Sunday, 20 August 2017

"It is a counter-intuitive idea"...

... says the BBC:

... but actually the economics textbooks do provide some support for the idea of unilateral trade liberalisation.

Patrick Minford on top form, Bremoaners on top form, BBC at its quietly biased best.

Ms Ebell's own research showed that if the UK left the single market but made unilateral trade deals with major developing economies...

A trade deal is of necessity bi- or multilateral. No such thing as a unilateral one.


James Higham said...

Yes, entirely depends, does it not, on what one means by 'trade liberalization'? The dotting of i's and crossing of t's I mean.

Pablo said...


As part of the Brexit debate, we are being told by the "remainers" that we need to protect home producers, which is what the EU's Single Market has done for the past 40 years. In other words, imports are a bad thing and dumped goods are the worst of all. American President Donald Trump is saying much the same thing - that US industry should be supported, by keeping out imported competitive goods. On the whole, it is the "remainers" who are most critical of Trump for his alleged populism. There is an inconsistency somewhere.

It doesn't stop there, either. The EU has imposed sanctions on Russia; ie it is refusing to allow certain goods to be sold to the country, which has had a damaging effect on agriculture in some EU countries. The US is following suit. North Korea is also the subject of this kind of sanction. Which is a further inconsistency. If imports are a bad thing and should be restricted by tariffs, then sanctions must be good for Russia, North Korea and anyone else on the receiving end of them. In which case why are they being imposed? If dumping is a bad thing and we want to damage the economies of those countries, surely they should be the recipients of dumped goods and we should be sending shiploads of stuff in their direction, produced at below cost? That would also satisfy Trump's desire to rejuvenate the US steel industry.

paulc156 said...

Even Minford accepted that unilateral free trade without recipricosity would mean devestation for large swathes of manufacturing. So it seems a non starter for political reasons if nothing else. Is much of manufacturing strategically important to the UK? We've ended up contracting out nuclear power generation at hugely inflated cost to foreign states because we abandoned that field long ago so it's a valid question.
Furthermore he postulates tend of billions worth of gains from 'deregulation'.
We are one of tge least regulated economies in the OECD so he's going to have his work cut out justifying that one. T
Regards workers from old manufacturing fonding new work in time that sounds fanciful. It was not the case for miners, though it was suggested it would be at the time.

Shiney said...


I speak as the owner of a SME manufacturing company and I can tell you that unilateral FT would be, on balance, pretty good for most SMEs.

#1 - if the cost of basic stuff like food and clothing goes down in price then UK consumers have more disposable income = higher business for SMEs who tend to trade in the UK market and not export all that much.

#2 - many manufacturing SMEs import their basic RMs or, if not, the suppliers of the components do - costs will probably go down or at least stay even if tariffs are abolished. If they are SME service businesses then #1 helps as employees have more money and don't press for pay rises.

#3 - some of the REALLY (REALLY) stupid EU inspired regs could be got rid of - they've probably cost my small business > £150k over the last 4 years.

#4 The biggest EU sponsored 'regulation' of course is VAT - which we would be free to get rid of and replace with LVT one we exit. How cool would that be!

On the downside (and in the spirit of being even handed)

#4 - Lower currency = increased costs of imports BUT it also means imports of competitive products are more expensive so there will be benefits and downsides on that. Plus reduction in tariffs offsets the currency effect - sort of.

#5 - ummm can't think of any other downsides right now.

Shiney said...

Ooops - numbering fail!

Lola said...

Shiney. There are NO downsides to free trade. None. De nada. Bupkiss. Bugger all.

Lola said...


"UFT should also be supplemented by efforts to reach trade agreements with major trading partners, including the EU. The purpose of these deals should be to promote free trade, but the recent record of trade agreements is not auspicious: multilateral trade deals have achieved little trade liberalisation in over two decades. Recent deals such as the Transatlantic Trade and Investment Partnership do not seek to promote free trade as much as to promote regulatory harmonisation and the woolly notion of ‘partnership’.

As I have been saying. The SM is a protectionist construct.

Shiney said...


Agreed, but was just trying to answer the specific points about manufacturing. Which I know something about ;-D

Lola said...

Shinet. I 'know something about financial services'. That starts with unilateral bank reform...

Ralph Musgrave said...

Paulc156 says “Even Minford accepted that unilateral free trade without recipricosity would mean devestation for large swathes of manufacturing.”

Actually it wouldn’t and for reasons given by Frances Coppla here:

Basically the reason is that if we open our doors to tariff free imports without getting any tariff reduction on our exports, the initial effect is of course to mess up the balance of payments. But that’s compensated for sooner or later by a fall in the pound which re-balances the balance of payments. Hey presto: exports balance imports again.

Coppola describes that error of Minford’s as a “school boy” one. She’s right.

Lola said...

RM. Under the gold standard I believe that was called the 'species flow mechanism'? Trouble is under the current fiat money system the central bank will likely step in and mess it all up. Again.