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Why rules are necessary and free trade is an attractive myth

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or how the erosion of trust is expressed in the symbolic tearing up of agreements

As the Brexit saga continues its agonising journey, it is worth reflecting on the realities of trade between countries and why rules are necessary. Free trade sounded great in the words of the Brexiteers. Suddenly we would be free of all those unnecessary rules from Brussels and be able to trade with whoever we like. What a wonderful opportunity we might have thought. Yet making such a bonfire of rules is actually part of the erosion of trust that is sweeping across the world. It comes from people who do not appreciate the more subtle realities of trade in a civilised society.

If countries trade ‘freely’ with one another, without any rules, then the field is open for one partner in the trade to undercut all the others because it is abusing people or the environment, or creating unsafe products and suchlike. So, it is always necessary to create a trading platform between nations in order to ensure a ‘level playing field’ for competitive trade.  That is what the European Union achieved for its member countries. We may not have liked all the laws it generated, but the vast majority were of real importance and the system was relatively efficient.  More than that, having lived with this trading platform for years, our industries have adjusted to its demands.  Our farmers, for example, are absolutely dependent on the schedule of subsidy payments that they have learnt to live with over the years.

The Great Repeal Bill, as it has been called, translates all those Brussels rules into our own law. This seems like a very strange thing to do if we are looking for ‘free trade’, but it is vital if we are to make any sort of transition to a different future. We cannot live without a set of rules. The Brexiteers respond by saying, ‘Aah but now we can adjust these rules ourselves. We have taken back sovereignty over these rules.’ But the truth is that whoever we want to trade with in the future will require a set of rules to be developed and the danger is that we will now become consumed with the mass of trading negotiations involved.

Yet there is opportunity in all this, if we can grasp it. Whilst we now have to develop new sets of trade rules with a whole host of countries, then we would do well to take note of some serious inadequacies in our existing systems. Take the food system, for example. James Rebanks, a shepherd from the Lake District, recently travelled through Kentucky and witnessed the tragic decline of rural areas there. His article in the New York Times pointed to the fact that we have all colluded in the process of driving down food prices such that traditional farmers can hardly make a living[1].  Another way of putting this would be to point out that we have allowed supermarkets to dominate our food system, force suppliers into a dependent position, drive food prices down and duck a whole range of social and environmental problems that the supermarkets are responsible for creating.

The great difficulty with today’s context is that the free traders will look for less rules as a rule of thumb, because they do not adequately appreciate the positive benefits of trading rules. What they might best consider is not less rules in principle, but wiser rules. Only wiser rules can create the economic conditions for genuine well-being and long term harmony with the earth.

This is the political struggle that we must now engage with.

[1] Thanks to Bristol Food Network for this reference


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