5 thoughts on “Who’s afraid of free trade?”

  1. Posted 21/08/2017 at 13:57 | Permalink

    A great read, thank you.

  2. Posted 22/08/2017 at 17:57 | Permalink

    Economic theory says that there are gains from trade since free trade (or restricted trade) is superior to autarky (no trade) regardless of the trade policy pursued by other countries. Some people lose, but the gainers could compensate the losers so that everyone gains from trade. However, what you do not address is that a large country, such as the UK , could lose from a unilateral reduction in tariffs (or the unilateral elimination of tariffs) due to the worsening of the terms of trade. This is the rationale for multilateral trade negotiations through the World Trade Organisation (WTO).

  3. Posted 25/08/2017 at 14:11 | Permalink

    Any links to the critical articles? They would be useful.

    ” … what about things that other countries can only produce more cheaply using large subsidies or some other undesirable advantage? … Why shouldn’t our consumers benefit if another government is daft enough to waste its own taxpayers’ money?”

    This strikes me as a rather glib response to the subsidised imports argument. And its this sort of glibness that probably goes some way toward explaining why the IEA and messrs Dowd and Minford are having trouble getting their arguments taken seriously. And I speak as someone who is instinctively supportive of IEA type proposals.

  4. Posted 30/08/2017 at 07:57 | Permalink

    @Julian Jessop:

    “Of course, there would be some losers from free trade among consumers as well as producers…”

    Julian, could you provide some examples of where there would be consumers who lose from free trade? I’ve been racking my brains but I can’t think of why this would be, or of any such examples.

  5. Posted 23/09/2017 at 15:47 | Permalink

    HJ,

    Free trade is not just about tariffs. It is about regulatory standards. Consumers can lose from Free Trade. Consider pharmaceuticals. Liam Fox has suggested that Indian pharmaceutical approval standards will be good enough for the UK. It could be that they are not and patients will die or suffer complications the excessive bureaucratic burdens of EU harmonized pharmaceutical safety regulations might otherwise protect them from.

    Or consider Small Electrical Appliances. The initiative damping forces of the EU intend to rate the energy use of Small Electrical Appliances by their performance. So they will measure the suction produced by a vacuum cleaner and compare it to energy use. Dyson for example produces innovate, ergonomically elegant designs but it might be that they tend not to be energy efficient. When similar legislation was introduced for Large Electrical Appliances, energy consumption for new machines fell in two years. Protecting producers from informed consumers is a producer’s motivation for leaving the EU and would result in Free Trade harming consumer interests. Down with tariffs to import from Malaysia and down with consumer information to diminish competition from firms still manufacturing in the EU.

    Then there is a boom and bust aspect. China has a huge glut of steel capacity. Exceptionally low steel prices reflect Chinese steel makers efforts to stay in business. As these plants are mothballed or closed, prices will rise again. However, during this, say five year period, Free Trade might destroy our assets like the Port Talbot steel works (developing it’s capabilities since 1130 AD) that take decades or centuries to develop and effectively cannot come back. That said, the solution in steel is not tariffs, regulation or local content requirements in public sector tenders but a reduction in energy costs for UK steel makers. This means building 3 big nukes amongst other measures. Instead of which we waste political time on the immaterialities of Brexit. “Sovereignty”. If its so good, why can’t Scotland, Wales and Cornwall have it?

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