Ryan Bourne of the IEA writes:
Let us examine the components of the EU. First, the customs union, where the mind-boggling common external tariff and quotas on non-EU goods contribute to raising prices for manufactured and agricultural products by about 20 per cent for EU consumers, according to the research of Patrick Minford. Under the much lamented “hard Brexit” with World Trade Organisation rules, we could abolish this administrative nightmare, adopting unilateral free trade.
It is true that this would entail more customs checks, but it would lead to a substantial fall in consumer prices (about 8 per cent overall, according to Professor Minford). But the real long-term gains would come from trading on our comparative advantages. In other words, producing what we are relatively good at under global competition — pushing us further up the value chain into a future of high-end manufacturing and services.
An 8% drop in the price of imported goods would be great.
Vested producer interests will wail. Remain backers will whinge about manufacturing and agriculture facing more overseas competition. But if competition at an EU level is good, why not globally? Brexit is a chance to throw off not only the shackles of the EU’s tariffs, but also the second major economic pillar: subsidies and protections for agriculture. The Common Agricultural Policy deters innovation at a high cost to taxpayers and has been captured by interest groups using it to impose stringent, anti-scientific regulations relating to food standards, pesticide use and GM crops. It should be scrapped.
New Zealand in the 1980s showed what liberalisation can achieve. The country’s sheep stock halved and the number of beef and sheep farms fell by a third. But farms became larger and more productive, while production of fruits and wines grew sharply and a venison industry developed. There was substantial supply-chain innovation. Trading at world prices, the sector is now an international success story.
The UK should leave behind the protectionism of Europe and declare itself open for free trade with any country that will reciprocate.
Surely leaving the single market will mean less foreign direct investment and more restrictive migration? Far from leaving the UK insular, I believe a clean Brexit will put pressure on the UK for the opposite. Quite simply, there will be no other choice. Given the trend for falling corporate profit tax rates and the need to maintain important FDI, Britain could lead the world in abolishing profits as a tax base entirely.
It would also become obvious that for a mature economy, trading services requires the movement of people. After initial attempted clampdowns on numbers, the country would adopt more expansive bilateral movement with many other mature nations, as well as the EU, to reflect our successful service sector.
I’m sure NZ would be keen on a bilateral movement agreement.