Daniel Hannan is a writer and columnist. He was a Conservative MEP from 1999 to 2020, and is now President of the Initiative for Free Trade.
She’s unstoppable, that Liz Truss. The epidemic has put most Whitehall ministries in damage limitation mode, but the Department of International Trade is on a roll, signing 62 free trade agreements to date – plus, obviously, the deal with the EU itself.
Those who can’t bear the thought of Brexit succeeding are, naturally, scoffing. These deals, they say, are largely replicas of what we already had as EU members. Their new line of criticism is, I suppose, an improvement on the position that they took until 12 months ago, namely that we would barely be able to strike any deals at all.
But it’s still not true. Many of the “rollover” treaties go further in small ways: more generous quotas, fewer restrictions. True, these liberalisations are chiefly tokens of intent. But that intent is real. With limited capacity, our priority has been to negotiate new FTAs – that is FTAs with countries where the EU currently has no trade deals, such as Australia and the United States.
Where there are serviceable existing arrangements, we have tended to say, in effect: “Let’s leave things roughly as they are for now, and agree to come back to it next year”. Even in these cases, though, we have often taken the opportunity to go further. The UK-Japan deal, for example, is more comprehensive when it comes to services and cross-border data flows than the EU-Japan deal, even though the latter had only just entered into effect.
This week, Britain took a momentous step when it applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade zone comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Again, many Europhiles are sneering. Joining a Pacific trade pact, they say, defies geography. And it is of course true that Britain is not a Pacific country (other than in the technical sense of owning the Pitcairn islands). But we have exceptionally close links to a number of CPTPP members. Australia, New Zealand, Singapore and Canada are common law, English-speaking nations. So, to a degree, are Brunei and Malaysia.
One of the arguments for Brexit was that, in the internet age, cultural proximity trumps physical proximity. That argument is stronger now than it was a year ago. The lockdown has habituated us to using Zoom or Teams for important discussions. When travel returns, it is hard to imagine that business people will be as ready to hop over to Düsseldorf for the day to make a presentation. If you’re online, Rotorua is no further than Rennes – indeed, nearer in the sense that it shares your language, legal system and accounting methods.
Another argument for Brexit was that, by global standards, the EU was a slow-growth region. That argument, too, is now looking stronger. Although we talk of the pandemic as a global event, the truth is that it hit Europe much harder than Asia, Africa or the Antipodes.
But the biggest difference between the EU and the CPTPP is that the latter is a trade agreement rather than a state-in-the-making. Its members simply seek to maximise their prosperity through greater specialisation and exchange. Joining the CPTPP does not involve making budget transfers to its poorer regions, or accepting the supremacy of its laws over our parliamentary statutes, or adopting a common flag, passport or anthem. Nor does it require a member to alter its standards on non-exported goods and services.
Viewed purely as a trade pact, the CPTPP is preferable to the EU because it elevates mutual recognition over harmonisation. The essence of the CPTPP is that its members agree to refrain from certain actions that would restrict free commerce. It is perfectly possible for CPTPP members simultaneously to have ambitious trade deals with each other and with the EU – as, for example, Japan and Canada do. On services and on professional qualifications, CPTPP uses a “negative list” approach. In other words, it assumes that whatever is legal in one state is legal in all the others unless it is expressly exempted in the treaty.
It is fair to say that the CPTPP is wide rather than deep. It does not go as far as, say, the Australia–New Zealand deal, which is arguably the most advanced on the planet. But, as Australia and New Zealand demonstrate, a deeper trade deal can nestle within a broader one.
Our aim should be to negotiate a deal similar to that which Australia and New Zealand enjoy with one another – assuming that is, that our protectionists in DEFRA and the NFU will let us. We should, in other words, seek both to participate fully in the CPTPP and, under its auspices, to secure even more ambitious agreements with the countries closest to us in terms of GDP per capita and regulatory interoperability – namely, Australia, Canada, New Zealand and Singapore.
Indeed, New Zealand, Singapore and Chile – three of the world’s greatest free-traders – are currently setting the pace when it comes to digital trade. If Britain peels itself away from the wary and watchful EU, which has never been comfortable with the free-wheeling nature of the internet, and joins these Hayekian states, it is likely to end up crafting standards on digital trade that every competitive country will want to adopt.
Finally, there is a geopolitical case for membership. Donald Trump’s decision to pull out of the Pacific deal at the last minute opened the door to China which, three months ago, created a rival trade pact with Australia, Japan, New Zealand, South Korea, and all ten members of ASEAN.
My guess is that the Biden administration will want to reverse Trump’s mistake. After all, many of its leading members had been involved with putting the Trans-Pacific Partnership together in the first place under Obama. British membership of the zone, as well as being in itself a useful counterweight to Beijing’s ambitions in the region, will set the context for UK-US trade talks.
To sum up, then, our CPTPP application will boost jobs and growth, strengthen the Anglosphere, improve the prospects for a bilateral American deal, accelerate our pivot to the fastest-growing markets on Earth, and elevate Global Britain. Not bad. Not bad at all.