the environment, for example by encouraging the development of new, efficient technologies.

But there are some harsh truths: international trade permits us to clothe and feed ourselves on the cheap, because the rules around employment rights and minimum wage levels do not apply globally.

And the use of Tim Tams as an example of the benefits of trade could be viewed as peculiar, given that Britain is so concerned about excess sugar consumption that it introduced a ‘sugar tax’ on soft drinks.

A Queen Mary University study showed three-quarters of Britain’s biscuits have a high sugar content, and original Tim Tams each contain a couple of teaspoons of sugar – a third of our daily recommended intake – though they are certainly not the worst offenders in this respect.

5. Good news: We can build this city on Choco Rolls

At the time of writing, the minimum wage in Australia is A$19.49, or roughly £10.74. The British equivalent is £8.72, and a whole lot less if you’re young.

Now, the online reviews of McVitie’s as an employer suggest people making Penguins are happy with their pay, so we’re certainly not having a go at that company or its moreish munchies.

But that minimum wage means it might well make economic sense for our Australian friends to turn Britain into a green and pleasant biscuit factory, then send the Brit-bics back to Oz.

And if it works for Australia, why not other countries with higher wage standards too, as Britain builds a low-wage, low-skill biscuit manufacturing army?

Britain could go from being a nation of grocers to a nation that supplies grocers with lunchbox treats. Get biscuits done.

Trade deals – with the EU in particular – are essential in the modern world. They are complex, and they are difficult to do well.

They reward both sides but they take time, and goodwill, on both sides.

They must be constructed properly. And anyone who tells you otherwise is simply taking the biscuit.


By Kenny Campbell
Best for Britain's Director of Communications

Follow us on Twitter @BestforBritain


 

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