Apparently the most important qualification for membership of “Economists for Free Trade” is that you don’t believe in free trade – that is, you don’t think tariffs, customs checks or other barriers to trade do any economic damage.
That, at any rate, appears to be the view of Michael Burrage, who argues, in his critique of UK in a Changing Europe’s recent report on the impact of moving to “WTO terms” for UK trade, that we are wrong to claim that this would “make UK-EU trade significantly harder”, as a consequence of the imposition of tariffs and other barriers.
Mr Burrage’s argument is that we have been more successful trading with countries under WTO terms than within the EU Single Market. He makes a great deal of growth rates – and that, for some countries over some periods, trade has grown faster outside the EU.
It is true that, for example, the growth rate of our exports to China and India (where we trade on WTO terms) have outpaced those with Belgium and Ireland.
However, we still export 50 percent more to Ireland than to China; and more than twice as much to Belgium as to India, despite the huge disproportion in GDP and population.
The same is true if you look at our developed country partners – despite our historic links, we export more to Sweden than to Australia, although the latter’s economy is well over twice as large.
Why? Because – and you don’t need to be an economist to work this out – EU countries are much closer, and the lack of tariffs, quotas, customs checks, and numerous other regulatory barriers makes it much easier to trade with them.
This relationship has been confirmed by more quantitative economic analyses than I care to count. And the statistics show it.
UK trade with other members of the Single Market makes up more than half of all UK trade (although the EU is only about a seventh of the world economy).