We have a unique opportunity to write a new trade policy from scratch – which is why I’ve launched the Institute for Free Trade

We have a unique opportunity to write a new trade policy from scratch – which is why I’ve launched the Institute for Free Trade

Much of the focus of BrexitCentral has, quite understandably, been on the arrangements Britain negotiates with the EU27. Most of our politicians, and almost all our commentators, share that priority. But there are 165 countries which are not in the EU, and these countries will, to a single approximation, account for all the growth in the next hundred years.

Liam Fox was criticised when he said that trade would be the easiest aspect of our eventual deal with Brussels, but he was absolutely right. Never underestimate what Milton Friedman called “the tyranny of the status quo”. The biggest obstacle to any trade deal is that companies and individuals have learned how to make a living out of the existing system, however irrational it is. On this occasion, though, uniquely, the two sides are beginning from a position of zero tariffs and regulatory equivalence. The inertia bias will, for once, pull toward free markets.

The same is not true of non-EU states. There, we shall face all of the special pleading and insularity that trade liberalisation always provokes – in our own country as well as in those of our negotiating partners. Time is short and, even assuming that we quickly agree to replicate the deals that the EU has with third countries and concentrate on the countries where no such deals exist, we shall have our work cut out.

That is why I am launching the Institute for Free TradeWe shall make the case for unrestricted commerce as the supreme instrument of poverty alleviation, conflict resolution and social justice. We aim to use Brexit as an opportunity, not just to open our markets, but to revitalise the world trading system, which has been more or less stalled since the mid-1990s. It is not every day that a G7 economy gets to draw up an entirely new trade policy: an opportunity like this won’t come again.

We shall explore the scope of specific deals with non-EU states. Indeed, we have already started: a few weeks ago, I organised a trade conference in Kampala for British, European and East African businesses, looking at ways in which Brexit could be used to remove obstacles. Even those African states that enjoy tariff-free access to the EU under the EBA programme often face non-tariff barriers. A Ugandan vanilla producer, for example, explained to me that EU standards on vanilla are effectively drawn up French lobbyists who own plantations in Madagascar, and are set in such a way as to exclude competition.

Obviously, Britain will place a great deal of weight on securing a mutually advantageous trade agreement with the United States, which accounts for nearly a quarter of the world economy, and which is our biggest trading partner, and both our chief destination for and our main source of overseas investment. We shall be looking, too, at deals with China, India, Mercosur, Australia, the Gulf States and others.

Our Board is made up, not of politicians, but of successful entrepreneurs. Actual importers and exporters, in other words, rather than the PR and corporate affairs types who often speak for industry bodies. We also have an International Advisory Panel, comprising statesmen who have liberalised their own economies, from Australia’s Tony Abbott to Spain’s José María Aznar.

We are working closely with the relevant government departments. Our launch at the Foreign Office tonight will be addressed by Boris Johnson and Liam Fox, and attended by politicians and diplomats from friendly countries, EU and non-EU.

Britain is in an unfrozen moment: we have 18 months in which to draw up a new trade policy. Either we shall take the opportunity open our markets, in the way that Hong Kong and New Zealand have done; or we shall simply roll over most of our existing EU tariffs and quotas with the ambition of getting around to reducing them at some point in the future. If we take the first course, or something close to it, we shall quickly find, as Hong Kong and New Zealand did, that almost no one wants to go back. If we take the second, we’ll have walked past one of the greatest opportunities that Brexit offers.

Photocredit: Gage Skidmore