Firstly a primer for socialists, who have no understanding of economics: Free trade and globalisation are incredibly good, they drive down prices, increase economic activity, alleviate poverty, decrease unemployment, increase our quality of life due to the wide diversity of goods and services available to us and they stimulate technical and creative advances. Even if a country liberalises trade whilst its competitors don’t the country with the lowest trade barriers always wins. This is all proven fact, look at history to see repeated examples.
When we were less economically literate it was common for countries to “protect” themselves with tariff barriers, or import duties. This was and always is self harm. The General Agreement on Tariffs and Trade (GATT) was created in 1948 to reduce or eliminate trade tariffs and did so through a number of “rounds”. This was so successful that most remaining tariffs in the world are minimal. And, quite frankly, they are utterly stupid. GATT vastly improved the living standards of everyone on earth, except for victims of socialism in places like Cuba, North Korea and Venezuela where basic economics are not understood.
Another major driver towards increasing trade has been the reduction or elimination of transport costs. Things like Netflix, App stores and Spotify have, effectively, zero transport requirements. Physical goods, thanks to amazing efficiencies, such as containerisation and the Maersk Triple E, can be moved around the planet for minimal cost. We are ever closer to the economic ideal of a single homogeneous global market for everything. Which will bring millions out of poverty.
But there is a huge remaining problem and that is what are known as non tariff barriers. American cars don’t sell well in the UK because the steering wheel is on the wrong side. American meat isn’t sold here because it is made using hormones. The UK had to convert to metric measures so as to trade with the rest of the world. Professional qualifications from one country are often not recognised in another country. Pharmaceutical drugs have to be certified with many different agencies around the world. You must be getting the idea now. These non tariff barriers, just like tariff barriers, do huge amounts of harm. Increasing poverty, unemployment, poor life quality etc.
The European Union has zero internal tariff barriers, so its huge bureaucracy devotes itself to removing non tariff barriers. But sometimes they exceed themselves and enforce leftie political interference in the name of removing these barriers. Whilst, at the same time, they have failed abysmally to implement a single market for services, mainly it seems because this would favour the UK most.
As you must have realised by now we would have a far better world if non tariff barriers were removed by everyone everywhere. But this means bringing governments to account, which has to be a very good thing. For instance when Japanese made video recorders first became hugely popular the French government restricted their importation by insisting that they all had to go through one warehouse where each one had to be opened and inspected by a very small staff. The French government was thus erecting a barrier which disadvantaged its own people and the people of Japan. It was plain stupid, but then governments often are.
We now live in an amazing and exciting time when the world’s remaining tariff and non tariff barriers are being rapidly removed. The Trans-Pacific Partnership (TPP) is an agreement between the USA and many Asian countries. To ensure non tariff equality among many other measures it enforces fundamental labour rights and environmental protection, so no country can gain advantage by treating its workers badly or by harming the planet.
The Comprehensive Trade and Economic Agreement (CETA) is a new treaty between Canada and the EU. “It will remove customs duties, end limitations in access to public contracts, open-up services’ market, offer predictable conditions for investors and, last but not least, help prevent illegal copying of EU innovations and traditional products. The agreement contains also all the guarantees to make sure that the economic gains do not come on expense of democracy, environment or consumers’ health and safety.”
As you will realise by now these are truly excellent advances for humanity on this planet.
But the real big one will be a trade treaty between the two biggest trading blocs on planet earth, the EU and the USA. This is The Transatlantic Trade and Investment Partnership (TTIP) and as you can imagine the negotiations are incredibly complex because they are seeking to create the freest trade possible by removing the maximum number of tariff and non tariff barriers, whilst still respecting local sensibilities. The treaty is being developed by 24 joint EU-US working groups, each considering a separate aspect of the agreement. All 28 EU governments will then have to approve or reject the negotiated agreement in the EU Council of Ministers, at which point the European Parliament will also be asked for its endorsement. Getting this all done is no simple task.
The benefits, obviously, will be enormous. The European Centre for Economic Policy Research estimates that the treaty will create a GDP increase by 2027 of 68-119bn euros in the EU and annual GDP growth of 50-95bn euros in the US. This equate to increased annual disposable income for a family of four of 545 euros in the EU and 655 euros in the US. All, as history has proven to us many times, the sorts of results that free trade delivers.
Capitalism is incredibly successful at delivering goods and services to the world’s population, because it is driven by competing to look after customers. Its biggest obstacle is usually government, which often harms its citizens more than it helps them. Free trade allows capitalism to work even better and so we should all be cheering TTIP for the many benefits it will bring to all of us. Anyone who thinks otherwise is ignorant of both economics and history.