Scrap trade agreements to boost free trade
- 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
To read the press release click here