No Need To Queue: The benefits of free trade without trade agreements



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Scrap trade agreements to boost free trade need to queue_3.pdf

  • It is widely believed that trade agreements are necessary to enable the UK to prosper in world markets. In reality, unilateral free trade is possible and offers many benefits.

  • The UK’s exports of services to the EU owe little to the Single Market as national barriers to trade in services still dominate in Europe.

  • Trade agreements typically involve substantial trade diversion as domestic interests exert pressure on governments to protect particular producers.

  • In world terms, the UK benefits from the ‘importance of unimportance’. If any country or group of countries decides to erest trade barriers against us it cannot influence world prices and we can trade elsewhere.

  • When the general equilibrium consequences are properly understood, trade agreements by small countries are seen to reallocate output, but do not alter world prices in the long run.

2016, Current Controversies Paper No. 51

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Shadow Monetary Policy Committee

Patrick Minford has been the Professor of Economics at Cardiff Business School, Cardiff University from October 1997. Between 1967 and 1976 he held economic positions in: the Ministry of Finance, Malawi; Directors' staff, Courtaulds Limited; HM Treasury; HM Treasury's Delegation to Washington, DC; Manchester University; and the National Institute for Economic and Social Research. From 1976-1997, he was a Professor of economics at Liverpool University. Patrick Minford was also a member of the Monopolies and Mergers Commission between 1990 and 1996 and one of HM Treasury's Panel of Forecasters (the 'Six Wise Men') between January 1993 and December 1996. He was awarded a CBE for services to economics in 1996 and is the author of: books, articles and journalism on exchange rates, unemployment, housing and macroeconomics. Patrick Minford currently directs the Julian Hodge Institute of Applied Macroeconomics at Cardiff University Business School.