How important are trade deals? As a former trade minister it pains me to admit – their importance is grossly exaggerated. Countries succeed, with or without trade deals, if they produce goods and services other countries want. Thanks to the Uruguay Round, tariffs between developed countries now average low single figures – small beer compared with recent movements in exchange rates. So the most worthwhile trade agreements are with fast growing developing countries which still have high tariffs.
i.e. you can sell iPads much more easily than Ladas, and what matters is making what people want, and then working out how to get to them round their self-imposed barriers, particularly with countries that are on the road to turning out well (e.g. not Greece, Spain, Brazil).
It’s a great article all around, well worth the read. Given that so many of the large financial institutions are opposing Brexit, claiming that it will cause firms in the City to move to Frankfurt or wherever, I especially liked his last paragraph:
Isn’t that copyright* of the Estate of the late Joseph Goebbels?
*One month and one year out of copyright now.
Though it’s true that countries manipulate exchage rates in their “currency war” efforts, what really matter is purchasing power parity or what a loaf of bread or a beer REALLY costs in a foreign country in units relative to the effort I used to earn my savings.
Foreign trade gains are small as a percentage of overall economic gains in most countries, but it still remains significant in almost all cases. And, I don’t trust “the experts” when it comes to calculating those gains, since they almost ubiquitously subscribe to “trade deficit” nonsense theory, i.e. the idea that exports are good and imports are bad. The idea that buying something from someone who can make it better and cheaper than I can make it myself is “bad” is patently stupid IMO. That flys in the face of idea of the gains to be achieved by division of labor and specialization, not to mention Ricardian Comparitive Advantage, which we KNOW works.
Mr Ed. Long out of copyright in sensible countries that stick to the Berne convention (50+year end). Now where did 70 originate – in the wreckage of Greater Germany.
Good post.
Mr Lilley is correct.
From the second paragraph of the article;
“Because Trade and the Single Market are key referendum issues yet I am the only MP with first hand experience of both.”
Emphasis added.
Peter Lilley was Secretary of State for Trade and Industry from July 1990 to April 1992. That is 24 years ago.
The EU structures may have a democratic deficit. They may not.
However, the above should clearly demonstrate that it has a very definite chilling effect on the capability of national governments to be even competent.