Rational debate and the movement of opinion swayed by facts and analysis has always been at the centre of our parliamentary affairs. As a nation we want issues to be decided by this rational process. So it should be with Brexit.
The one option we could choose that has not had the attention it has deserved has been the option of leaving the EU without any trade agreement under the auspices of international law as administered by the WTO. Brexiteers have focused understandably on the aim of a good trade agreement with the EU. Diehard Remainers have argued that we should stay in the EU Customs Union to avoid the ‘high costs’ that would attend any trade agreement, let alone the ‘chaos’ that would be unleashed if we left with none at all under WTO law. In this they have been aided by selective leaks from a Civil Service report which has claimed there will be lost GDP under any scheme short of staying in the EU fully, but especially under the WTO option.
Yet sober economic analysis shows that the option based on WTO rules not only brings us substantial gains from free trade – as well as control of our laws and borders – but it also implies the very opposite of chaos; and most importantly of all, it can be implemented without any assistance from a plainly uncooperative EU. This makes it highly attractive. All that remains is to convince our lawmakers of these points and to that end Economists for Free Trade have just published a report explaining the advantages.
Let us begin with the WTO. Because we surrendered our active role in the WTO to the EEC when we joined it in 1972, 46 years ago, it is not surprising that the WTO’s role and workings are little known or understood in UK public circles.
The WTO has had a long-existing function to police non-discrimination in tariffs via the Most Favoured Nation principle. But the WTO has also in recent years produced three path-breaking sets of rules to codify and enforce non-discrimination in trade standards for goods and services, and to streamline border procedures.
Some people seem to think the WTO is an irrelevant ‘toothless’ body which will be trampled on by large trading powers such as the US, the EU and China. However, the US has relied on it to force the EU to admit GM foods and also in a recent dispute between Airbus and Boeing. For China, the imprimatur of the WTO has always been crucial to underpin its massive export planning. The EU in turn will want to use the power of the WTO to hold back or complicate as far as possible President Trump’s tariff threats. Countries generally choose to obey the law because then others will do the same.
To read Patrick Minford’s piece for BrexitCentral in full, click here.