Wednesday 15 January 2020

Steve Baker: free trade and regulatory alignment

Richard North was excoriating in his recent and excellent criticism of Steve Baker, current chairman of the ERG, for the article which appeared in The Telegraph on Monday (see it HERE) under his name. To publicise the article, Baker appeared on Politics live, on Monday (HERE for the next 28 days only) where he expanded on his piece, declaring that the UK after Brexit will be an independent country setting it's own regulations (about 16:20 in).

Dr North ridiculed Baker's assertion about Britain benefiting in any way from leaving the EU's regulatory orbit, not least because half the world uses EU regulations anyway - and this includes the USA!  The entire planet (except the ERG that is, where hatred of Brussels runs too deep) recognises that the EU is indeed a regulatory superpower, as Sir Ivan Rogers calls it.  It has taken multi-nation rule-making to a fine art, crafting well thought through regulations in complex areas of data protection, environmental measures, food safety and so on.  If Baker thinks the UK alone can or will escape the sheer and increasing gravitational pull of Brussels he is in for a big shock.

He says on Politics Live that "mutual recognition and equivalence are the normal ways that free trade agreements work amongst independent countries," implying that countries recognise each others standards. They don't. They have mutual recognition of conformity assessment, something quite different. 

Mutual recognition of standards is, I think, something quite unique to the EU as a way of opening up the single internal market in one fell swoop. It was the only way to do it unless everything was harmonised - a process likely to take decades. Plus there is an overarching legal framework under the ECJ so consumers can seek redress relatively easily.  The EU MRA allows the free circulation of goods for which there is no harmonised EU standard. It's a privilege reserved for members only and not for third countries.

Independent nations setting their own standards can hardly sign a general MRA with another country allowing all or any goods to be imported and exported otherwise they are simply sub-contracting their right to regulate to another country's legislature. If the MRA isn't a general one, only applying to specific goods, then it's hardly an MRA anyway and presumably needs to be constantly reviewed. Does each nation have to consult every country with whom it has an MRA before updating or reforming its own rules? Think about it, how could it possibly work outside the single market ecosystem?

Baker also says in his article:

"..the US is not protectionist but they do wish to avoid importing other countries’ anti-competitive practices." 

Which was timely given that on the following day it was reported that the USA is 54th on the list of countries most open to free trade while India and China are said to be "the greatest trade restrictionists deploying excessive tariffs, services restrictions, and non-tariff barriers". These are nations with whom we are rushing to do trade deals.  India is 86th and last with China just behind at 85. 

On the other hand, according to the 2019 Trade Barriers Index (HERE) 14 EU nations are in the top 20 and none are in the bottom half of the 86 nations listed. Brexit means leaving the most highly developed free market in the world, with all its level playing field provisions, for the shark infested waters of international trade where size alone matters.

So, Brexit may not be quite the bonanza for British business that Mr Baker thinks. Signing 'free' trade agreements with the "greatest trade restrictionists" in the world might benefit UK consumers but show me a happy consumer and I'll show you a very unhappy and unemployed producer.

I cannot wait for these trade negotiations to start.  Brexit will be revealed soon afterwards as the total delusion it is.