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Britain and the US Can Show the World What a Free Trade Deal Should Like

September 19, 2018 in Economics

By Victoria Hewson, Daniel J. Ikenson

Victoria Hewson and Daniel J. Ikenson

Now might seem an odd time to be considering new free trade
deals with the US, when President Donald Trump has just escalated
his trade war with China by imposing new tariffs on $200bn worth of
goods.

The UK, meanwhile, is still focused on resolving the uncertainty
surrounding its future trading relationship with the EU. Talking
seriously about a possible UK-US free trade agreement may feel a
bit premature.

Yet that is precisely what policy experts from 11 think tanks on
both sides of the Atlantic have been busy debating this year.

The culmination of that effort is a paper entitled “The
Ideal US-UK Free Trade Agreement: A Free Trader’s
Perspective”, published on Tuesday by the Initiative for Free
Trade in London and the Cato Institute in Washington.

This in-depth report includes the draft legal text, summaries,
and explanations of what the authors consider provisions worthy of
the model free trade agreement.

It is difficult to
imagine two countries that are better suited for a
state-of-the-art, comprehensive, truly liberalizing trade agreement
than Britain and the US.

Free trade is about the freedom of people to transact as they
wish, with whom they wish, and without politicians and bureaucrats
as gatekeepers. Therefore, genuine free traders tend to be
sceptical of agreements, which are usually more about managed trade
than free trade.

Rather than liberalise the rules and provide consumers with
greater choices, trade agreements too often contain provisions that
protect incumbents from challengers by locking in existing
advantages, requiring long tariff phase-out periods, and limiting
competition in industries through rules that masquerade as serving
prudential or socially desirable purposes.

Too often, the terms are pro-business, pro-labour, or
pro-special interest, when they should be pro-market.

The prospect of a bilateral UK-US agreement affords two of the
world’s largest economies — both traditionally
committed to the institutions of free-market capitalism and the
rule of law — the opportunity to break new ground and pioneer
the rules of a genuinely liberalising, modern trade agreement.

By removing tariffs and significantly reducing behind the border
barriers that inhibit market integration, such a model will have a
transformative effect, on both economies and beyond.

With some limited exceptions, the final model for an ideal
agreement calls for: zero tariffs on all goods; zero non-tariff
trade barriers; zero restrictions on competition for government
procurement and on foreign direct investment; rules to make mutual
recognition of potentially protectionist product standards and
regulations more feasible; prohibitions against the use of
anti-dumping measures; and prohibitions against restrictions based
on scientifically unsubstantiated public health and safety concerns
and national security concerns that do not meet certain minimum
standards.

Despite the current uncertainty in both the …read more

Source: OP-EDS

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