The Institute of Economic Affairs has published a report claiming that the UK doesn’t need free trade agreements to prosper.
Penned by Professor of Economics at Cardiff Business School Patrick Minford, the report criticises the widely held idea that free trade agreements are good for the country and that “unilateral free trade” would provide the UK with a much better deal.
Crucially, Minford also claims that British exports to the European Union have little to do with being in the common market – a major point of contention in the ongoing Brexit debate.
Minford cites China’s rapid growth without formal trade agreements to back up his claim. “: it was not even a member of the WTO until 2001. Equally, Britain’s rapid growth in the nineteenth century was largely the product of unilateral free trade rather than the result of complicated bilateral or multilateral trade deals,” the report said.
The report was highly critical of the European Single Market for services, stating that not enough has been done to bring down historical barriers between nations. As the UK conducts more trade outside of the EU, mostly under standard WTO rules, as Minford points out.
Minford relied on “the importance of being unimportant” – that is, with the UK having such a small percentage of global GDP – that it makes no sense for either the UK or others to impose trading barriers.
The UK accounts for around 3% of global GDP.
Overall, Minford argues that the UK does not need to be a part of the Common Market for trade, and that the UK economy would be no worse off if it simply applied standard WTO rules when trading with the European Union.