BREXIT AND US TRADE WARS

On the 23^rd June 2016, the British people were given a choice on whether to remain members of the European Union or to leave the Union. As a ‘remainer’ it saddens me that the people choose to leave. It makes me even more upset that our Prime Minister Theresa May has decided that she would like to leave the Single Market and Customs Union and pursue a free trade agreement with the European Union. This does mean that the UK will lose all of its free trade agreements (50 and counting) which have been negotiated by the European Union on our behalf. One key free trade agreement is the “Transatlantic Trade and Investment Partnership” (TTIP), an agreement between the EU and the US, with the UK leaving the customs union, it will also leave this free trade deal and will have to negotiate by itself a new free trade agreement with the US. And this trade agreement will likely be less favourable to the UK since the country will have less political and economic clout to negotiate with the US

Furthermore, there are some challenges with negotiating with the US, yes Donald Trump has stated that the UK will be fast tracked, although, recent actions such as imposing import tariffs on steel production has led myself to wonder whether the UK would be able to negotiate a decent free trade deal. It’s important to note that this isn’t even Trump’s first protectionist policy. One of his first acts as President of the United States was to withdraw from Obama’s ‘Trans-Pacific Partnership’, despite the Senate voting to ratify the trade deal. This trade deal was with 11 countries in the Pacific Rim. His reason for withdrawing from the agreement is not only to dismantle Obama’s legacy (nonetheless it is the main reason), but also to bring manufacturing back to the American economy. He stated upon signing the removal of the US from this agreement as a “…great thing for the American worker.”

Now many economists alive and dead would argue that any form of protectionism is harmful to all agents in an economy. Famous British-Portuguese economist David Ricardo opposed protectionism such as the British “Corn Laws” – which were tariffs on agricultural products. Yes, imposing tariffs on nations will prevent companies from moving their operations to nations such as China (due to lower production costs), and yes this will result in workers gaining their jobs back. But at what cost, it will also raise prices for consumers which will harm the worker since more of his/her salary will have to go towards the greater cost of essential items, moreover, protectionist policies hurt the poorest the most.

Many ‘Brexiters’ argued that it costs too much money to be a member of the European Union, £350 million a week (according to them). Although, leaving the EU with just a free trade deal and it looks likely that the UK will not be able to get a favourable free trade deal with the US and with other nations such as India (since they would like more student visas in return) the average UK household may be worse off after Brexit day. Even though the UK has not even left the club. The Governor of the Bank of England has already reported that UK households are worse of £900 a year. This figure will surely only ever grow as with approach Brexit day and even worse after.

Despite all the statistics and facts being presented, ‘Leavers’ will still just chant: “Stop being a ‘remoaner’”. According to Leave voters we cannot express our opinion after referendums, although, after the 1975 referendum voters who voted to leave, still expressed their desire to leave throughout time, so why can’t ‘remoaners’.