Protectionism harms and trade helps. Almost all the world’s leaders have come to accept this message, and many even champion it. However, as economies falter, little is actually being done to end the process of ‘beggar thy neighbour’. This may be extremely harmful.
For once, I actually agree with Gordon Brown who argues that, “we must tackle protectionism and not risk a spiral of trade collapse”. However, while some of his rhetoric is promising, his actions are less so. Only time will tell whether he means what he says, and follows through on his catchphrases; the lessons of recent history suggest otherwise.
His focus remains on securing a ‘stimulus for trade’ rather than allowing genuine free trade, and his comments on British jobs for British workers are hardly reassuring. Free trade is the process that allows individuals to transact without interference from government. A ‘stimulus for trade’ as described seems less like a removal of barriers, and more like an international stimulus plan. If recent ‘stimuli’ are anything to go by, higher government spending supported by a wave of subsidies and barriers focused towards special interest groups are on the horizon.
This will do little for free trade, or all the people around the world who benefit from trade so significantly. The policy does not determine resource allocation by allowing free exchange between individuals based on comparative advantage. Subsidies, taxes, tariffs, and non-tariff barriers are protectionist even when they are disguised as stimuli.
If Brown is truly dedicated, he will push world leaders to lower their barriers, force the EU to lower the common external tariff towards zero, and if unsatisfactory progress is made, leave Europe altogether to join EFTA. This move would continue to allow the UK access to the single market, thus maintaining all the trade benefits with the EU. Additionally, it would allow us to pursue a much freer trade policy, leading the way forward to the benefit of the mass of consumers and producers in the UK, and to our partners across the world.
In times of economic woe, protecting free trade against special interests is even more vital.