French President Francois Hollande ©Pool/ABACA/PA Images
"Trade! Huh! Who is it good for? Absolutely everyone!" As, Edwin Starr didn't write. But seriously, why, given the fact that trade creates jobs and growth, cuts prices and pays our wages, is it so unpopular?
The latest sign of the low regard in which trade is held is the announcement by French President Francois Hollande that he will never sign up to the Transatlantic Trade and Investment Partnership—a proposed trade deal between the US and the European Union—in its current form. Some see that as a death knell for the agreement, though the ambition of a deal being done within three years—as was the original timetable—was an overstretch. Trade treaties do, though, traditionally take years to complete. The Doha Round of trade negotiations under the World Trade Organisation (WTO) has been going since 2001 and paused since 2008. This is more than a sobering counter to the notion that post-Brexit an EU-UK trade deal would be rapidly forthcoming.
Free trade is progressive. Consider the case that Mike Moore makes—no, not that one; he is former Labour Prime Minister of New Zealand and former Director-General of the World Trade Organisation. Open economies bring many advantages. Markets and free trade reward commitment to equalities: there is a price to pay for discrimination, an economic price for the loss of growth when you lock women or minorities out of productive parts of the economy.
Free trade is essential, too. As we are unwilling to live in a world where we only eat, use or wear things we have made ourselves, we are tied to a world of trade. That is what brought me the MacBook on which I write this article and the smartphone on which you read it. The only question regards the conditions under which that trade is conducted. Trade barriers raise costs and that hurts workers and their families, while liberalisation cuts costs and helps them.
And free trade spreads ideas—freedom is contagious. It leaches from trade to freedom of ideas, freedom of speech, freedom of association.
So why does the idea of free trade seem to be in retreat in the UK and the EU? It is a mixture of cowardice and context. The former is easily explained. We have a political class who suffered massive reputational damage after the Global Financial Crisis. Many of those in power as the crisis erupted have been ejected from office, and many of those elected to replace them have struggled to be effective or popular. Hollande is a good example. Rather than leading he has decided to pander—TTIP has been thrown off the sled. It won’t do him any good, France needs better ideas not none at all, but expect his actions be echoed elsewhere.
The latter issue—context—is in many ways more interesting. As TTIP has floundered the Trans Pacific Partnership (TPP) has been signed. Why? Because it links countries who want, experience and expect growth: Singapore, Chile, Australia, Vietnam among them. And it has a queue of countries wanting to join. It has been observed that Obama is the first "Pacific President"—Hawaiian born and orienting himself naturally towards the new fulcrum of the world in both security and economic terms. Paul Keating, former Australian Prime Minister, has described our contrasting fortunes in characteristically blunt terms—he says Europe is settling in for a long run of 1-1.5 per cent growth per year. We are not going to like that.
Britain remains an outlier in terms of public support for free trade but no-one makes the case. It is just a sense of our history as a trading nation—and our success in trading not just goods but services, which means that many people understand the link between trade and prosperity directly. If politicians are either too scared or too unpersuasive we need other voices. But here we hit the problem: business leaders are keeping their heads down too. This hurt the campaign to keep Scotland in the UK, which would have been an economic disaster. It is hitting the campaign to keep us in the EU also. Too many businesses are hoping that that economic disaster can be avoided without them lifting a finger.
Well, business needs a licence to trade—not just a regulatory one but a popular one too. If it will not defend what is in its then it is likely to suffer. And, since the business of the UK is business, so will we. There are strong voices in private—you hear them at dinners across the country. Some say in public what they say privately. But where are the banks and the financial sector, the legal firms and the advertising and PR giants.
Good ideas need people to champion them—free trade is one of the greatest liberating forces in the world but who speaks for it?
