Consumers should always come first in trade deals
22 January 2018
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Healthcare
19 January 2018
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22 January 2018
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19 November 2024
On 17th January, I appeared as an expert witness on Brexit and US-UK trade relations before the House of Commons Select Committee on International Trade. A recording of the full session (which also included interesting contributions from Dr Peter Holmes and Warwick Lightfoot) is available here.
Here are some of the key points.
First, there is overwhelming evidence that free trade is good for consumers. UK households could save 100s of pounds a year if tariffs were removed on imports from outside the EU. Many studies have also shown that increased openness in trade is associated with faster economic growth and rising living standards through other channels, including more competition and gains in productivity.
Second, though, there will be some losers, at least initially. The impact of free trade can be asymmetric: the benefits are often large but divided between a great many people while the small number of losers are usually better at organising themselves and lobbying in favour of continued protectionism. They may need some help to adjust, but barriers to trade are a very poor way to protect jobs.
Third, the challenges raised by the Irish border are often exaggerated. In particular, would the volume of goods that might bypass EU standards and tariffs through a single open border really be large enough to threaten the integrity of the whole Single Market? It is also perfectly possible to check goods some way away from the border itself.
Fourth, it is wrong to assume that the most restrictive food standards are necessarily the best. Instead, regulations should be science-based and proportionate. The presumption should be that the choice of what foods to buy is left to consumers, unless there is clear evidence of risks to human health or animal welfare that only government intervention can address.
Fifth, it is not obvious that trade deals always need to include mechanisms for investor-state dispute resolution. But there should be little to fear if they do. It is hard to see why an international court, operating under sensible principles, would rule in favour of a foreign company against a national government that is acting reasonably.
Sixth, it is nonsense to argue that allowing more US firms to bid for UK government contracts on the same basis as those from the rest of the EU would inevitably lead to the ‘Americanisation’ of the NHS. This is demonstrated by the diversity of healthcare systems and funding models within the EU itself. However, consumers surely have just as much to gain from more choice and competition in the provision of healthcare as in any other area.
Here are some of the key points.
First, there is overwhelming evidence that free trade is good for consumers. UK households could save 100s of pounds a year if tariffs were removed on imports from outside the EU. Many studies have also shown that increased openness in trade is associated with faster economic growth and rising living standards through other channels, including more competition and gains in productivity.
Second, though, there will be some losers, at least initially. The impact of free trade can be asymmetric: the benefits are often large but divided between a great many people while the small number of losers are usually better at organising themselves and lobbying in favour of continued protectionism. They may need some help to adjust, but barriers to trade are a very poor way to protect jobs.
Third, the challenges raised by the Irish border are often exaggerated. In particular, would the volume of goods that might bypass EU standards and tariffs through a single open border really be large enough to threaten the integrity of the whole Single Market? It is also perfectly possible to check goods some way away from the border itself.
Fourth, it is wrong to assume that the most restrictive food standards are necessarily the best. Instead, regulations should be science-based and proportionate. The presumption should be that the choice of what foods to buy is left to consumers, unless there is clear evidence of risks to human health or animal welfare that only government intervention can address.
Fifth, it is not obvious that trade deals always need to include mechanisms for investor-state dispute resolution. But there should be little to fear if they do. It is hard to see why an international court, operating under sensible principles, would rule in favour of a foreign company against a national government that is acting reasonably.
Sixth, it is nonsense to argue that allowing more US firms to bid for UK government contracts on the same basis as those from the rest of the EU would inevitably lead to the ‘Americanisation’ of the NHS. This is demonstrated by the diversity of healthcare systems and funding models within the EU itself. However, consumers surely have just as much to gain from more choice and competition in the provision of healthcare as in any other area.
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