Brexit is an Opportunity For Britain to Return its Classical Liberal Roots: New at Reason

The upcoming process of the United Kingdom leaving the European Union (“Brexit”) presents opportunities for a more classically liberal approach to trade, immigration, and regulation.

Julian Morris writes:

Assuming that Parliament does not over-ride the referendum result, many vexing decisions must now be taken, among them: What should be Britain’s trade policy? How should immigration be reformed? And which British regulations required by the E.U. should be kept and which scrapped? To make matters worse (or at least more confusing), these questions are not necessarily independent of one another.

Taking trade first: At present, the U.K. is part of the E.U. customs union and practically all trade policy decisions are made on an E.U.-wide basis. At present, all trade between the U.K. and other E.U. member states is tariff free—there are no taxes on import or exports. That applies not only to goods (which means anything physical, from oil to toasters) but also to services (such as computer programming, architecture, and financial planning) and capital (investments of various kinds). This preferential treatment for trade within the E.U. created a tendency for transactions to remain within the customs union. However, the slow growth of most E.U. economies compared with other less heavily regulated economies has resulted in a decline in the share of British trade with the E.U.—from about 55 percent in 1999 to 45 percent in 2015.

The rapid growth of Asian economies over the past three decades was driven in part by unilateral trade liberalization. Britain could potentially benefit enormously by following that route. Unilaterally removing external restrictions on imports of goods, services and capital would be both the simplest and in many respects the best policy, since it can be undertaken without the need for any intergovernmental negotiation. It would ensure that consumers and producers in the U.K. had access to these inputs at the lowest possible cost. This would drive stronger domestic competition, resulting in higher rates of innovation and growth.

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