Trade Tools for the 21st Century
Shanker Singham and Molly Kiniry are the authors of a new Legatum Institute study that outlines the difficulties that are faced by modern trade agreements, which include powerful political forces opposing globalisation and the rising tide of protectionism, populism, and nationalism.
By Shanker A. Singham and A. Molly Kiniry
Published by the Legatum Institute
Previously high levels of public support for free trade are eroding at an ever-increasing rate. This study outlines the difficulties that are faced by modern trade agreements, which include powerful political forces opposing globalisation and the rising tide of protectionism, populism, and nationalism. We argue that the public backlash against free trade emanates from the failure of policy-makers to deal properly with behind-the-border trade barriers, including a host of economic distortions that we have termed “anti-competitive market distortions” (ACMDs). Failure to develop offensive and defensive trade-policy tools will result in continued fracturing of free markets and increased public opposition to job—and wealth-creating—free-trade agreements.
We lay out these offensive and defensive tools, identify best practices around the world, and explain how they can best be deployed to deliver both open trade and competition on the merits. Finally, we present a case study of Britain after the Brexit referendum vote. Brexit has opened up new opportunities for Britain to stand at the centre of a vast global network of trade relationships, cemented by its importance in global supply chains. We argue that the British government should prioritise negotiations with likeminded countries and its historic trading partners, notably the Commonwealth. Bold action by the UK in breaking down foreign and domestic trade barriers could serve to reinvigorate the stalled global trade agenda and the sluggish global economy. We believe that this “Brexit moment” is an inflection point in history which requires creative thinking and courageous leadership. We conclude this paper by giving a rough estimate of the economic value that could be liberated as a result of the trade policy proposals we outline, and contend that, with so much at stake, British policy-makers must cast off their partisan blinkers and take full advantage of the opportunity that has been presented to them.
This report was launched at the 2016 Conservative Party Conference on 2 October 2016 [Details]
About the Economics of Prosperity
The Economics of Prosperity programme looks at how policy-makers can develop legal, economic and governance environments that deliver increased economic activity, generate jobs and lift their peoples out of poverty. Led by Shanker Singham, the programme produces papers, panels and seminars, including country studies that identify the constraints to economic growth and wealth creation.