On December 31, 2020 the 11-month transition period which gives the U.K. time to sort out its international affairs before Brexit is finalized will come to an end. One of the most important diplomatic items that the British government must decide upon is its various trade deals with other countries. While focus has largely been on the trade deal that will emerge between the U.K. and the E.U., there are many other trade deals which must have their terms decided on. This includes their trade agreement with Canada..The trade deal which Canada and the E.U. operate on is the Canada-European Trade Agreement (CETA). This trade deal is still in effect until the end of the transition period, but once January 1, 2021 arrives, the deal will no longer be in effect and Canada and the U.K. will be operating without a trade agreement. As the looming deadline gets closer, the U.K.’s Secretary of State for International Trade, Lizz Truss, and Canada’s Minister of Small Business, Export Promotion and International Trade, Mary Ng, have begun work on what they call a “transitional agreement” which would be an interim solution before a full agreement can be finalized..CETA, according to the Canadian government, reduces barriers to trade between Canada and Europe. Since CETA’s enactment, 98 per cent of Canadian goods have become exempt from European tariffs when previously only 25 per cent were. As Canada and the U.K. come to a trade agreement, it’s time to ask why we should stop at 98 per cent and not move to 100 per cent and remove other barriers to trade. In fact, it’s time to ask why we need trade agreements at all. As American economist Murray Rothbard notes, “Genuine free trade doesn’t require a treaty or its deformed cousin, a ‘trade agreement’ … If the establishment truly wants free trade, all it has to do is to repeal our numerous tariffs, import quotas, anti-‘dumping’ laws, and other American-imposed restrictions on trade. No foreign policy or foreign maneuvering is needed.” If the benefits of CETA are that we get reduced barriers to trade, then why not eliminate all of them? Why indulge in protectionism at all?.One argument for protectionism is the claim that that jobs will be saved and domestic wages will be raised. As William McKinley, the American mastermind behind the McKinley tariff of 1890 argued during his 1892 presidential campaign, “Open competition between high-paid American labor and poorly paid European labor will either drive out of existence American industry or lower American wages.”.But this thesis proves far too much. For if it is really the case that places with different wage rates do not benefit from free trade then we should reject not only international free trade but intranational free trade as long as there are unequal wages between different regions. As German economist and philosopher, Hans-Hermann Hoppe explains,.“Any argument in favor of international protectionism rather than free trade is simultaneously an argument in favor of interregional and interlocal protectionism. Just as different wage rates exist between the United States and Mexico, Haiti, or China, for instance, such differences also exist between New York and Alabama, or between Manhattan, the Bronx and Harlem. Thus, if it were true that international protectionism could make an entire nation prosperous and strong, it must also be true that interregional and interlocal protectionism could make regions and localities prosperous and strong. In fact, one may even go one step further. If the protectionist argument were right, it would amount to an indictment of all trade and a defense of the thesis that everyone would be the most prosperous and strongest if he never traded with anyone else and remained in self-sufficient isolation.”.McKinley ironically also noted in 1892 that the United States had free trade between the states. He said in the speech title “The Triumph of Protection”, “We have free trade among ourselves throughout our forty-four States and the several territories. That is because we are one family, one country. We have on standard of citizenship, one flag, one Constitution, one Nation, one destiny.” What these states did not have was equalized wages across states. And thus, based on McKinley’s own arguments, he should have aimed to restrict trade between the states as well as between America and the rest of the world. Just as Toronto benefits from free trade with Hamilton and PEI benefits from free trade with British-Columbia, so too does Canada benefit from free trade with the U.K..Canadian and British consumers deserve the low prices that come with free trade. Mary Ng and Liz Truss are presented with a unique opportunity to make that a reality for their respective consumers and they should seize it. Let us begin our relationship with the newly independent U.K. as one of free trade and free exchange..Andrew D. Allison is a graduate student at the University of Waterloo
