Assessing the Economic Impact of Future Free Trade Agreements on Scottish Agri-Food

Client: Scottish Government

Delivered in collaboration with Wageningen University and Research (WUR)

Aim and Objectives:

The project aimed to assess the economic impact of four new Free Trade Agreements (FTAs), as at 2023, between the UK and four partners (Australia, New Zealand, Canada and the Gulf Cooperation Council (GCC)) on Scottish and UK agriculture. Associated objectives included:

• Conduct an evidence review of studies assessing the impact of trade deals on agriculture, including the UK (Scotland), the EU & other key players.
• Quantify the impact of four selected FTAs on each selected sector with respect to Tariffs, Non-Tariff Measures (NTMs), Tariff Rate Quotas (TRQs) and overall trade impact.
• Quantify the economic output, trade and wages/employment in each selected agricultural sub-sector sector in the UK and Scotland for the scenarios selected.
• Analyse the impact of other economic shocks (Covid) under each scenario.
• Assess the implications for Scottish agricultural industry at both a sectoral and farm-level, particularly in terms of profitability.

What We Delivered:

• A detailed 112-page report which set-out the economic impact of these FTAs on Scottish agriculture over the long-term.
• A comprehensive Evidence Review of previous studies that looked at the impact of FTAs on agriculture whether that be in Scotland, the UK, the EU or further afield.
• A detailed analysis of Scottish and UK output and trade across wheat, barley, dairy, beef and sheep sectors encompassing the estimated tariffs and tariff rate quotas (TRQs) applicable in addition to an updated assessment of NTM costs based on primary research input.
• Supported WUR in conducting a thorough analysis of the long-term impacts of the selected FTAs both iteratively and cumulatively on each agri-food sub-sector using the GTAP-MAGNET model.
• Conduct an additional analysis of the farm-level impacts of the FTAs based on the GTAP-MAGNET model projections. This included an additional Excel-based analysis of the projected impact of FTAs on the Scottish potatoes’ sector.

Skills & Expertise Developed:

• A further enhanced understanding of Scottish agriculture and how new UK FTAs could affect both Scottish farming and its food and drink industry more generally.
• A detailed working knowledge of the GTAP-MAGNET computable general equilibrium (CGE) economic model and further developed our working relationship with WUR.
• A more in-depth understanding of the influence that trade barriers play on UK overseas trade with both EU and selected non-EU partners and how the removal of some trade barriers (brought about by future trade deals) could also influence the future competitive performance of Scottish and UK agriculture.
• Established good working relationships with a number of stakeholders in the Scottish agri-food sector as part of the primary research in particular.