Long overdue optimism on Brexit
The Brexit talks that began last month have focused so far on the so-called bill for leaving the EU and citizenship rights. But the biggest fight will come over trade, an issue that the EU declines to address until substantial progress has been made on the first two. The Government wants what ministers have called a “frictionless” relationship after Brexit, effectively maintaining the same flow of goods and services between the UK and the EU with no tariff barriers.
Some economists believe this could be offered unilaterally by Britain to all-comers, not just the EU. A paper to be published in the autumn by the pressure group Economists for Free Trade argues that this would help generate an annual £135billion uplift to the UK economy. In an introduction, Prof Patrick Minford, the lead author, says the “ideal solution” would still be free trade deals with major economic blocs, including the EU. But were the UK to signal that without a mutually beneficial agreement it could abolish all trade barriers unilaterally it would concentrate minds elsewhere.
Prof Minford has long been a believer in unfettered free trade, often pointing out how being in the European single market has been damaging to a country that trades so much with the rest of the world. Ideally, the best trade policy would be to have no barriers and to trade at world prices with our own regulatory structure. In the long run this would, arguably, produce lower prices and taxes, making the UK a highly competitive economy.
But unilateralism is not the Government’s preferred approach. As Crawford Falconer, Whitehall’s chief trade negotiation adviser, argues on these pages, its aim is to secure a whole range of agreements through bilateral bargaining. Nonetheless, the aim is the same: free trade. Mr Falconer says the department established under Liam Fox is creating a new cadre of trade negotiators, reviving the expertise lost through EU membership. They will be needed to harness the huge economic benefits of free trade. However, he also observes that since new protectionist obstacles are being introduced by G20 nations the UK can help further the cause of global trade liberalisation.
Extolling the virtues of free trade is a positive and forward-looking consequence of Brexit and yet is invariably dismissed by Remainers as a “hard” approach to be resisted at all costs. It is refreshing to hear from people like Prof Minford and Mr Falconer who see that optimism and opportunity lie ahead.