Should we tie our own hands behind our back on free trade?

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July 31, 2017 by Paul Goldsmith


Pro-Brexit politicians and activists will constantly invoke the benefits of lifting our eyes to distant horizons, of heading out into the wider world and of being free to make trade deals with the likes of Australia, China and the USA. That’s all very well, but in order for those deals to actually happen they are going to have to marshal their intellectual forces in favour of free trade and against protectionism a LOT better than they are at the moment. The past week alone has shown how difficult it will be to persuade the British public at large that free trade is in their interests.

I am referring in a narrow sense to the outcry over ‘chlorinated chicken’, which became the focus of Liam Fox’s visit to the USA to start talking to them about trade possibilities. Chicken in the USA can be washed in chlorine, in order to cleanse it, which in turn is needed because the chickens are kept in the US under far more cramped and dirty conditions than the EU allows. The European Food Standards Agency doesn’t actually have a problem with the chicken being washed in chlorine, because it does result in a clean product. It has a problem with the conditions the chickens live in beforehand.

Yet, the headline was about ‘chlorinated chicken’. It was highlighted as one of the many problems of achieving free trade deals with other countries – it is not just about tariff barriers, it is about ‘non-tariff barriers’, regulations on standards that allow all goods and services to be traded freely within the EU, but exclude many products from outside. If we are to have a trade deal with the USA, we may have to accept their different production standards and regulations, and they are, but people seem to forget about this. There is a massive difference between the way the EU makes laws (you can’t do something unless it is permitted and then regulated) and the US and UK makes laws (you can do anything unless expressly forbidden). Leaving the EU will mean that Britain would leave this different law-making system (superior to British law) and be able to decide the laws and regulations it wants.

This is where those who want to Remain, or to remain within the Single Market, and the EU rules that involves, are going to focus on. Leaving the EU could mean that Britain enters into competition with the EU, giving it the ability to have its own consumer product regulations, labour laws, environmental protections and tax regime. Look for headlines such as the ones on ‘chlorinated chickens’ or ‘Sweatshops could return’ or ‘factories could be allowed to poison lakes’ or ‘corporation tax could be scrapped’, which all COULD happen, but are unlikely to.

Bear in mind, the UK has always been well ahead of the EU in all of these areas. Be it minimum wage, working conditions, equal pay, climate change legislation, the British public have voted again and again for parties whose ideas on many issues on which the EU regulates. But it suits Remainers to make dark warnings about what COULD happen – partly because the Leave vote has made them trust their fellow citizens even less. Every time a politician or activists says that they don’t want to lose the social and environmental protections the EU provides they are saying that they think the British public would vote for a party that would take them away.

EU chief negotiator Michel Barnier shares those fears, but for different reasons. He told a House of Lords Committee on July 12th that “We are of course totally integrated now in the single market, and you will diverge mechanically. The questions that we have are: is that divergence reasonable? Is it under control? Is it mastered, and if so by whom? Or will it become a tool for regulatory competition with us?” He then argued that attempts top compete with the EU in the areas of tax for example would make it impossible for a trade deal to be ratified by the EU 27’s national parliaments.

But if Britain cannot decide on its own regulations in employment, social protection, the environment and tax then it would be negotiating trade deals with other countries with one arm tied firmly behind its back. We would be leaving the EU but with no possibility of accessing beneficial trade deals with other countries. Brexit is the removal of a constraint that prevents the UK from doing its own thing if it is anything else. It may not be a guarantee of national success, but it does allow the UK to decide on its own laws and regulations, and that means something to many people.

If we are to achieve any free trade deal with other countries, Brexit-leaning politicians and activists need to make this point more, and call out those like Barnier who are trying to tie the UK’s hands, and those who disagree with Brexit, who are determined to assume the very worst could happen, and substitute those arguments for reason.



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