‘Global Britain’ Is a Pipe Dream
Taking back control sounded good in 2016. It won’t be so easy in the Trump era.
Among the more compelling arguments for Brexit in 2016 was the idea that the center of gravity of the global economy was shifting away from Europe. In order to capitalize on the new opportunities, the argument went, the United Kingdom should unmoor itself from the rigid and introspective European Union.
If “Global Britain” sounded vaguely plausible in the generally benign international environment of the early months of 2016, it sounds much less so at a time when post-Brexit Britain would find itself in a much less favorable geopolitical situation—and in the midst of trade wars between the United States and the EU, as well the United States and China.
The idea of a Global Britain always rested on shaky premises. Imperial nostalgia aside, the U.K. economy is going to remain tightly integrated with the European continent by virtue of economic gravity. That alone makes it hard to justify erecting new trade barriers between Britain and its closest economic partners—a necessary consequence of Brexit.
It is also far from obvious that going it alone, without having to put up with the protectionist instincts of continental Europeans, offers the U.K. better prospects of meaningful trade liberalization with the rest of the world than does using Britain’s voice to steer conversations about trade policy in Brussels. Surprisingly for some, the EU has turned out to be quite adept at concluding free trade agreements in recent years. Since 2016, it signed agreements with Canada, Japan, and Singapore—as well as with Ecuador and several economies in sub-Saharan Africa.
Perhaps the U.K. can do better than that, notwithstanding its size and limited administrative capacity for trade negotiations. In particular, the Trump administration has repeatedly dangled the promise of a U.S.-U.K. trade deal—a potentially valuable prize for the British, considering the previous failure of the Transatlantic Trade and Investment Partnership (TTIP). Setting aside the mercurial character of the current U.S. president, getting such an agreement through Congress is “just not in the cards,” as House Speaker Nancy Pelosi put it, if the U.K. were to crash out of the EU and erode the Good Friday Agreement.
Furthermore, President Donald Trump is unlikely to be a reliable ally for the Brexiteers’ cause. Especially those who invoke the World Trade Organization (WTO) option—a no-deal Brexit under which the EU would still have to refrain from punitive trade measures because of WTO measures—should remember that Trump has little patience for the workings of the WTO; its underlying principle of nondiscrimination runs directly against the president’s penchant for bilateral deals.
There is an even more serious blind spot. Leavers are fooling themselves if they believe that concluding trade agreements with economies around the world is a fundamentally different exercise from the process of economic integration with the European continent, from which they want the U.K. to extricate itself. Both entail vexing trade-offs between deeper economic ties and national sovereignty and control over domestic legislation.
Because tariffs, quotas, and other explicit forms of protectionism are rare, the most significant challenge for businesses trading across borders is compliance with the countless environmental, safety, and sanitary rules of different jurisdictions. Reducing those barriers necessarily means giving up some sovereign control.
To see why, consider mutual recognition of rules—a light-touch solution to the problem favored by free market advocates. By saying that, say, U.S. standards on food safety or medicines are going to be recognized by U.K. authorities as equivalent to the British ones, domestic regulation is rendered ineffective. Suddenly, companies no longer have to abide by the laws made in Westminster but have a choice between domestic and foreign rules. Such competition between regulatory standards may be a good thing on its merits. Yet it inevitably means less control for domestic policymakers—and potentially more anxiety for voters, as can be illustrated by the hysteria over “chlorinated chicken” and the supposed impending privatization of the British National Health Service, had TTIP been adopted.
As a result, trade liberalization involves a messy and acrimonious process of political bargaining over the forms of regulatory cooperation used to bring down nontariff barriers. In some cases, mutual recognition of rules is an easy political sell. More often than not, economic integration requires agreeing on a harmonized layer of common rules. In other cases, governments commit to open-ended partnerships on regulatory policy or to using international standards set by transnational organizations or to mutually recognizing each other’s assessment bodies in evaluating conformity with their respective regulations (that way, a drug developed by a European company could be tested by the European regulator for compliance with U.S. standards).
Each of those specific approaches has different costs and benefits, but they all involve trade-offs, just like the process of European integration does. If the British public rejected European rules over which their government had a substantial degree of control, how much appetite do they have for meaningful trade liberalization with large economies such as the United States or China, which would involve opening up British markets to practices and rules over which the U.K. Parliament has no say whatsoever?
Taking full advantage of everything the global economy has to offer and becoming a true Singapore-on-Thames is also a matter of domestic policy, not just trade negotiations. In some ways, the British are not doing badly. Compared to other countries in the Organization for Economic Cooperation and Development (OECD), the U.K. has a reasonably lightly regulated economy. If, in Singapore, it takes two procedures and one and a half days to start a business, in the U.K. it takes four procedures and four and a half days (compared with the OECD average of five procedures and nine days).
Yet Britain’s productivity growth record has been dismal for years, largely as a result of a very high proportion of low-educated workers, including in its younger cohorts, and also of onerous land use restrictions. Solving those problems in order to make the British economy more dynamic is not a matter of an indiscriminate bonfire of heavy-handed EU regulation. Fixing secondary education is a project for several decades. Reforming zoning will require careful political balancing to get homeowners and other entrenched interests on board. And both of these have nothing to do with the EU.
Even though these problems are completely unrelated to U.K. membership in the EU, Brexit has completely displaced them as topics of the national conversation, making them effectively invisible and harder to solve. Furthermore, if the U.K. does indeed leave, Brexit-related issues are guaranteed to continue to crowd out all the questions of domestic policy for years to come. This is because the agreement negotiated by Theresa May is only about withdrawal, while the agreement that will govern Britain’s future relationship with the EU, including regarding trade, is to be concluded at a later date.
In that sense, it is almost immaterial whether the U.K. leaves with or without a deal. Besides the immediate economic damage, crashing out means simply that there will be more to be negotiated in the future. Either way, the difficult questions that have not been answered by the British political class will remain unanswered for as long as the U.K. demands the impossible: the benefits of membership without any of the costs.
After the referendum, it seemed reasonable to acquiesce to the prospect of the U.K. leaving the EU. Lest the trust in British democracy be undermined, plebiscites ought to have consequences. But if the experience of the past three years has taught us anything, it is that Brexit is the most reliable way of ensuring that the U.K. does not take advantage of opportunities that the global economy has to offer and that the country instead spends another decade engaged in unproductive navel-gazing while the rest of the world moves on.