We have nothing to fear from running our own trade policy

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This article was first published on CapX.

Theresa May’s visit to India earlier this month was overshadowed by the issue of visas. The Indian government proved to be particularly interested in the loosening of restrictions on British visas for Indian professionals and students. One of Narendra Modi’s former advisors described Britain’s stance, somewhat unfairly, as: “We want your business, but we don’t want your people.”

Given this attitude, and with EU leaders insisting on freedom of movement as a necessary consequence of our retaining various aspects of the Single Market, it would be easy to conclude Britain is in a vulnerable position going into international trade negotiations. Do we have nothing else to offer apart from the right for their citizens to migrate here?

But the facts do not justify these worries. Other countries most certainly do want our business. Governments around the world have expressed interest in securing free-trade agreements with post-Brexit Britain, including Canada, Australia, Donald Trump’s administration-in-waiting in the United States – and, of course, India. They do so not out of any sentimental loyalty, and not because they just want to facilitate their citizens’ migration to Britain. They recognise the ability to trade freely with Britain is an attractive prospect for their economies.

India is interested in loosening British visa restrictions not because they are seeking a substitute for our business, but because they want our business and want to enhance free trade. Visa reforms are a perfectly normal aspect of free-trade negotiations. Short-term, visa-free travel to Canada for Romanians and Bulgarians was briefly a sticking point in the CETA negotiations earlier this year, for example – and nobody would say Canada is so vulnerable it can only offer expanded migration rights in exchange for EU business.

The rest of the world’s interest in free trade with Britain should come as no surprise. As keen as we are to call ourselves a “small island”, we are historically a global trading nation. We are still the world’s 5th largest economy – a wealthy market of over 64 million consumers. We are the world’s 6th biggest importer and 9th biggest exporter. Theresa May has pledged to make our Corporation Tax rate the lowest in the G20. We rank 3rd in the world in the Global Innovation Index for 2016, and 7th in the Ease of Doing Business Index for 2017.

Other countries have every incentive to seek greater access to the British market. They should also welcome the prospect of Britain having greater access to their own markets. While it might be more difficult to think of one particular product Britain has to sell to potential trade partners than it is for Germany (cars), Norway (oil), or Australia (coal and iron ore), we should not consider this a weakness.

In fact, it testifies to the diversity of our export economy, which is a strength. We do have many big net exports – they are mostly in less obvious, but nonetheless very lucrative, service industries, such as banking and insurance.

Potential free-trade partners have an interest in buying these services from Britain, rather than, say, attempting to create replicas of the City of London at home. The age-old principle of comparative advantage states that each country benefits more from focusing on what it does more efficiently. So it would suit Australia to focus on mining while using British financial services.

We should not be disheartened by the inevitable “prophecies of doom” whenever preliminary trade talks go anything other than swimmingly. We are not a vulnerable basket-case, casting around for the rest of the world to save us as we shed the straitjacket of the European Union.

Britain isn’t seen simply as a destination for future “expats”. We have plenty to offer, and our negotiating position in global trade negotiations would be strong.

The Government must act accordingly. Theresa May knows we have nothing to fear from running our own trade policy – we should immediately commit to leaving the EU’s ineffective and restrictive Customs Union.

In committing to doing so, the Government would finally confirm that Britain would actually be able to enter into free-trade agreements with potential partners after Brexit. With the removal of such uncertainty, the Government can begin to seriously pursue trade negotiations around the world, and take an assertive stance in those talks.

We should aim to strike comprehensive free-trade deals which would come into force as soon as possible after Brexit – on the very day we leave, if possible. There is no reason for us to undersell ourselves, and there is no reason to delay.

We must get Britain out of the European Union, and give ourselves a head start in seizing the worldwide trading opportunities made possible by Brexit.

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