So, British Prime Minister Theresa May has met President Trump. Trump joked that in the absence of his Commerce Secretary, he would have to handle Trade negotiations himself. Clearly he hasn’t realised – or doesn’t care – that the UK cannot officially enter into trade negotiations until the UK has formally exited the EU.
But it seems nobody cares much about this prohibition. Liam Fox has got the International Trade brief, and is being dispatched to New Zealand for ‘informal’ negotiations already. He has stated that similar discussions are going on with other countries, and no-one now seems to pretend that formally adhering to the EU prohibition is even necessary.
There is even more frankness from outside the EU. Professor Ted Malloch is the man tipped to be Trump’s ambassador to the EU. He spoke to the Guardian earlier this week, and dismissed the problems caused by this technicality: “There’s nothing to stop a group of people going to a resort in Virginia and hammering this out, which isn’t a public affair … we’re talking politics here”.
It is to be wondered how successful trade negotiations with the United States are going to be. Trump has spoken the language of Protectionism, bemoaning the loss of manufacturing jobs in America. On his first full day in office he rescinded the Trans-Pacific Partnership that had taken Obama 7 years to conclude. But he has made it clear that this is because he prefers bi-lateral agreements to those conducted with big blocs, which may be to the UK’s advantage.
The specious lures of protectionism are only available when the two economies are at a very different level of development: I don’t think a Trump government will be worried about the British economy undercutting them substantially on wages. The apparent problems of free trade (as Trump sees them) adhere mainly between rich and poor countries; when the two countries maintain a similar standard of living then these problems diminish. A free trade therefore is eminently possible.
Simultaneous to this has been Theresa May’s statements about the Single Market. The Prime Minister has made it clear that she wants trade to be conducted as freely as possible with the European Union, but that she will not countenance accepting the Common External Tariff. There has been criticism of her aims.
Some criticism has been levelled on account of the fact that the UK trades much more with the EU than with the rest of the world. Remainers say that it is illogical to leave a currently existing free trade deal with our biggest trading partners, in the hope of forging new trade deals with countries we trade less with. This imbalance is necessarily the case: in matters of trade, geography will always count. But if we approve of free trade, then why is free trade with Slovakia good, but not free trade with New Zealand?
Trade is mutually beneficial. It is in our interest to buy quality German cars, just as it is in Germany’s interest to sell them us. It is in our interest to buy high quality cuts of lamb from New Zealand, and fewer lower quality cuts to poorer countries abroad. Nothing has done more to elevate the world’s population out of absolute poverty than the benefits of free trade. Freeing ourselves from the Common External Tariff can only be a good thing. There ought not to be any reason why we should impose tariffs on our European neighbours, nor why they should impose tariff on us.
But other criticism has come from within the EU. Guy Verhofstadt – the Belgian Prime Minister between 1999 and 2008 – is the EU’s chief negotiator in the Brexit talks. He replied to Mrs May’s speech by saying that the EU could “never accept a situation in which the status of a country outside the union is more favourable than to be a member of the European Union”.
Unfortunately, the EU is a political project, and economic considerations play second fiddle. It doesn’t make economic sense to maintain Greece in the Euro, preventing them from devaluing their currency; boosting their exports and encouraging tourism. But then it never made sense to admit Greece in the first place. Greece currently has a youth unemployment figure approaching 50%.
The Common External Tariff is not a manifestation of any approval of free trade. It is the recognition that the EU is trying to create a single, unitary state. It is a precondition of statehood that the citizens are free to move and trade within the boundaries of the state as they will. No normal trade deal comes with conditions of free movement attached
This is entirely unobjectionable. It is what the EU has always been about, and I wish them well. But if we didn’t want to see the project to its conclusion, then we shouldn’t have joined when we did.
If the Eurocrats can impose a punishing settlement, without angering their voters at home too much, they shall do. They are engaged on a political project, and want to dissuade wavering nations from taking the same leap we have. This is to be expected: we shall have to hope that the reality of economic logic holds firm in negotiations. But it is precisely their unwillingness to establish a deal that is to the benefit of both polities that confirms so very much why we needed to leave. If the Brexit negotiations are how they treat their enemies; the Greek Tragedy is how they treat their friends.
David Hume published an essay in 1758, at the height of the Seven Years’ War with France. Entitled ‘Jealousy of Trade’, he concluded: “I shall therefore venture to acknowledge, that, not only as a man, but as a BRITISH subject, I pray for the flourishing commerce of GERMANY, SPAIN, ITALY, and even FRANCE itself. I am at least certain, that GREAT BRITAIN, and all those nations, would flourish more, did their sovereigns and ministers adopt such enlarged and benevolent sentiments towards each other”.
O Hume, ‘thou should’st be living at this hour; England hath need of thee!”