Brexit is already proving to be a huge victory for global free trade

By Lawrence Solomon on July 22, 2016 • ( Leave a comment )

World trade, Canada’s included, is beating a direct path to the British market.

U.S. Secretary of State John Kerry, after talks this week with U.K. Prime Minister Theresa May, declared it was imperative that the U.S. move “as fast as possible” to “maximize the economic opportunities” of Brexit. Jack Taylor/Getty Images.

This article, by Lawrence Solomon, first appeared in the National Post

Canada has long wanted free trade with the United Kingdom, a fellow G7 country that became the world’s fifth-largest economy in 2014 after overtaking France. According to the Centre for Economics Business and Research, a premier U.K. consultancy, the fast-growing U.K. will overtake Germany over the next two decades to become Europe’s largest economy and the world’s fourth largest.

But until Brexit, Canada was shut off from this economic powerhouse, our only path to profitable U.K. trade wending through the EU bureaucracy in Brussels, which controls trade access to every EU country. And as a frustrated Canada knows only too well from almost a decade of interminable, ongoing jockeying in aid of sealing a Canada-EU trade deal, the EU is the world’s largest closed shop. No one gets to trade with the EU on preferential terms without either joining the union or trading away national sovereignty for the privilege.

Now the world, Canada included, is beating a direct path to the United Kingdom. U.S. Secretary of State John Kerry, after talks this week with U.K. Prime Minister Theresa May, declared it was imperative that the U.S. move “as fast as possible” to “maximize the economic opportunities” of Brexit. Kerry’s views echoed those of Australian Prime Minister Malcolm Turnbull who, after his own discussions with May, stated: “So as Britain leaves the EU, what we will need to do is negotiate direct arrangements with Britain … we need to get moving on that quickly.”

According to the U.K.’s international trade secretary, Liam Fox, countries are lining up to strike trade deals with the U.K. — Japan, India and China are among those that have informally committed themselves, with some saying they are eager for quick deals. The U.K. has not only become the world’s most eligible free-trade partner; it has also become its most attainable. “We can make Britain a beacon for open trade,” Fox told The Sunday Times. “We have already had a number of countries saying ‘we’d love to do a trade deal with the world’s fifth-biggest economy without having to deal with the other 27 members of the EU.’”

If not for Brexit, and with the possible exception of Canada, none of the many countries eager for U.K. trade would have access to its immense market anytime soon — these potential trading partners have been shut out since 1973, when the U.K. joined the European trading bloc and cut itself off from greater trading opportunities in the rest of the world. Now, less than a month after the Brexit vote, barely a week after a new prime minister has taken the helm, countries large and small are contemplating their access to a British market that had been blocked by tariff walls for almost half a century. Put another way, Brexit has become the biggest impetus to global free trade in more than a generation.

Once the U.K. strikes free-trade deals with the U.S., Canada and several others, it will have gained access to a much larger market than it had in the EU (the U.S. economy alone, by some measures, is larger than the EU market). From the perspective of a Canada or a U.S., the opening up of free trade with the U.K. is no less consequential: The U.K., the U.S., and Canada have a combined GDP far exceeding that of the NAFTA partnership.

The Brexit free-trade bonanza would just be starting, though, because Brexit, doomsaying notwithstanding, is opening eyes in the other EU nations. The IMF — perhaps the most prominent among the doomsayers — has entirely reevaluated its analysis. Brexit will not sink the U.K. into recession after all, it now says; instead the post-Brexit United Kingdom will best Germany and France to be one of the G7s best-performing economies, behind only the U.S. in 2016 and only the U.S. and Canada in 2017.

In France, the Netherlands, Spain and elsewhere in Europe, the sentiment among large portions of the citizenry to leave the EU is thwarted largely by fear of the economic consequences. Brexit is showing them that the consequences of staying within a decaying EU is fear-worthy, while striking out into a world of free trade is hopeful and worth embracing. Every free-trade-oriented country in the EU that shrugs off the dead weight of the EU bureaucracy from its back and follows Britain’s lead will, like the U.K., provide countries around the world with a new free-trading partner in another free-trading round, making Brexit a defining event in the annals of free trade.

Lawrence Solomon is a policy analyst with Probe International. For the first in this series, see here.