Ministers should argue against Brussels protectionism during their final year at the EU table

Ministers should argue against Brussels protectionism during their final year at the EU table

Securing new trade deals with the nations of the world, which are mutually beneficial for both Britain and for our trade partners, is one of the great prizes from leaving the European Union. A key reason that an independent trade policy is so desirable is that the EU’s inconsistent trade policy – which the UK is currently forced to follow – is in reality highly protectionist. Negotiations, particularly with emerging markets, are conducted from a position of bargaining strength using the bribe of access to the single market.

But the European Commission focuses trade negotiations on non-tariff regulatory issues: the environment, labour and product regulations. This builds high walls for exporters in poorer countries, particularly those with products where raw materials have been processed and value added in supply chains. But as the IEA’s Shanker Singham has argued, trade policy should be about breaking down barriers, not building them up.

Britain will have to abide by the result of these negotiations until it leaves the EU. However, while still a member we can still engage and demonstrate an antipathy towards restrictions on trade. Supporters of a free-trade Brexit do not have to wait until March 2019 to act against protectionism: trade barriers are being erected in Brussels right now that will impact the UK’s ability to strike free trade deals, including with our Commonwealth friends and partners who recently met in London. We must not turn our back on the ideals of free trade; we must signal the reason we are leaving the EU is to open up, not close trade.

Singham highlighted the example of palm oil – one of the most important agricultural exports for fast-growing countries in Africa, Latin America and Asia. The EU is currently planning to ban some palm oil imports to be used in the production of biofuels energy in a protectionist measure designed to benefit the already rich and well-supported EU farming sector. Since a large proportion of vegetable oils used in bio-fuel in Europe is imported palm oil, while the European Union is the largest global producer of rapeseed (a substitute for palm oil, for bio-diesel uses), it is not hard to guess who would gain most from a ban. European consumers would face higher costs, but the real pain would be inflicted on those countries with which we need to start negotiating trade deals when we leave the EU.

Palm oil exporting countries, from Colombia and Nigeria through to Malaysia and Indonesia, where the ban will hurt, have reacted furiously. For Nigeria, which used to be the world’s largest producer of palm oil and has only recently started to reinvest in the crop after decades of neglect, an EU ban would be a major blow to its agricultural ambitions. The measure has been compared – with some justification – to President Trump’s foolish steel tariffs. The EU will suffer retaliation from potentially dozens of countries in Asia, Latin America and Africa if it moves ahead with the ban.

It is easy to think that Brexit means that the UK doesn’t have to worry about such EU protectionism any longer. Not so. The UK is affected by this in three ways. First, the UK government seems to support, or is indifferent to, this protectionist move inside the Council of the EU, the body which makes the final decision. This is a crazy stance, given that we are crushing thousands of export jobs in these countries only a few months before we turn around and ask them for a free trade deal. It is a perfect example of the civil service bias towards Brussels that will have to change when we have an independent trade policy.

Second, the case for free trade is harmed because bans such as this propagate the dangerous idea that trade should be focused on environmental, rather than economic, objectives. Third – and perhaps most importantly – we are undermining the global trade rules-based order if we support actions that are so clearly against the WTO, and which harm our Commonwealth friends and allies.

Furthermore, it is easy to see that the environmental claims by the EU and Iceland do not stack up (Malaysia, the major palm oil exporting country to the UK, actually has a growing forest area according to official UN data, and is one of the world’s leading preservers of rainforest). Using environmental arguments to justify a trade-restrictive measure is a trick used often by the EU regulators in Brussels – and the UK too often signs up to these regulations: in effect, choosing protectionism over openness. This has to stop, if post-Brexit trade policy is to be successful.

Instead, we need to send a welcoming message that Britain is open for business. The good news is that we can start right now – before we even formally become an independent trading nation – by pledging to oppose any such protectionist nonsense in Brussels while we remain a member of the EU. Opposing the palm oil ban is a good place to start, but there are so many other EU tariffs and restrictions we can also publicly oppose over the coming months. Doing so will send a signal to the world that our commitment to free trade is expressed in deeds, as well as mere words.