Northern Ireland in trade purgatory

Reading the latest news about Brexit makes me feel sick. The whole debate is entirely absurd. The problems are artificial. The political posturing self-serving. A thousand political problems and structures have created a thousand more, none of which need exist in the first place.

It’s only if you believe several absurd claims that the whole Brexit drama turns into a problem at all:

  • Free trade only exists if there is a free trade agreement.
  • Trade can only occur between countries with the same regulations.
  • People should be governed by laws and courts where they are from, not where they are.

These are obviously nonsense. But you have to presume them to be true to understand what UK and EU politicians spend their time doing at Brexit negotiations. Otherwise, everything they are doing is just obstruction of the economy.

It all reminds me of a comment I made while on a speaking tour in 2015 with the Free Market Road Show. I found myself in some left-behind eastern European country. Our panel had to discuss the proposed free trade agreement with the EU.

My opinion was a bit rude, inspired by the same irritation as this Capital & Conflict. I did ask our host about my choice of words first. “Am I allowed to swear?” He looked nervous, but nodded.

“Free trade agreements are bullsh*t.”

The two bulky Russian economists sitting either side of me looked down in surprise. They’d just given lengthy speeches in support of the proposed deal with the EU.

And the audience couldn’t help but agree. All their best and brightest had long since disappeared to the EU. So a free trade agreement would boost the local economy enormously by opening up economic access to those still stuck at home.

But it’s a trap, I told them. Look at it this way. If a thief steals all your money, but then offers you a deal to get half of it back, are you happy about the deal?

Of course not, it’s your money! They stole it in the first place.

Governments play the same game with trade. You have a basic human right to trade. Whether it’s across an imaginary line called a border or not is irrelevant. Unless the government makes it relevant and arbitrarily interferes in some way. The restriction or banning of trade takes away your inherent rights.

The offer of a government to interfere less, under an agreement called a free trade agreement, doesn’t make their violation of your rights any less outrageous.

Now, if a free trade agreement is a good idea, then why the hell did they prevent the trade in the first place!?

What a stupid idea to give someone something that you took away and expect them to be happy about it. Yes, obviously the trade deal is beneficial. But only because it means the government is doing less of what the government shouldn’t be doing in the first place.

Looking at trade in this light makes you realise how the entire Brexit negotiation process is an artificially drummed up problem. It’s politicians dealing with political problems that never should’ve existed, and then trying to look heroic in the process.

Unfortunately, their political solutions are hamstrung because of the inherent contradictions. The Irish mess exposes this beautifully. That’s why it’s such a sticking point in the negotiations. The absurdity is very palpable on the ground. And the politicians don’t know what to do in the face of the contradictions.

It’s hard to sell a free trade agreement to people who have free trade because their border was rendered irrelevant. They know the agreement is a stupid idea because it restricts trade, it doesn’t open it.

Again, the problem is very obviously the government’s need to restrict trade in the first place. The Brexit mess has exposed the stupidity of this default position, and thereby the stupidity of the free trade agreement. Brexit itself is not the problem.

But the mess in Ireland does favour the UK by exposing the EU’s absurdities disproportionately. The border currently has free trade, because we all agree that’s a good thing. The British government is trying to keep free trade. But the EU is pushing the need for a trade agreement, which would actually restrict trade.

Why not just avoid preventing trade from being free in the first place!? Because it’s a bad thing? Then why is a free trade agreement good? Why is the EU customs union good? Why is the current lack of a border good?

If the political nature of global trade governance is the sole problem here, then it’s the sole problem. Get rid of it!

Anyone who is worried about the divergence of EU and UK goods and services has a terribly low opinion of the EU, UK and consumers in both areas.

Not to mention, misunderstanding the nature of trade. Plenty of countries differ in regulation, but still have decent trade deals with the EU. Their trade regulation does not take place at the border, but by tracking goods and services.

Northern Ireland in trade purgatory

Unfortunately, politics is never going to leave trade alone. So the nonsense over the border in Ireland has become an enormous stumbling block.

The Northern Irish are worried they’ll become part of an EU/UK trade purgatory. So called “regulatory alignment” between Northern Ireland and the EU will ensure the border remains open, but puts a trade border between Ireland and the UK instead. How stupid does the EU and UK trade law have to be to create this situation?

The obvious solution is not to have the rest of the UK in regulatory alignment with the EU. London Mayor Sadiq Khan even suggested keeping London inside the single market.

The obvious solution is for the EU and UK to accept that neither of the two are going to endanger each other’s citizens with products and services sneaking across the Irish border. As always, exports must comply with the law in countries where they are sold. The regulation is the same as for local products produced and offered locally.

A few curvy cucumbers sneaking across the border will not ruin the EU, don’t you think? Leave us a comment below.

Until next time,

Nick Hubble
Capital & Conflict

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Category: Brexit

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