September 15, 2017

RACE TO THE BOTTOM:

Best hope for free trade is to have principles : Britain should argue against the rules-based system of the EU and China and champion the ways of the Anglosphere (Matt Ridley, 9/11/17, The Times)


[E]xternal tariffs are pure self-harm; they are blockades against your own ports, as the economist Ryan Bourne has pointed out. We impose sanctions on pariah regimes, restricting their imports, not to help their economies but to hurt them. The entire point of producing things is to consume things (the pattern of pay shows that we work to live rather than vice versa), so punishing consumers is perverse. As Adam Smith put it, describing the European Union in advance, "in the mercantile system the interest of the consumer is almost constantly sacrificed to that of the producer".

Therefore, after Brexit, Britain should try unilateral free trade no matter what everybody else does -- and even if the United States turns more protectionist. So argues a group of 16 distinguished economists, Economists for Free Trade, the first part of whose manifesto From Project Fear to Project Prosperity is published today. They calculate that unilateral free trade would benefit the British economy to the tune of £135 billion a year. One of them, Kevin Dowd of Durham University, has also written a powerful new pamphlet for the Institute of Economic Affairs entitled A trade policy for a Brexited Britain.

He argues that unlike in every other kind of negotiation, unilateral disarmament works with trade. Dismantling barriers to imports -- removing sanctions against your own people -- reduces the costs of the goods for consumers, reduces the costs of inputs for most producers, lowers inflation, creates employment and boosts growth.

So the best negotiating strategy is liberalise first, talk second: dare others to follow suit. 

Posted by at September 15, 2017 3:08 PM

  

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