The folly of the free trade case for Brexit

What is the point of Brexit? It depends who you ask—and when. During the referendum campaign, much of the debate surrounded immigration. Since then, at least in the minds of the leading Brexiteers, trade has taken centre stage. From David Davis to Boris Johnson, John Redwood to Douglas Carswell, the ability to trade freely with whomever we want has become the one constant positive benefit of Brexit they are able to cite.

Let’s, for now, leave to one side the question about whether a nation that believes in free trade should exit the world’s largest free trade area where it does 44 per cent of all its trade in order to trade more freely with other nations. Let’s also, for now, leave aside the question over whether it’s worth leaving said free trade union when it also has its own set of free trade deals with around 40 other nations which make up a further 17 per cent of all your trade.

Instead, let’s accept the premise laid out by the Brexiteers that a new set of trade deals will boost our flagging economy. The question then, is trade with whom—and what difference will it make?

Three nations have been at the heart of the trade debate—the US, Australia and New Zealand. At this month’s Conservative Party conference, it was these nations with which Fox proudly claimed discussions about “future relationships” had already begun. Of these three, the US—even the most ardent Brexiteer will now admit—is the most complicated. President Trump’s “America First” vow is one of the few promises he is willing to stick to. After the US slapped 222 per cent tariffs on Bombardier, putting thousands of UK jobs at risk, a trade war looks more likely than a trade deal.

That leaves Australia and New Zealand, two nations that Fox has claimed will be “first cab off the rank”. Informal talks have begun with both—and Fox and Johnson have headed Down Under for official visits where trade was at the top of the agenda.

But there is a problem. Interviews with Australian and New Zealand diplomats reveal that neither nation is confident that these trade talks will actually lead to more trade. “We don’t seek to be better off,” says Jerry Mateparae, New Zealand’s high commissioner to the UK. Instead, New Zealand’s priority is to “retain and protect” what they already have.

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Sheep meat is one of New Zealand’s most important exports to the UK, but according to Mateparae, New Zealand won’t be seeking to increase the amount they are currently allowed to sell. “We have a quota [into the EU] which we don’t meet. We’ve got 50 per cent of the sheep flock that we had in the 1970s so our capacity is quite limited—two cities in China could take all we could produce.”

Australia’s high commissioner, Alexander Downer, is more optimistic, but voices concern that a free trade deal may not be as free as the Brexiteers claim. “The more the UK says, ‘well, you know, we would like to inject into the free trade agreement all sorts of extraneous considerations’, or 'we'd like to protect the flower industry or the morris-dancing industry'… these issues become highly negotiable or highly debatable.”

Even if trade with Australia were to increase, it wouldn’t make much of a difference to the UK’s overall total—just 1.4 per cent of UK trade is with Australia. “It’s quite thin,” says Downer.

What’s more, both Australia and New Zealand are currently prioritising free trade agreements with the EU. New Zealand is already in the process of negotiating an FTA with the European Union and is confident it will be agreed within the next two years. If the UK is unable to strike a deal with New Zealand before 2021 when the transition is set to end, it would mean UK/NZ trade could end up being lower than if the UK had remained inside the EU.

Free trade deals with the rest of the world were supposed to be the panacea—the one, undisputed positive, no matter how bad talks with the EU became, that all Brexiteers could point to. But if free trade deals won’t actually make the UK any better off, what was the point of Brexit?