Saturday, 26 August 2017

ConservativeHome: Economists for Free Trade should be called Economists for Protectionism

ConservativeHome: Economists for Free Trade should be called Economists for Protectionism

by Garvan Walshe

"Their plan for unilateral free trade looks attractive. Economically, there´s no difference between a legal trade barrier and a physical one. Imposing a barrier on imports is like “putting rocks in your own harbour” as the economist Joan Robinson used to say. But they neglect the fact that international trade negotiations take place between protectionists. They are really an exercise in countries saying to each other: “I’ll take this rock out of my harbour, if you’ll remove that one from yours.” Unilaterally fishing your own rocks out deprives them of an incentive to remove theirs.

And though Minford is right to say we have no reason to protect inefficient manufacturing industry from foreign competition, modern trade isn’t about tariffs anymore. It extends into politically sensitive ‘rocks’ equally able to impede commerce. These are treacherous reefs: immigration policy, labour laws, animal welfare regulation. The benefits of modern trade agreements accrue from their mutually assured removal, which makes countries adopt the same standards. It must be added that Matt Ridley is wrong, mutual recognition of standards isn’t enough: should we, for example, recognise American animal welfare standards for livestock, if they recognise ours? Or what would Americans think if they had to allow all cladding approved for use in UK buildings to be fitted on American skyscrapers, however combustible American regulators considered it to be?"

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