COMPREHENSIVE AND PROGRESSIVE AGREEMENT FOR TRANSPACIFIC PARTNERSHIP (CPTPP)

In the first sentence of the first paragraph of an article for the Daily Mail last Saturday, Kemi Badenoch, the Business and Trade Secretary, inadvertently revealed the flaws in her approach:

‘Being appointed Trade Secretary last year didn’t just force me to overcome my loathing of travel – having to negotiate deals on behalf of the UK, fighting the corner for UK farmers and financiers showed me the benefits of free trade agreements (FTAs).’

So, for Kemi Badenoch, in an article selling her new deal to join a trade bloc in the Pacific Ocean, the two sectors that are prioritised are farming and banking. The term ‘manufacturing’ is not in the article at all. Once again, the interests of the bankers are priority and all else is to be sacrificed – despite the damage and costs of the financial crash of 2008, from which the UK has never recovered.

Liz Truss, a previous trade secretary, signed a number of deals with numerous countries, including some who are members of the CPTPP, the disadvantageous terms of which UK farmers have been complaining. Since the UK imports large amounts of food that can be produced in the UK, then to increase farming output would require the farming sector to focus on the domestic UK market – not to be trying to export to the opposite side of the world, to countries, many of which have different cultures, and far lower production costs and living standards.

In praising the virtues of free trade, Kemi Badenoch continued:

‘UK businesses already have tariff-free trade with our EU neighbours. Now, they can seize the myriad of opportunities that come from joining the most dynamic free trade family on the planet. Sadly, there has been a tendency for discussion about the UK’s participation in the trade bloc to be mired in short-termism and declinism. Much of it anchored in myths about the UK economy.’

In fact, the deal is declinism. It is a dodge to avoid dealing with the reality of the UK’s massive balance of trade deficit with the EU and China. The UK needs less trade. We need to import fewer manufactured goods from the EU and China. We need to tackle the reasons why UK productivity is so poor compared to our competitors, rather than simply assuming that signing free trade deals will somehow resolve the issue.

Liz Truss, who was briefly prime minister, has warned about the need to keep China out of the CPTPP. With good reason, for Kemi Badenoch, in her Daily Mail article wrote:

‘We are well positioned to enter these fast-growing markets, such as Malaysia and Vietnam, and develop deeper partnerships within the region.’

In comparing the CPTPP to the EU, Kemi Badenoch continued:

‘The CPTPP has a different philosophy. Sovereign nations agree to respect each other’s rules and recognise that bringing down barriers fires up innovation and growth. This is a crucial advantage in a world faced with much uncertainty, and with protectionism on the rise. Some argue that the era of free trade is dead. But our alliance will send a signal to the international community that global commerce is the surest path to economic advancement and political stability.’

Given that the deal is only predicted, by the government itself, to increase GDP by £1.8 billion per annum, barely even loose change, then the deal is more force of habit than anything advantageous. The potential downsides will depend on the terms of the deal. If multinationals are able to transfer UK production abroad to countries with far lower wages and production costs and then import into the UK, tariff-free, the products manufactured then that is a serious potential downside that will make are balance of trade situation worse. There is the threat of British workers having to compete with Third World wage rates.

The argument about being in favour of free trade and against protectionism might be routine mantra, but it is still stupid. One should no more be in favour of free trade and against protectionism than being in favour of spanners and against screwdrivers. If someone needs to insert a screw, then he needs a screwdriver. It does not matter if that person possesses a big set of spanners, including ring spanners and metric ones. If a screw needs inserting, then that requires a screwdriver.

Likewise, if a country has an ongoing trade deficit then the use of tariffs is one means of rectifying it. A more protectionist approach is required. The UK has had an annual trade deficit since 1983. Contrary to liberal economic theory, that deficit has not corrected itself but has got steadily worse. It is crucifying our economy. The theory does not work.

No other country in the world is as obsessed with free trade as is the UK.

Joining the EU in the early seventies did not solve the problems of the UK’s economic difficulties. Between 1970 and 1980, the UK’s manufacturing output fell by 3 per cent. The UK’s GDP increased by around 20 per cent over that period, while it increased by around 32 per cent in the USA and West Germany, 45 per cent in Canada, France and Italy, and by around 70 per cent in Japan.