Friday, 20 January 2017

The one track obsession with tariffs will kill Britain's trade reputation

One of the most depressing aspects of the Toryboy fixation with tariffs is that it pays no real attention to the facts on the ground. What use is a free trade agreement if you lack the means to trade with the UK? If archaic infrastructure and corrupt and inefficient ports are eating into your profit margins then any agreement on tariffs is not worth the paper it is written on.

Worse still, with ever more trade requiring sophisticated IT systems for conformity and compliance - and ease of navigating customs, much of the world is excluded. 57% population can't afford the Internet and 50% don't have access to relevant content in their language

If we want cheaper food then we need to be looking at developing countries but half of Africans don't have mobile phones and there isn't the infrastructure to support those who do. A recent Guardian article shows what happens when you build a mobile mast in rural Africa. Very rapidly it becomes a population centre with a whole village popping up in its shadow. That is the kind of investment needed to facilitate trade. These days, without internet, trade just doesn't happen.

But what is also lacking are the mature systems that make for trustworthy and reliable trade. There have been improvements but still the system is nowhere near adequate. It is readily exploited by the worldwide black market in counterfeit goods. If the net result of "free trade" deals means dangerous or poisonous goods then trust in the system collapses.

The World Customs Organization (WCO) and the International Institute for Research Against Counterfeit Medicines (IRACM) announced this week the results of their fourth common initiative in the fight against fake medicines on the African continent. There were record seizures of 113 million illicit and potentially dangerous pharmaceutical products, which took place in the context of Operation ACIM (Action against Counterfeit and Illicit Medicines) in September 2016.

The number of seizures made in joint IRACM-WCO operations has now reached dramatic proportions, with almost 900 million counterfeit and illicit medicines seized at the borders of the continent. “Of the 243 maritime containers inspected, 150 contained illicit or counterfeit products". Staggering. And that's without looking at food fraud.

That's really the sort of thing we have all the single market agencies for. For all that some have it that the single market firewall diverts trade away from Europe, ultra free trade comes with massive costs and externalities, not least counterfeit medicines. It's why we have the AEO system along with sophisticated and expensive market surveillance mechanisms.

It's one of the many reasons life in the west is better. We can buy food and medicine with confidence. This kind of thing can only come about through a network of international cooperation and if we wish to maintain it and we wish to shape it then it necessarily requires that we contribute to the running of it. The fact that many of these agencies fall under EU jurisdiction is neither here nor there. It is a fact of life, that is how the system has evolved and maintaining present levels of involvement is unavoidable.

Chancers and free trade frauds like Shanker Singham have it that we should leave the single market so that we have the ability to relax regulations where really that's the last thing we want to do in the face of the massive liabilities that creates. As much as there is less scope for deregulation as single market standards are derived from global standards, much of the base level of regulation exists for a very good reason.

If Britain wants to become a global Britain and take a leading role in the world then a myopic and crass fixation with tariffs will get us nowhere. Rather than breaking up the sophisticated systems that facilitate free and fair trade we need to be investing all the way through supply chains in the common good - to break the stagnation of trade normalisation. In this we still have to prioritise supply chain security and if we want better trade then we need to lend our regulatory expertise to developing counties to solve the blight of counterfeiting.

Dropping standards and reducing tariffs doesn't really get us anywhere. Only through working with various global agencies can we tackle the many problems that hinder trade and that is not going to happen without considerable aid spending. If there is a Brexit dividend, which is highly unlikely, it will have to be spent on trade facilitation because scraps of paper signed by politicians aren't going to get the containers rolling. We will have to work doubly hard to replace the trade we lose by way of erecting non tariff barriers with Europe, it's not going to come for free and anyone who believes the Tory mantra of "bumper free trade deals" after Brexit was pretty much born yesterday.

Bilateral deals on tariffs can only give us marginal increments to existing supply chains. Many tariffs exist for pretty sound legacy reasons and we should not be any hurry to casually disregard them. Any future agreements must be meticulously studied rather than ratified for their own sake. That is why MPs need to take trade far more seriously than they do presently. There is enormous scope for self harm. If we want progress on trade then we have to recognise we are limited in what we can do alone and we will have to build up strategic alliances to split the costs of developing new trade lines.

In this the answers are to be found in regulatory harmonisation and customs cooperation through multilateral bodies. Trade unilateralism is an obsolete and unproductive mentality and in many ways it subverts efforts to bring about a global system of trade that matches the single market for security and stability. That will not make us any friends. I am sad to say that those driving the Brexit agenda have only a two dimensional view of trade which is ultimately self-defeating and a zero sum game. If we really are sincere about our commitment to international cooperation then a purely mercantile approach to trade and development is insufficient. We need to think bigger and longer term.

If we allow the agenda to be set by the likes of Fox, Baker and Redwood then we stand to demolish our credibility and ultimately Britain will be worse off for having left the EU. Brexit need not make us substantially poorer and in fact it could be a major opportunity but first the establishment must lose its infantile obsession with tariffs and learn to appreciate that trade is a far more involved discipline. How these people ever ended up in positions of influence given how little they know really does beat the hell out of me. The sooner they are removed, the better.

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