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Comment

Brexiteers can’t have both free trade and protection

by Michael Prest | 14.04.2016

Brexiteers do not have a coherent vision of the trade policy which will emerge should the UK stumble in a fit of absence of mind out of the EU. The problem for Brexiteers is that their camp is the most divided since the Greeks pitched their tents outside Troy. Amid the muddle, broadly speaking, two main sets of opinion are discernable.

In one tent sit the free marketeers, who favour some version of a laissez-faire trade relationship with the world, including the EU. In another sits a group who, judged by their views on immigration and support for industrial subsidies, are de facto protectionists. It is in many ways a conflict between competing, if well-worn, visions of society: a laissez-faire ideal of a small state and openness to the world against a larger state and more control over relations with the outside world.   

A recent report by Open Europe inadvertently highlights the contrast. The free market think-tank argues that the best way to offset the probable hit to GDP post Brexit would be a combination of free trade, opening Britain up to low-cost competition, relatively high immigration and deregulation.

Some Brexiteers might find this formula palatable. Others would gag. Open Europe recognizes the likely strength of opposition to free trade: “Recent controversies, particularly around the steel sector, highlight the potential political challenges to opening up trade with emerging markets and particularly with non-market economies such as China. Striking trade agreements with such countries may well face significant grassroots opposition.”

Put bluntly, Brexit is likely to spark trade policy chaos. It will be hard to reconcile the free trade and protectionist tents. The issue will be fought out in a turbulent political arena, not a  think-tank’s political vacuum.

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Who will be prime minister? Who will be in his or her administration? Will the Conservative Party split? What mandate for negotiating with the EU will a House of Commons, a majority of which backs Remain, give the government? And then there is the little matter of the EU. Our erstwhile European partners are unlikely to be well disposed towards the UK and could be outright hostile.

Behind the political reality lies a deeper truth. Brexiteers’ competing trade policies are likely to end in confusion because the two main camps are well past their sell-by dates. The debate between free trade and protection has its roots in the nineteenth century, as do the corresponding visions of society. Whatever the understandable concerns voters have over immigration or the future of the UK’s steel industry, neither free trade nor protection is the answer.

The eventual economic model may not be a million miles away from the current arrangement – little change to red tape and social protection, continued migration but not global free trade. The fundamental disadvantage, of course, would be that the UK would no longer have a say in how the EU was run and we’d have to go through frightful disruption to get from here to there.

If this is the outcome, the electorate will be unhappy. Voters who chose to leave the EU could understandably feel betrayed if their main concerns – especially immigration – appear to be reinterpreted out of all recognition by the kind of wily politicians they thought they had voted against. Further disillusion with politics and politicians is the last thing we need.

Edited by Hugo Dixon