Lamb: modelling the impact of the UK-Switzerland FTA

The impact of the UK–Switzerland trade deal was examined for lamb, looking at the changes expected after the deal comes into force. This aspect of the modelling work assumes all other factors, except the FTA, remain the same.

The impact of the UK-Switzerland trade deal was examined for lamb, looking at the changes expected after the deal comes into force. This aspect of the modelling work assumes all other factors, except the FTA, remain the same.

Key points

The model suggests that UK lamb exports to Switzerland will increase by about 205t (an increase of 64% in percentage terms on the baseline used within the model)

• There will be no change in exports from Switzerland to the UK
• The model predicts that changes in production and price will be relatively small in the UK (less than 1%)

Summary of findings

For lamb, the chosen network consists of the UK, EU, USA, New Zealand and Australia, and Switzerland.

The UK and the EU are key trading partners of lamb, New Zealand and Australia are also key exporters to both the UK and EU. The USA is a major importer of sheep meat from New Zealand and Australia. Switzerland does not export any lamb and imports a very small amount, mainly from the EU and New Zealand.

The model predicts a 64% increase in lamb exports to Switzerland in a fully liberalised trade scenario, a rise of about 205 t.

To put this into context, the UK currently exports about 78 Kt of lamb per year with 321 t going to Switzerland. As discussed in previous articles, it is likely that the products exported to Switzerland will be high quality cuts for food service. In order to send more lamb to Switzerland there will be a slight increase of lamb sold by the UK farming sector, an increase of 163 t.

There will be limited changes within the Swiss marketplace as the increase in UK exports will displace imports from EU, New Zealand and Australia, although there will be a slight reduction in the total lamb sold in the domestic market.

The effect on the domestic marketplace is relatively small. Domestic production of lamb will increase by 163 t which is less than 1% in percentage terms.

Table 1 details the impact on domestic production and prices in both countries.

Table 1. Impact on domestic production, prices and total amount of lamb available in both countries

Considerations

The analysis is based on full liberalisation. Switzerland is a highly protectionist country with high tariffs on good especially meat and dairy. There are currently tariffs on beef exports to Switzerland, and negotiations may focus on reducing these not eliminating completely.

There are a number of caveats to these results. Like other economic models, the trade network model is not a prediction or forecast and assumes all factors other than the FTA remain equal.

This is unrealistic in a global economy but is an essential assumption for modelling due to the complexity of predicting future changes.

What the network model can do, though, is examine specific ‘what if’ scenarios and this is something that AHDB will be analysing going forward.

Like other economic models, the trade network model treats all products in a category as homogenous.

In reality, we know that there are varying levels of demand for different cuts of lamb in each market. The model treats all cuts as the same, and therefore the impact of carcase balance must be considered alongside the results. As such, our interpretation considers the modelling results within the context of the other analysis and findings.

The model does not take into account Sanitary and Phytosanitary (SPS) limitations such as Export Health Certificates (EHCs) and other trade barriers, such as the ban on hormone-treated beef entering the UK. Read more about trade implications of Non-Tariff Measures.