Free trade requires trade-offs. Who knew? The answer, it seems, is not enough of the UK’s ruling Conservative party. Shortly before the last election, one cabinet minister noted ominously that decades of delegating trade policy to the EU had left British politicians unready for the scale of the fights new agreements provoke. “We’ve been sheltered for so long. I don’t think everyone realises what a hot political issue this is going to be.”
As Tories start to face those hard choices outside the protection of a large trading bloc, the early signs are worrying for free traders. In February, Boris Johnson, the prime minister, pledged to be a force for free trade in a speech flush with high-minded rhetoric. Free trade was to be the Brexit dividend. The US, along with Japan, Australia and New Zealand are the first targets, followed perhaps by membership of the Trans-Pacific Partnership. That even a US trade deal would add less than 0.2 per cent to UK gross domestic product over 15 years, compared with a 5 per cent hit from the loss of EU trade, was moot. At times it seems as if the win of getting a deal matters more than its contents.
But deals require the courage to compromise for one’s convictions and Mr Johnson, often the least radical member of this radical government’s leaders, can be surprisingly tremulous. The trade-offs also feed into a key Tory tension between economic and social priorities. Brexit was essentially the placing of political values over economic ones. Brexit-backing free traders now find arguments for protectionism draped in social values. There are ministers ready to make the case for free trade — most obviously Liz Truss, the trade secretary, and Rishi Sunak, the chancellor. But they faced push-back from colleagues including past and present environment secretaries Michael Gove and George Eustice, who resist diluting animal welfare or environmental standards. Mr Johnson agrees with both sides.
And this is the problem. Leaving aside the contradiction of espousing free trade while restricting it with your largest market, the party is full of “free trade but”-ers. Some believe in free trade but worry about farmers and environmental protections; others want an EU deal but fret about Britain’s tiny fishing industry. Still more want state support to build national resilience. Each has a point, but the combined effect will dilute or even threaten any agreement.
The most heated fight is over agriculture. Last month, 20 Tory MPs rebelled in an effort to create extra protections for farmers. But having drawn a red line around the NHS in any US deal, the UK is needs to give ground on agriculture.
The headline cases are UK bans on chemical-washed chicken and hormone-treated beef. Ms Truss and Mr Eustice have promised to maintain food safety standards. But in truth these are not food safety issues. The chemical wash, for example, is to remove the hygiene risks of lower animal welfare standards. The real issue is economic protection for higher standards. Some Tories fear ministers are operating a bait and switch, focusing all attention on these issues while agreeing to lesser protections in less noticed areas, such as antimicrobial resistant drugs and pesticides. They also fear that treating the headline issues as food safety concerns opens the door to a later reclassification.
The UK’s answer is a dual-tariff system, which opens markets to US imports but offers lower duties to goods that meet higher standards. This leaves the choice to consumers, but market solutions are not regulations so the dual tariff must weaken animal welfare and environmental protections.
There are other trade-offs. Data service liberalisation may mean accepting that data on citizens will not be stored in the UK and even a pared down EU free trade deal may founder on protection for the fishing industry.
Then there is Project Defend, the initiative to build UK resilience of supply initially in about 30 key areas ranging from transformers to paracetamol. Tied to it is the rising anxiety over dependence on Chinese imports and solutions, including tougher rules on foreign takeovers, onshoring and tie-ups with allies. The danger is not the tight focus on resilience. Ministers and officials know the trade risk of overreach. But it all bolsters a protectionist mindset.
These issues will intensify. It is an easy job to scare people against trade deals. Private polling will often support protectionism and Tory MPs are already in a nervous state. If Mr Johnson is to live up to his rhetoric, he will have to make the case for his cause and its difficult trade-offs. This is no longer an issue that can be slipped past the public. Of late, he has looked less like a man with a stomach for hard choices, but the fight for free trade is not for the faint-hearted.
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