Why protectionism must not overwhelm Brexit

The free trade, globalised world order since the end of the second world war has always had the United States at its epicentre. Yet this world order is under attack; consumed by Trumpist protectionism, support for international trade is a bright spark amidst the darkness.

Such brightness was provided this week, as the largest bilateral trade deal in history created a glimmer of hope for global interconnectedness. The parties in question were the EU and Japan; eliminating tariffs on almost all goods traded between the two, it covers almost a third of global GDP and 600 million people. European exports to the Land of the Rising Sun are worth £75bn annually, with tariff removal further expanding the market. European cheese, wine and handbags, traditionally subject to large tariffs at Japanese borders, are predicted to see large sales increases as Japanese consumerism extends to the European mainland.

This deal is symbolic. As the US heightens its trade wars with China and the EU, it has withdrawn its role as torchbearer of the globalised world for the past 70 years. America’s retreat into its shell, promoting its economic interests by removing itself from the world stage, has enabled other powers to emerge as the bastions of free trade. As Europe and Japan rise to the forefront, the US is an anomaly amongst the West – in its reluctance to sustain the world order that it itself created.

America has long been an avid supported of an open world. The free market, laissez-faire economy created by the Founding Fathers in 1783 had free trade at its forefront – albeit superseded by protectionism in the 19th century. The post war multinational organisations – IMF, World Bank and WTO – all had the United States at their epicentre. The Bretton Woods system, creating a fixed exchange rate where all currencies were priced in relation to the dollar, inextricably tied America to international trade. Trump is a stark detachment from American history.

Dire consequences are to follow, for both American consumers and for businesses; as Jean-Claude Juncker remarked at the unveiling of the bilateral trade pact, “there is no protection in protectionism, and no unity in unilateralism”. Globalisation is not a cure for all ails – Trump is the voice of the dissatisfied swathe of unemployed Rust Belt industrialists who have seen the multinationals and emerging markets soar ahead, stripping them of prosperity. Yet trade wars with China and the EU – the two largest trading bodies in the world after the US – will only prove damaging to these workers through increased prices for basic goods, and a reduced disposable income.

However, Trump’s unilateral action is not only indicative of a protectionist world order, but also a shifting pattern in international relations. The Cold War era was defined by the US, armed with its free trade Western allies in Europe, against the Soviet bloc. Such had been maintained under the Obama era, yet the words of the President at the Helsinki summit with Vladimir Putin indicate a shift towards Trump’s own ideals. His refusal to attack Russia for its 2016 electoral interference, together with his relaxed stance on North Korea – declaring that there is “no rush” for denuclearisation – suggest a relaxation towards the dictators. Siding with Russia on its illegal electoral meddling that potentially changed the course of American history lies in sharp contrast to his attempt to shake the fragile British government, heralding Boris Johnson’s potential as a “good Prime Minister” as Mrs May struggles to unite a fractious Conservative Party. Mr Trump is definitely not an avid supporter of these nations, as his previous comments towards the North Korean dictator have proven. Yet the world has shifted from capitalism against communism to open against closed. By addressing concerns with traditional enemies at the expense of shunning his democratic allies, Trump’s construction of a new era of international relations is none that the liberal Founding Fathers would have envisaged.

The global powers have divided into two camps; the champions of free trade and liberal democracy, emblazoned on the politics of Japan and the EU, against the protectionist nationalism of America – with China inching towards the former economically.

Yet severed from the unwavering globalised will of Europe, this is a world in which post-Brexit Britain must establish its place. The anti-immigration rhetoric of the Hard Brexiteers stands in contrast to their desire for global trade deals free from Brussels’ regulatory hurdles – whilst they wish for goods to be freely exchanged around the world, labour must remain chained to where it is born. The Chequers deal for a Brexit appears in turmoil as Conservative splits force May into a harder hand in the negotiations, yet it seems likely that Britain will emerge from the Brexit process more distant from European trade and more hostile to immigration. The Liberal thinkers who reshaped policy on the British Isles during the Industrial Revolution – with Adam Smith, David Hume and David Ricardo all advancing the government’s commitment to a free trade doctrine – would be horrified at the reversal from this ideal that Brexit symbolises.

As the international debate on globalisation heightens, Britain now has the opportunity to determine where it stands in the new world order. Whilst the Little Englanders attempt to close off our borders, the globalist forces in the government must reign supreme. Toshimitsu Motegi, Japan’s Minister for Economic Revitalisation, stated that “At a time when protectionist measures are gaining steam globally, the signing of the Japan-EU deal today will show the world once again our unwavering political will to promote free trade”. Britain need not overburden itself with the special relationship, and must instead forge ties along the globalist line that British politicians endorse. Whilst only a minor international trade player in a vast global arena, Britain’s admission to the closed world would further enhance the nationalist cause. The EU and Japan have proven that the globalised world remains alive; Britain must join and strengthen it, or risk fading into obscurity.

 

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Craig Stock

Second Year Economics Undergraduate at Warwick University.

Craig Stock has 14 posts and counting. See all posts by Craig Stock

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