Regional agreements like the Single Market are not the only trade game in town

The development of the global trading system has stalled. This has been the conventional wisdom for some time. It was weaponised during the referendum campaign by advocates of regionalism who were at pains to point out that, for Britain, the Single Market is the only game in town and that any attempt to be an independent global trading nation would fail.  

The World Trade Organisation is the epicentre of the global trading system. As the world’s multilateral trade forum, the WTO has massive potential and hopes were high in 1995 when it replaced the General Agreement on Tariffs and Trade (GATT). After the Uruguay Round of global trade negotiations concluded, and despite several notable accessions to the organisation – such as China – the WTO peaked and then became gradually marginalised.

Driven primarily by the European Union and the United States, regionalism was prioritised over multilateralism. With ambitious but exclusive regional agreements such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) taking precedence over the development of the WTO. It was only a year ago that both were being used as evidence that regional agreements were the future; only game in town. Now TTIP has failed and the USA has pulled out of the TPP.  

Despite this, the election of Donald Trump, advocate of “America First” protectionism, has been seen by some as further evidence that the global trading system has broken down. Last July, Trump mooted the possibility that the US could withdraw from the WTO if it constrained his ability to impose tariffs.

There are however rays of hope beginning to emerge; though progress has slowed over the previous fifteen years, it has not stopped. In what has to be considered the biggest achievement in the history of the WTO, the historic and truly ground breaking WTO Trade Facilitation Agreement was finally ratified last week. Despite being lauded by Liam Fox and the Department for International Trade, this very significant event has not been reported or discussed in the mainstream media. It has far bigger potential than TTIP ever had and yet there has been no fanfare in Britain whatsoever.

The Agreement seeks to reduce red-tape and streamline customs procedures on a global scale. A 2015 study by the WTO estimates that the Agreement could add 2.7% a year to world export growth up to 2030, equating to 0.5% of global GDP. At a time when the warning signs are flashing on the global economy, and global trade growth is stagnating; this is exactly the kind of boost we need.

WTO director-general Roberto Azevêdo hailed the Agreement, claiming the Agreement will: “boost global trade by up to US$1tn each year, with the biggest gains being felt in the poorest countries. The impact will be bigger than the elimination of all existing tariffs around the world.”

This is a timely boost for free trade advocates. By streamlining customs procedures and making supply chains more secure, the Trade Facilitation Agreement will allow small and medium sized business to conduct cross border business more easily and give entrepreneurs in developing countries better access global markets. When fully implemented, the Agreement will be a major boost to economic prosperity across the world.

The WTO could have a new lease of life. European integration has been the means of managing intra-European trade, but Brexit Britain will need to look to the WTO as a crucial forum for its trade relations with the rest of the world. A protectionist Trump may be no great friend to the WTO, but the WTO will be a blessing for any US trading partners that find themselves penalized and in need of adjudication.

Perhaps we could even see a renewed WTO as a means of advancing global trade at a time when there has been a severe backlash against globalisation. In Europe, the single currency has caused poverty and in the EU and the US mass immigration brought anxiety and resentment.  The perceived attack on sovereignty from the big hitters of regionalism – TPP, TTIP and NAFTA – has caused anger in the electorate. Could intergovernmental cooperation, globalised trade facilitation and multilateralism be the better means of pursuing free trade and global prosperity?

The revival of the global trading system will not happen automatically. It will take a huge amount of work and, crucially, leadership. Willing champions must actively pursue the renewed global agenda and mid-sized economies are best placed to do it. Countries such as the UK, Australia, New Zealand, Canada, India, Brazil, Japan, South Africa and other emerging economies can work collectively to open markets and jumpstart the global economy.

A post-Brexit Britain must be open, globalist and working to develop links with emerging economies and pioneering the elimination of technical barriers to trade. Britain can play an active part in kickstarting the global trading system and reinvigorating global trade. We will not be alone in doing so, but having regained control of our trade policy we will be free to flexibly build coalitions and ad hoc alliances to drive reform and spread prosperity.

Ben Kelly is an Executive Director of Conservatives for Liberty.