What a wondrous treat this free trade is
Hostages - sausages of course - to fortune can come in varying degrees of convincingness:
Urgent talks are under way to avert the closure of Britain’s biggest bioethanal plant, which would be a damaging blow to the government in the week that the business secretary will unveil a ten-year industrial strategy.
The owners of the Vivergo Fuels plant in Hull have set the minister, Jonathan Reynolds, a deadline of Wednesday to devise a support package for the industry after it was blindsided by a clause in last month’s trade agreement with Donald Trump that would allow America to export 1.4 billion litres of ethanol to Britain annually, free of tariffs.
This one certainly convinces us - let it go bust. Spend not a penny on a “support package”.
Now, as we’ve said before, we’re not in favour of the bioethanol industry at all. Well, converting interesting fruits and grains into ethanol gains our favour, yes. But not to then stick into cars. But as we’ve noted before this latest trade agreement means Americans can import the stuff into Britain free of tariffs.
Now, our argument against bioethanol is that it requires subsidies. Our argument in favour of free trade is that this means it’s the Americans who are paying subsidies to their own producers. We then get the bioethanol itself free and clear. Sounds good to us. This is also why the plant says it will close - we must subsidise it to make up for the hole in American taxpayers’ pockets being made by subsidies. We’re in a Dr Strangelove endgame, a subsidies gap is opening up.
At which point, of course, the correct answer is we buy the subsidised US stuff cheap, the US has to pay the subsidy, we let the Britih factory go bust so we don’t have to pay that subsidy and we, we Britons, we few of Crispin’s Day, are better off.
What an excellent plan that is. Bit of a pity for those at Vivergo Fuels of course but there we are, live by the subsidy, die by the subsidy.
Tim Worstall