Tuesday, 21 March 2017

Free trade and not so free trade

Yet again yesterday, the UK Prime Minister told us that she wants a “good free trade deal” with what’s left of the EU after Brexit.  It isn’t just her, of course; the refrain about free trade has come from most if not all of her ministers repeatedly over recent months.  But when this message comes from the mouths of people who are deliberately placing obstacles in the way of free trade, it is reasonable to ask whether they are simply being disingenuous, or whether they really don’t understand what “free trade” means.
There are two types of obstacle to free trade – tariff barriers and non-tariff barriers.  But much of the discussion revolves only around the first of those; to hear them talking, one might believe that, if only we can come to an agreement on tariffs, the problem is solved.  But in reality, tariff barriers are the easiest part to overcome, and I am entirely willing to believe that, given an adequate timescale (which is almost certainly longer than the 2 years allocated for Brexit talks) and goodwill on all sides, a deal on tariffs will be possible.
It is the non-tariff barriers where the real obstacles will arise.  Free trade, as we know it at the moment within the EU, is based on the idea either of a common set of regulations across the whole free trade area, or as a minimum, a broad acceptance that regulations set by different countries can be regarded as equivalent.  This part of the agreement is the part which actually does most to facilitate the movement of goods and services across the national frontiers without checking or verification.  But the abolition of rules made “by Brussels” (in reality through negotiation between the 28 partners in a long drawn-out process which eventually reaches a position acceptable to all) is central to the aim of the Brexiteers.  They don’t want to follow the same rules as everyone else; they are seeking to gain an advantage by not having to follow those rules. 
Whilst I can see a prospect of a deal on tariffs, I see little prospect of a deal on the non-tariff barriers as long as one side is determined to  have a single set of rules and the other is even more determined to work to a different set of rules to give itself an advantage.  Yet for reasons which escape me, most Brexiteers seem to seriously believe that they will get their way on this.  The likeliest outcome is that a deal of some sort on tariffs will end up being spun as a free trade deal in order to claim a “success”.  But it is unlikely to look that way to those companies and employers who find themselves having to negotiate their way through different sets of regulations after decades of being faced with a single set.

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