Tuesday, 10 July 2018

Tory Brexiters are held hostage by the smallness of their ideas

So why are the ultra Brexit morons up in arms about May's ill fated proposal? In a nutshell it comes down to the inability to diverge on standards which then puts limitations on what we can offer by way of trade deals with the rest of the world. In theory that is.

But the point they miss, is that the foundation of EU rules consists of global standards and these same standards form the backbone of any FTA the EU has with a third country. It is now in a space race to complete similar deals with Aus/NZ/Japan/Korea/Mexico and India.

The trend for some time has been toward convergence on the global standards, and with every deal the EU signs, the fewer opportunities there are for divergence. The EU is ahead of the game because it is a more lucrative market than the UK.

So as much as divergence limits our ability to trade with the EU (not least because of EFSA risk assessments). remaining options are shrinking - leaving only the USA as the odd man out. So Tories proposing we diverge from the world for the off chance of a threadbare US deal.

This reveals Tory ignorance on trade, and fails to account for the fact that business doesn't want deregulation and consumers do no want to see a relaxation of standards. A USA deal could fail for the same reason TTIP did.

Moreover, there is substantially more to trade than FTAs and there are many more ways to go about it than tinkering with tariffs and regulations. The Tories have tunnel vision because they equate free trade deals with free trade when in reality no such thing exists.

This ignorance, though is not limited to Brexiters. How many times have we seen remainers saying there is no point in Liam Fox's job if we have a customs "arrangement" - as if FTAs and tariffs were the only game in town.

The smart moves for the UK are in the field of multilateral regulatory diplomacy where we have considerable influence anyway. That is primarily why we have been able to shape the EU. Our mission should be to enhance and expand the global rules based system.

The goal of our trade policy should be to maximise the profitability of existing value chains not least since we are approaching global trade normalisation - (which is why growth is anaemic). This can be done with regulatory measures to tackle fraud and counterfeiting.

Deregulation is the luddite approach, sending the quality of trade backwards. What we want is regulatory improvement and harmonisation but taking trade facilitation measures to ensure lesser developed nations can participate. We do this with development aid, not deregulation.

But this requires that we play the long game, investing in trade facilitation. Our ability to do this is substantially diminished by way of leaving the single market simply because we will see tax receipts collapse. Trade costs money, like it or not.

The classic Tory Brexit dogma still had some residual validity back in 1992 when they last did any serious thinking but since then the single market has happened and globalisation has exploded where gradually the single market, for goods at least, will become the global norm.

What we need to do is further develop the WTO TBT and TFA agreements and work toward a global agreement on services. We need to build alliances in all of the global regulatory forums. Reform of those should be our number one concern - the WTO especially.

The Tory imagining of how trade works is small time and old fashioned. Improvements in global intellectual property rules could dwarf the value of tinkering with tariffs on clothes and footwear as JRM would have it. There is a singular lack of vision there.

Ultimately if we hand over our trade policy to the Brexit ultras we'll be back to cavorting druids, death by stoning and dung for dinner. Brexit has risks but also opportunities to form new ad hoc sectoral alliances to challenge the EUs regulatory hegemony.

If we want to do that then joining Efta is our starter for ten. From there we work with others to wrest control of the single market away from the EU and make it a genuinely global inclusive system based out of Geneva. Since that is the direction of travel, why not formalise it?


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