If you think the trade issues in the Brexit debate have been divisive thus far, I have some bad news for you: this is only the beginning.
Trade policy has always been important. It impacts everything from jobs to the fight against climate change. Yet historically trade attracted about as much attention from most of the general public as semi-professional curling.
In most western countries, this apathy can be explained by a broad bipartisan agreement on fundamental trade questions. The major parties everywhere generally agreed that inching toward greater openness was good, provided you took it slowly and didn’t stick it to any industry with a lobby group capable of cutting and airing a powerful ad on primetime television.
The UK public was even further removed from the fray. The European Commission had the lead on most trade issues, thus conveniently shouldering the blame for the downsides of any hard choices.
Brexit changed all that. If you time warped to a 2014 World Trade Organisation General Council Meeting to tell them the politics of a G7 country was about to grind to a paralytic halt for three years over questions of customs paperwork, animal health regulations and the finer points of GATT XXIV… you’d be politely asked to leave because the WTO doesn’t give the floor to private citizens. But I think you get my point.
The UK is divided and tempers are flaring. However, what’s perhaps most worrying is that, on trade at least, the truly divisive policy debates haven’t actually started yet.
To date, the two sides have feuded over whether regaining independent sovereignty over trade policy is worth the disruption involved in attaining it. As part of the EU single market and customs union, the UK traded protectionism and full autonomy over a range of trade policy decisions for unprecedentedly open and simplified access to its neighbour’s markets. Any move toward regaining autonomy, from the most gradual (a customs union plus an approach partially modeled on Norway) to the most extreme (an exit on WTO terms alone), reduces that access.
The UK’s modern economy was built in an environment which included such access, so its removal risks disruption in the short term. Potentially a lot of it. Yet it’s only a foreshadowing of the difficult choices to come.
It is one thing to regain sovereignty, it is another entirely to agree where to point it.
I don’t think even the most rabid Brexit supporter would disagree that on trade policy, theirs was a broad church. Some felt the EU was excessively protectionist and regulatory, stifling the UK’s competitiveness and innovation. Others thought the opposite, that EU membership prevented the UK from sufficiently protecting its producers or supporting them through subsidies. Then there are those, many of them seemingly permanently residing in my Twitter notifications, who hold that trade is an irrelevant side question in the Brexit debate, of no bearing on how we should interpret the Leave vote.
Any contradiction in these views hasn’t been a problem for the Brexit project up until now. Provided all agreed that sovereignty itself is critical, internal arguments on what specifically to do with it could be postponed until Brexit day.
Yet, like dishes left forgotten in the sink which eventually develop sentient mould spores, these debates will soon need urgent resolution if the UK is to adopt a coherent trade policy. It’s not going to be pretty. Trade policy is about choices, and often hard ones.
It is easy to speak in the abstract about rolling back burdensome regulations, cutting tariffs or giving “hard working citizens a helping hand.” It is far more difficult to peel back the soaring rhetoric and expose the jagged clockwork of interconnecting policy choices within.
“Divisions on trade among the Remain camp will doubtless emerge in time”Lowering protection may reduce the cost of imports, but it will expose British industry to potentially fatal competition from abroad.
Raising protection may keep some UK industries afloat, but risks creating a rent-seeking class of producers more dedicated to lobbying for ever higher tariffs than improving their products.
No one likes regulation and red tape in principle, but policymakers looking to slash it often confront the reality that even imperfect regulation sometimes exists in pursuit of a valid (and popular) policy objective. Cutting regulations and reducing costs for UK business is popular, but so too is combating climate change or enforcing labour standards. Even looking only domestically hard choices await, few promising universal acclaim.
Internationally, every negotiation requires internal trade-offs between competing interests. Securing lower tariffs for bus sales to New Zealand will support manufacturing in Yorkshire and Scotland, but what will the UK be asked to offer in exchange? Which currently protected sector will the UK have to expose to greater competition by lowering its own tariffs, or which priority of another UK sector will it have to give up on to secure this concession?
A UK emerging from Brexit will find itself caught between three increasingly mutually antagonistic giants. Across the Atlantic, the US beckons with ideas about minimal regulatory protection and pro-business governance. Proximity, meanwhile, suggests a continued close partnership with the EU, whose regulatory approach is far more cautious and even defensive. All the while, China beckons from Asia with its vast size and entirely different model of capitalism and international engagement.
A post-Brexit UK, with trade now firmly lodged in its collective eyeline, will need to make some difficult choices. It will have to manage not only the divisions within the Brexit camp between “Singapore-on-the-Thames” Libertarians, “Norway Brexit” supporters and “Fortress Britain” nationalists, but also the divisions on trade among the Remain camp which have to date been irrelevant but which will doubtless emerge in time.
At a hyper-politicised time, with trade dominating the headlines, the UK faces tough choices, opposing constituencies and no easy answers.
Trade wonk (and regular Prospect contributor) David Henig is forever pining wistfully for when trade fades from the foreground and those of us in the trade commentariat vanish from view. Given the choices facing a post-Brexit UK, his retirement into obscurity may be further away than he hopes.
