Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21
UK Covid-19 Booster Jabs Moderna, Pfizer Are They Worth the Risk of Side effects, Illness? - 22nd Nov 21
US Dollar vs Yields vs Stock Market Trends - 20th Nov 21
Inflation Risk: Milton Friedman Would Buy Gold Right Now - 20th Nov 21
How to Determine if It’s Time for You to Outsource Your Packaging Requirements to a Contract Packer - 20th Nov 21
2 easy ways to play Facebook’s Metaverse Spending Spree - 20th Nov 21
Stock Market Margin Debt WARNING! - 19th Nov 21
Gold Mid-Tier Stocks Q3’21 Fundamentals - 19th Nov 21
Protect Your Wealth From PERMANENT Transitory Inflation - 19th Nov 21
Investors Expect High Inflation. Golden Inquisition Ahead? - 19th Nov 21
Will the Senate Confirm a Marxist to Oversee the U.S. Currency System? - 19th Nov 21
When Even Stock Market Bears Act Bullishly (What It May Mean) - 19th Nov 21
Chinese People do NOT Eat Dogs Newspeak - 18th Nov 21
CHINOBLE! Evergrande Reality Exposes China Fiction! - 18th Nov 21
Kondratieff Full-Season Stock Market Sector Rotation - 18th Nov 21
What Stock Market Trends Will Drive Through To 2022? - 18th Nov 21
How to Jump Start Your Motherboard Without a Power Button With Just a Screwdriver - 18th Nov 21
Bitcoin & Ethereum 2021 Trend - 18th Nov 21
FREE TRADE How to Get 2 FREE SHARES Fractional Investing Platform and ISA Specs - 18th Nov 21
Inflation Ain’t Transitory – But the Fed’s Credibility Is - 18th Nov 21
The real reason Facebook just went “all in” on the metaverse - 18th Nov 21
Biden Signs a Bill to Revive Infrastructure… and Gold! - 18th Nov 21
Silver vs US Dollar - 17th Nov 21
Silver Supply and Demand Balance - 17th Nov 21
Sentiment Speaks: This Stock Market Makes Absolutely No Sense - 17th Nov 21
Biden Spending to Build Back Stagflation - 17th Nov 21
Meshing Cryptocurrency Wealth Generation With Global Fiat Money Demise - 17th Nov 21
Dow Stock Market Trend Forecast Into Mid 2022 - 16th Nov 21
Stock Market Minor Cycle Correcting - 16th Nov 21
The INFLATION MEGA-TREND - Ripples of Deflation on an Ocean of Inflation! - 16th Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Free Trade, Brexit, and the WTO

ElectionOracle / EU_Referendum Jun 12, 2016 - 04:35 PM GMT

By: MISES

ElectionOracle

Carmen Elena Dorobăț writes: The debate surrounding the EU referendum in Britain, scheduled in two weeks, and the fate of the UK outside of the EU, is now in full swing. Unsurprisingly, little of substance has been said so far on the issue. One would expect that both sides would be better prepared with arguments to support their cause, but many aspects discussed have not only been erroneous, but have appealed to people’s fear rather than their intelligence. Both the Remain and the Leave camps have failed to show how either decision would enhance economic and political freedom; instead, they have tried to one-up each other in the preservation and growth of the existing welfare state, military complex, and bureaucratic apparatus.


Setting aside the disappointing democratic discourse within the UK, an even more irritating factor have been the pronouncements of international organizations regarding the effects of a possible Brexit. As if economic progress were impossible before the creation of European inter-governmental institutions, the IMF has repeatedly warned that a Leave vote would “precipitate a protracted period of heightened uncertainty, leading to financial market volatility and a hit to output.” The latest to join in this is the World Trade Organization, arguably the least entitled to display self-righteousness given its track record. Roberto Azevedo, WTO’s director general, has declared that in the event of a Brexit, he doesn’t “know exactly how members are going to behave [toward the UK] and what kind of engagement there will be. [Negotiations might take] two, three, four years. It can take a decade or more. It depends on the complexities of the negotiations and the appetite for members to do it quickly… [but] there would be a vacuum. The UK would be the only WTO member without a list of its commitments… it's a legal uncertainty. I don't have a crystal ball and the message I am bringing to you is that nobody has that crystal ball.”

Azevedo is unwittingly right on two counts: the WTO, in its 20 years of existence, has managed to erect a quagmire of regulations and agreements that have not only not promoted free trade, but have actually hampered it, and have increased the volatility and uncertainty of global trade. Secondly, any international trade negotiations now last decades—unsurprisingly since multilateral trade treaties do not seek trade liberalization, but the subtle introduction of additional hidden barriers to international economic freedom.

One does not need a crystal ball to point out that in the case of the United Kingdom, if sincerely interested, the benefits of EU membership for trade could be easily outperformed outside the Union and outside any other international agreement through unilateral liberalization. There is in fact no need for bilateral agreements—or for multilateral agreements—among countries, as the elimination of trade tariffs and barriers need not be reciprocal in order for a country to reap the full benefits of free trade. If the UK finds itself outside the EU common market and the WTO’s forum of multilateral negotiations, all it is needed for a real free trade agreement—as Robert Ebeling points out—is to pass “a short piece of legislation stating something to the effect: “The [UK] government herewith eliminates all existing barriers, restrictions, and prohibitions on the free and unrestricted importing and exporting, buying and selling of all goods and services between the [United Kingdom] and any and all nations in the world. The [UK] government declares that all forms of peaceful and non-fraudulent trade, commerce and exchange is the private matter of the individual citizens of the [United Kingdom] and any and all others situated in another country. This law takes effect immediately upon passage.” 

If this were to happen, chances are importers and exporters around the world would happily engage with the UK—as they currently do with Hong Kong, which has no import barriers. The WTO has conveniently branded the Asian powerhouse an ‘unusual’ case—but as unusual as it is today, it is one of the more successful, in a sea of otherwise heavily protectionist partner countries. And even if other countries might retaliate or simply not reciprocate, the UK would yet again be better off. Mises summed this up perfectly: “Even if all other countries cling to protection, every nation best serves its own interests by free trade.”

It is true that unilateral liberalization is impossible to accomplish when political interests are exactly opposite. As Mises argued, “if people regard imports as an injury, they will not stop anywhere on the way toward autarky” (1944, 250). Nevertheless, protectionism flourishes inside the EU or the WTO, where political interests detrimental to free trade not only find confirmation and support among other member countries, but also larger economic levers to push for further trade intervention. Again, Mises explained that governmental trade treaties are sought after only “as long as they hinder the other nation’s export trade and seem to encourage one’s own” (Mises 1944, 250).

In other words, the WTO and the EU common market amount to little else than well-organized cliques of protectionist policy makers labeling themselves as free traders. There is, without doubt, a better way for free trade outside both of these organizations.

By Carmen Elena Dorobăț

Contact Carmen Elena Dorobăț

AwardsO.P. Alford III Prize in Political Economy

Carmen Dorobăț has a PhD in economics from the University of Angers, and is assistant professor in International Business at Coventry University.

http://mises.org

© 2015 Copyright Ryan McMaken - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in