On WTO Brexit and Zero Tariffs

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James Delingpole recently came unstuck on the Daily Politics, under an intense grilling from Andrew Neil on the question of how Britain, trading under WTO terms, could expect to offer zero tariffs on imports while still having any leverage with which to negotiate favourable trade deals with countries such as the United States.

As Neil explained to Delingpole, WTO terms specify that we can’t set different tariffs for different countries – if we lower tariffs for one country’s imports, we have to lower them for all, so why would the US have any motivation to offer us a free trade deal if we are already taking their imports tariff-free?

It was a very good question, and one to which Delingpole, sadly, had to admit he couldn’t give an answer.  The article he wrote in response to the incident, is a masterclass in holding one’s hand up to one’s own mistakes, and could serve as a lesson to many others who in the same circumstances would have cried foul and tried to accuse Neil and the BBC of unfair bias. And while I applaud him for his honesty in simply saying “I don’t know the answer to that” rather than trying to bluster and avoid the question, as so many others would have done in the same circumstances, it is a great shame that he wasn’t able to take the question and run with it.

Now, I make no claim whatsoever to be a trade expert.  But here is what I would have said, had I been asked the same question. And yes, I am putting my tin hat on as I type this, in anticipation of all the responses I will undoubtedly receive, telling me how stupid I am to believe such nonsense.

“Well Andrew, obviously we wouldn’t lower tariffs on ALL imports to zero.  The whole point of international trade, which sadly many people seem to forget, is to exchange goods and services for mutual advantage.  So the UK wishes to import those goods which it doesn’t produce itself, while exporting those goods which it does produce, to countries that don’t.  The starting point for all deals of such nature, would be zero tariffs – the only reason to apply tariffs to imports would be to protect internal markets in goods that we already produce ourselves.

“So we would unilaterally lower tariffs on those goods which we don’t produce ourselves. And yes, that would then apply to all countries willing to export those goods to us.  But if the United States wish to sell us their beef and chicken (which we know they do) then they will have to negotiate a free trade deal with us – because we are quite capable of rearing our own beef and chicken, and have no need to buy it from the United States.  The same would apply to cars (which the Germans wish to sell us) and cheese (ditto the French) – if EU member states wish to sell us goods that we produce ourselves, it is in their interests to negotiate a free trade deal with us.  So we would keep the WTO tariffs on products such as beef, chicken, cheese and cars, while attempting to negotiate free trade deals with the EU, the US, Australia, Canada and any other country that wishes to trade with us”.

I realise, of course, that the above is a very simplistic explanation, and that the practicalities of deciding which products should be tariff-free and which should retain WTO tariffs, would be less than straightforward.  But we do have entire departments of government devoted to international trade, whom I’m pretty confident would be more than capable of working out and negotiating those details.  While the realities of globalization may make the intricacies of international trade fine and complicated to administer, I fear too often we lose sight of the fact that the overall principle is still as simple as it has ever been.  Buy what you don’t have enough of, sell what you have too much of.   Maybe if we went back to those principles, only buying what we actually need and producing for export only those goods which other countries actually wish to buy, we could even go some way to tackling the great waste debate.  Now that really would be an unexpected Brexit dividend.

 

 

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2 Responses to On WTO Brexit and Zero Tariffs

  1. The only story here is that Delingpole is promoting a course of action he does not understand and has made no attempt to understand. In his mea culpa article he recalls that it might have been an idea to brush up on the subject by reading an article by Patrick Minford – so he’s taking the entire thing on trust from sources within his chosen tribe who happen to be ideologically aligned. He is, therefore, little more than a mouthpiece for an agenda he doesn’t even care enough about to investigate. He’s a bone idle, crass chancer. One of many in our media driven bluffocracy.

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    • ilikewords23 says:

      You’re right, of course, that he’s basing his opinions on sources who are ideologically aligned – but as you also point out, he’s no different from most other commentators in that regard (or, sadly, most of the general public). He did at least have the humility to accept that he was at fault for not adequately preparing for the interview – and for that alone he retains my respect.

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