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Brexit

Global trade deals must take into account local concerns

The rise of Donald Trump and Britain’s decision to leave the EU have one thing in common: mega trade agreements that fail to account for the small guy

PUBLISHED : Monday, 04 July, 2016, 11:13pm
UPDATED : Monday, 04 July, 2016, 11:13pm

Isolationist sentiment is gaining momentum, and not only in the US as a result of the threat by Donald Trump to tear up trade deals. Britain’s vote to leave the European Union has given ammunition to critics of free trade, highlighting concerns in many nations that the forces of globalisation are negatively affecting local economies and lifestyles. This prompted the leaders of the US, Canada and Mexico – the North American Free Trade Area – to rebuff calls to throw up trade barriers, with President Barack Obama arguing that advanced countries needed to ensure that the benefits of globalisation were more widely felt by adopting higher standards, wages and legal protections.

Obama backtracks on UK trade warning to limit Brexit fallout

Having intervened in the Brexit campaign to say that a vote to leave would result in Britain moving to “the back of the queue” on trade with the US, Obama has now suggested that Britain has more important priorities than the future of US-UK trade. “Europe is their first priority, where they trade half their goods,” Obama said, adding that Brexit “does not help” global growth.

The US is currently negotiating a trade deal with Europe, which is still struggling to revive economic growth following the global financial crisis. Britain, meanwhile, has recovered to be one of Europe’s healthiest economies and the world’s fifth largest. If Obama is concerned about the future of free trade, that would seem a good enough reason to prioritise trade talks with the UK, which in turn could strengthen London’s hand in negotiating a new trade deal with Brussels after leaving the EU, if it finally comes to that.

Thanks to Brexit, a new global financial crash is looming

The free movement of people – or immigration – will remain a difficult issue between Britain and the EU. It has prompted labelling of Brexit voters as racists and bigots. But it should be remembered that concern about immigration is not unconnected to economic stagnation in Europe that resulted in workers migrating to Britain and competing for jobs.

It is now clear that mega trade deals and globalisation must take account of local concerns. Failure to do so could be used as an argument for the evil of protectionism.