Britain should unilaterally drop tariffs and become a champion of free trade
Today the Foreign Secretary gave a major speech at Policy Exchange – the first in a series by UK Ministers setting out the Government’s vision for Britain after Brexit. Our advice is simple – Britain should unilaterally drop tariffs and become a champion of free trade. This message has important, progressive consequences and is contained in Policy Exchange’s latest report, published on Monday.
As part of the EU Customs Union, the price of many everyday goods is kept artificially high – a policy which hits low-income households hardest. Food and clothing are two examples where tariffs keep out cheaper products, protecting the incomes of wealthy landowners and raising shopping bills for ordinary consumers.
Globally, the world’s poor are also hit. Farmers in Africa and South America are shut out of EU markets and prevented from developing their economies in an area where they enjoy an advantage. We nobly spend billions of pounds on international aid but then impose tariffs that hold back sustainable development. There is nothing progressive about the Customs Union. As Labour MP Graham Stringer has recently said – progressives should think twice about supporting protectionist policies and entities.
Protective tariffs also stifle domestic economic reform – holding back modernisation and harming productivity. One of the best ways to address the much sweated-over productivity crisis would be to expose domestic firms to international competition. Since the Australian economy was opened up to the world in the 1980s it has seen 26 years of economic growth. Free trade is perhaps the most effective industrial policy we know about.
Commenting on the report in a foreword, the Australian High Commissioner to London said: ‘Trade is not a zero-sum equation. In the decades ahead all major economies should remove their tariffs and open their markets to competition. As the UK once again takes its place at the WTO it should take the opportunity lead by example and remove its tariffs. Other economies should follow that example if they want to increase the prosperity of their people.’ He is right.
Government ministers are about to set out their vision for Britain after it leaves the EU. They should embrace a bold programme of liberal reform, combining the interests of low-income households in Britain with a global campaign for free trade.
This Policy Exchange report is the latest in a series which seeks to show how Britain can thrive as it leaves the EU and joins the world. Last month we described how a future immigration policy should level the playing field – welcoming the world’s best and removing the bias towards low-skilled EU migrants.
We were also pleased when the Government followed our published policy of future agriculture policy – declaring that subsidies for farmers should aim to enhance the local environment, not top-up the income of wealthy landowners with inefficient farms.
As cracks begin to show in some of the tactics of EU negotiators – from the Irish Border to ‘punishment sanctions’ during the transition – the UK Government has an opportunity to articulate a positive, progressive vision for Britain and the world. And as it does, Policy Exchange will continue to develop ideas and provide a platform for this most important of national debates.