established 1828C
omments by the former US Treasury
Secretary Larry Summers this week,
claiming that Britain will come off
poorly in negotiations for a trade deal with
the US, should not be surprising. He has
previously declared that Britain’s vote for
Brexit was ‘the worst self-inflicted policy
wound that a country has done since the sec-
ond world war’ so he would not want to be
proved wrong by Britain doing well out of
leaving the EU.
But the reaction to his intervention
has emphasised a peculiarity in attitudes
towards free trade, from both Brexiteers and
Remainers. Many of those who are keenest
to assert the importance of free trade with
the EU tend to retreat in fright whenever the
prospect of a trade deal with the US is raised.
Exit the single market, they tell us, and Brit-
ain will face a shrinking economy, along with
shortages of food and medicine. Negotiate a
trade deal with the US, on the other hand,
and we face the NHS being destroyed, as
well as the population being forced to eat
genetically modified food and chlorine-
washed chicken. Brexiteers, meanwhile, are
sanguine about tariffs on EU trade, while
talking as if tariff-free American trade would
be transformative.
The only way to square these two con-
trary positions is through the highly parti-
san politics of Brexit. Free trade with the US
is opposed by some Remainers for no bet-
ter reason than because it is advocated by
Leavers. The advantages of free trade with
our closest neighbours are being dismissed
by Brexiteers because Remainers want
them. On such a foolish basis is the future of
Britain’s trading relations with the rest of the
world being debated.
The reality is that free trade is almost
always on balance a good thing, regardless
of which country it is conducted with. That
said, there will always be compromises to be
made. Vested interests have to be tackled.
Product standards have to be reviewed,
and domestic producers must be exposed
to external competition. It is no use trying
to resist this, because it will inevitably result
in the other side also refusing to make con-
cessions. Good trade deals can even destroy
native industries — but the overall effect of
global trade is to boost the creation of wealth.
Competitive industries expand into newmarkets, while uncompetitive ones are driv-
en out by cheaper products from overseas.
The important thing is to make the right
concessions. Quite rightly, the government
has ruled out dismantling the NHS. Health-
care in Britain needs reform, but it shouldn’t
be linked to trade policy. Nevertheless, the
NHS has always outsourced some of its
services — which last year accounted for
7 per cent of its budget. There is no reason
why US providers should not be allowed to
compete for this work on equal terms with
British companies. What is there to lose, for
the NHS or for patients, by ensuring that
when NHS hospitals are unable to provide a
service, the widest possible range of alterna-
tives can be offered?
As for GM crops, they have been the
subject of far greater scaremongering than
EU directives about bananas and so forth.
Some of those trying to spread misinforma-
tion about GM foods may be unaware that
we have already been eating them for years.
GM soya, maize and sugar beet are allowed
to be imported to the EU because so much
comes from North America that it proved
impractical to exclude them. No one can
point to ill-effects, and for good reason: GMfoods are subject to far more scrutiny than
non-GM foods. Twenty years ago, Britain was
on the cusp of being a leader in GM tech-
nology, but the industry was snuffed out by
the EU’s precautionary — or perhaps more
accurately protectionist — principle. Dis-
mantling the barriers against GM should be
one of the advantages of leaving the EU.
Then there is the practice of washing
chicken in chlorine, which has been continu-
ously cited as a reason why we shouldn’t do
a trade deal with the US. Even the EU, when
it banned chlorine-washed chicken in 1997,
came to the conclusion that the practice
was perfectly acceptable from a food-safety
point of view — but banned it anyway on
the flimsy pretext that it might provide farm-
ers with a false sense of security. A better
explanation is that it spied the opportunity
to snuff out US competition for less efficient
European producers. The issue of chlorine-
washing ought to be examined through
investigating the evidence, rather than dis-
missed (as it was by the Brexit-championing
Michael Gove, seemingly on the grounds of
spurious claims made by activists).
With the Trump administration engaged
in a trade war with China, and with the EU
refusing to discuss a trade deal with Britain
without also attempting to control our regu-
lation via the Irish backstop, the curtains on
global trade are being drawn in the wrong
direction — reversing decades of progress.
A trade deal with the US — as well as ones
with Australia, South Korea and many other
countries that are keen to do business with
us — would send a signal that globalisation
of trade is far from over.
But it isn’t going to happen unless we are
prepared to open our markets. Allow poli-
cy to be directed by protectionists’ myths,
and we will be turning our backs on a huge
opportunity to increase wealth. That really
would be a self-inflicted wound.Tr a d i n g p l a c e s
The reality is that free trade
is almost always
on balance a good thing