Using Brexit to make free trade deals will help us cut prices, boost growth and help world trade Daniel Hannan

The Institute of Free Trade will aim to use Brexit to cut prices, boost growth, and help world trade
AS Britain got ready to join the EEC in 1973, one of the biggest arguments in the build up was over whether food prices would go up.

They did — by as much as 40 per cent.

Britain was no longer free to buy on world markets — Canadian wheat, Argentine beef, New Zealand lamb.

Instead, we had to get much of what we wanted from expensive Continental producers. There have been some reforms to the EU’s Common Agricultural Policy since then but, according to the Organisation for Economic Co-operation and Development, it still adds 17 per cent to our grocery bills.

Pricey food is bad for everyone. It means we have to spend more on the basics, so have less for other things. That makes the whole economy suffer.

But it is especially bad for people on low incomes, because food bills are a higher proportion of their monthly budget.

On Tuesday, alongside Boris Johnson and Liam Fox, I’ll be launching the Institute for Free Trade, which aims to use Brexit to cut prices, boost growth and help world trade. Outside the EU, we can sign deals with Australia, China, India, the US — helping our own folk and theirs.

Until recently, it went without saying that free trade was good for ordinary people. Protectionism was seen for what it was — a way to transfer money from the poor to the rich.

Outside the EU we can sign deals with Australia, China, India and the US

Nowadays, though, free trade is often seen as exploitative.

Well-meaning youngsters protest against trade deals, imagining they are standing up for poor countries against big business.

In fact they are doing the opposite.

Nothing has done more to reduce global poverty than the spread of markets.

As recently as 1990, 38 per cent of all people lived in extreme poverty — defined as an income of a dollar a day or less.

Today that number is eight per cent, with the biggest drops in the Asian and African countries that have removed their trade barriers.

Has their rise come, as is sometimes claimed, at the expense of manufacturing jobs in richer nations?
No. Some Western countries have pushed up unemployment through wrongheaded policies, but more Brits are working than ever before.

Reducing global poverty comes down to the spread of markets

It is true that certain jobs are disappearing while others are created, but this is due to technological change, not trade.

The internet means we have fewer secretaries, journalists, travel agents and archivists than we had 15 years ago.

But few of them are unemployed today because new jobs have taken over, ranging from 3D printing to fitness training.

Protectionism can prop up one industry, but always at greater cost to the economy overall.

For example, EU sugar tariffs are good news for a handful of beet farmers, but bad news for everyone else — not just Tate & Lyle, but food processing businesses and, to the extent that they drive up prices, all consumers.

Likewise, tariffs on cheap Chinese solar panels prop up some jobs among European manufacturers, yet removing them would create perhaps ten times as many jobs among installers.

The secret of our success in the past is that we traded with poorer countries and didn’t undercut our workers

The trouble is that those winners don’t know who they are.

They can’t organise and lobby in the way the old industries can.

That’s why politicians keep barriers that cause more harm than good.

A steel tariff destroys many more jobs in cars, aviation, construction and machine-making than it saves in steel.

But it’s the existing workers, not the non-existent ones, that we listen to.

A lot of people worry that we are too dependent on services, that we don’t make enough.

Manufacturing accounts for only around 11 per cent of our output.

Actually, all Western countries have shifted to services, and all have become much richer as a result.

Britain has not run a trade surplus in physical goods since, believe it or not, 1821 — yet the past 200 years have seen a 30-fold improvement in our living standards.

Our success was also in how our trade deals put money into the ordinary people’s pockets

The secret of our success was that we dropped our trade barriers and bought cheaply.

It turned out that trading with poorer countries didn’t undercut our workers.

On the contrary, it gave them more spending power, and so created whole new industries here.

Britain became the wealthiest country in the world — until others copied us and caught up.

Our success rested not on strategic industries but on putting more money in ordinary people’s pockets.

Free trade made us the greatest nation on earth. It will again.

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