Miriam González Durántez, who in less enlightened times would have been known as Mrs Nick Clegg, used a column in George Osborne’s revanchist Evening Standard shortly before the general election to ‘school’ (as publishers of YouTube videos so love to say) Theresa May on the complexities of international trade ahead of her expected lead in the forthcoming Brexit negotiations. She is an international trade lawyer, after all.
Interestingly, Ms González Durántez wrote that, because “traditionally, trade negotiations are based on a ‘give-and-take’ dynamic, it is indeed almost always the case that ‘no deal is better than a bad deal.’” Except this one, she added, because in the case of Brexit we are moving from a highly open market to an inevitably more closed one. For this reason the column was titled ‘Brexit is back to front’. But why is this?
There was a minority of libertarians, for example, who supported ‘Remain’ in the referendum last year because they valued the modern rarity of truly free trade between nations enough to accept the unaccountable bureaucracy of the Commission, the madness of the Parliament, and the downright moral bankruptcy of the European Arrest Warrant as a fair price.
The reason for this is that international trade generally is back to front. One would like to think, with a Rousseauian innocence, that truly free trade (i.e. the absence of tariffs and other barriers to trade) would be the natural state of affairs between individuals of different nations seeking to trade with each other. This is, sadly, not the way the world works. In times gone by before the introduction of income taxes, sovereigns relied on tariffs and duties as their principal source of revenue, while today protecting domestic industry is a prime concern. So the standard is punitive tariffs for everyone except nations you strike special deals with.
In reality ‘free trade’ is a much-abused term, and our fear of globalisation belies the fact that we have not had truly free trade since 1914, when the First World War smashed the delicate international system of trade and finance. For half a century this system had brought unprecedented productivity and prosperity to the globe. In those days, free trade not refer to the ‘tit-for-tat’ trade agreements we have between nations today – “I’ll give you preferential access for your oranges, provided you give me preferential access for my apples”, as Ms González Durántez explains – but the complete and unilateral removal of all domestic barriers to international trade, regardless of whether this would benefit nations who discriminated against your traders or not.
Britain took the incredibly bold first step towards this new economic order by repealing tariffs on the importation of foreign grain – colloquially known as the Corn Laws – in 1846. The price of bread plummeted and subsequent legislators were emboldened to drop tariffs on ever more areas of trade until, by the end of the century, Britain was a truly free trading nation and the epicentre of international trade. By this time, Britain had forced free trade on much of the world – China through ‘gunboat diplomacy’ and India simply by taking over politically – but, by and large, the rest of the world from Berlin to Buenos Aires followed our successful example voluntarily. We became the change we wanted to see.
But the size of that risk, regardless of whether or not it proved profitable, demonstrates that truly free trade is never free. There is always a price. For the European Union, the price of continued free trade with its single largest market without the free movement of people and the jurisdiction of the European Court of Justice is its disintegration as a political entity. Many other nations, chafing beneath the imperium of Brussels, would demand a similar arrangement. But Brussels’ commitment to free trade is neither philosophical nor humanistic but, like the Prussian Zollverein, merely a tool to bring coax hitherto sovereign states under a federal yoke. In the case of the Zollverein, this was the King of Prussia, as German Emperor. Most of the European Union’s leading politicians are on record wishing this to be a United States of Europe.
This is the reason so many young people who voted to remain in the European Economic Community in 1975 voted to leave the European Union four decades later. They had been sold free trade but had got a Zollverein. Ms González Durántez is right to point out that the Brexit negotiations will be ‘back to front’. But this only goes to demonstrate what is so wrong about international trade in the modern world. Good deal or no deal, we must now channel some of that bravery and leadership this country showed a century and a half ago, and once more set a new example for the world
This article was originally published by Conservatives for Liberty.