Home > Uncategorized > Where will Brexit leave us on trade?

Where will Brexit leave us on trade?

shutterstock_30486304This is a question that wont go away and has generated some fairly hysterical reactions from all sides. Trade agreements have become something of an obession in certain quarters and perhaps its time for a more realistic analysis. For this I come back to Matt Ridley

Matt is certainly a “leaver” but anyone questioning the stance would do well to go through his points line by line.

On timescales

A conversation last week with Tony Abbott, the former ­Australian Prime ­Minister, brought this home to me. When he became PM, Mr Abbott did something unusual.

Noticing that his country’s trade negotiators had spent years meandering towards deals with China, Japan and other countries — enjoying room service in five-star hotels in different cities as they did so — he set them deadlines.

Within six months Australia had signed a trade deal with South Korea.

Japan took eight months, China 13. There were just 150 people or so involved on the ­Australian side.

And is it trade?

The European Union makes them very hard. It began ­negotiating a trade ­agreement with America more than 27 years ago.

The resulting Transatlantic Trade and Investment ­Partnership leviathan is barely about trade at all, but about the rights of multinational companies in the courts and other such matters.

The obvious?

Besides, there seems to be a growing misapprehension that you need trade deals to trade, as if they were licences to trade. America, China and India, with which the EU has no deals, are among its ­biggest trading partners.

The EU is ­actually the best organisation to join if you DON’T want trade deals.

It has ­remarkably few and they are mostly with small countries: Mexico and South Korea are the biggest.

The real effect of “tariffs”?

In any case, the fall in the Pound more than compensates for such tariffs. I talked to a British manufacturer last week who said that with the Pound at $1.20, he can barely keep up with global demand on WTO terms from the rest of the world.

Diehard Remainers who liken that ­outcome to crashing off a cliff edge into catastrophe are wrong for two reasons.

First, under the WTO’s most-favoured nation principle, the EU cannot raise ­tariffs on our goods higher than they impose on other countries. It cannot ­discriminate against us.

Second, under the WTO’s national ­treatment principle, the EU cannot use non-tariff barriers, such as regulations and standards, to discriminate against British goods and services to favour domestic businesses instead.

Im finding little to disagree with here

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