Douglas Carswell

13 JAN 2017

Free trade doesn't require common rules

One of the big misnomers in Brexit coverage is that free trade requires uniform rules. It doesn't. The trade deals we now make should be based on mutual standards recognition, not regulatory union – as industry is starting to agree.

Reading the Brexit recommendations published this week by finance lobby group The City UK yesterday, I was struck that they omitted any demand for continued passporting arrangements for banks. Instead, they call for "the mutual recognition of regulatory regimes".

That's an approach we should adopt more widely.

Trade isn't free if it depends on reams of new regulation that makes every transaction subject to official permission.

Successful free trade deals are instead based on mutual standards recognition: each party allows the sale of goods and services produces produced according to the other's standards.

Many of the economies we want to trade with – from the US, to the EU, to Japan – are highly developed. Their regulatory regimes are similar to ours. So we can trust each other's rules when we buy each other's goods. We don't need to have the same rules to be able to trade.

Even the EU is capable of trading based on regulatory equivalence – as its new MiFID II rules testify. So that's how our future trade with the EU should work too. On that basis, we can have single market access without single market membership – as Leavers said all along.

But there's a broader point here, which is that trade isn't orchestrated by fiat. The mandarins who make a living from overcomplicated, permissions-based commerce want us to believe that they are an essential part of international trade. But they're not.

To beat oligarchy, we need to get these parasites out of the way.

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