Brake: Cabinet can’t even agree amongst themselves, let alone win concessions from EU

Now that David Davis is re-opening the EU talks timetable again, Lib Dem Brexit spokesperson Tom Brake has this to say on the paucity of the Government’s performance in the EU negotiations:

David Davis promised us ‘the row of the summer’ over the Brexit timetable, only to capitulate weeks later to the EU’s preferred timetable after a disastrous general election for his party which vastly undermined their negotiating position.

To be now, a couple of months down the line, trying to reopen the issue reeks of desperation at an approaching economic storm and a cabinet who don’t have a clue.

Constant reports of cabinet spats show our government cannot even agree a position between themselves, let alone win concessions from EU negotiating teams in our country’s best interests.

Davis certainly seems to be picking fights on simplistic binary issues to hide the enormous complexity of Brexit and the disaster it is likely to bring for our businesses, our economy and, consequently, for our poorest.

Meanwhile, Ed Davey has slammed the Government after the former head of the Government’s Legal Services Paul Wilkinson comprehensively trashed the Government’s claims that we can keep the cake we consume on the EU single market. He said:

Either Theresa May is trying to con Brexiteers and really understands the critical legal point Sir Paul Jenkins is making – or she is heading for the hardest of Brexits, despite the evidence that this could only work at huge cost to British people.

The Conservatives are refusing to admit publicly that Europe will still require Britain to abide by their rules in nearly 50% of our trade, hard Brexit or not.

Brexit Tories are increasingly like Donald Trump in their refusal to understand the reality of international trade law – namely, you can’t tell the other side what to do.

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46 Comments

  • YellowSubmarine 20th Aug '17 - 1:55pm

    Davis wanted talks about exit arrangements and a future trade deal running together. To me this seems like a perfectly reasonable approach. As the brexit bill is not something legally binding, and need not be paid, any moneys would always be paid as part of the larger final deal. The EU will now just have to discover this the hard way.

    Having said that you might just describe Davis’s conceding to EU desires as showing good will towards Brussels.

    I thought Cabinet spates could also be explained away as ‘the party contained a broad church’ and multiple views were ‘healthy’ 😉 Or can this state only apply to LibDems…

  • Translation of Davies plea for the brave Brexiteers it is not “Strong and stable, man in control” it’s “SOS help me can’t you see I’m up to my eyes in it here, please help me”
    I would expect the EU to follow Napoleon’s advice “Never interrupt an enemy when they are in the process of destroying themselves”. On the Brightside I get to listen to brave Brexiteers explaining why that isn’t so, cue Yellowsubmarine.

  • Tony Greaves 20th Aug '17 - 2:29pm

    I am not sure that the EU “has to discover anything the hard way”. None of this is of their doing and they don’t really have to concede anything. The mere willingness to discuss things reasonably and as helpfully as possible is in itself a major concession.

  • Tony the EU can be as reasonable as reasonable can be, safe in the knowledge that the brave Brexiteers will bugger it up. Their lack of ability is staggering and becoming more apparent by the day. Cue brave Brexiteer to say it isn’t so, why black is actually off white and the importance of protecting fairies.

  • Bernard Aris 20th Aug '17 - 4:13pm

    The special pleading about giving the UK a temporary trade deal which should not be confused with remaining (banish that word!) in the Common Market reminds me of the famous scene in Charles Dickens’s novel Oliver Twist where the small boy asks the chef of the soup kitchen: “please Sir, can I have a little more?”.

    The direct equivalent being that just as little Oliver was not prepared at all for the treatment meted out when he entered the workhouse, so the Brexit ministers keep turning up at Brexit meetings with the EU with not a scrap of paper of preparatory notes.
    Remember, they were ministers when Cameron launched his ill-fated Referendum, and they all had working experience about how Brussels prepares for and handles talks with obstreperous member countries. As Cabinet ministers, they could have used both their departments and their MEP’s like Daniel Hannan to prepare for the contingency that Britain would vote for Brexit. They had all the expertise to prepare, but, even though convinced that Brexit was the better option, they did nothing to prepare themselves or British government for it…
    That looks not at all the way statesmen do things, but a lot like a Victorian pauper boy entering a Workhouse…

  • Bernard,
    More Uriah Heep than Oliver.

  • Peter Martin 20th Aug '17 - 5:34pm

    I’m not sure we need any concessions. I’m still thinking about this and I’d welcome any comments from anyone else who might have given this more than just the usual level of superficial thought that we all hear so often.

    But at the moment I would say:

    Our standard of living will be defined, as it is now, by what we can produce ourselves plus what we can net import. What we can produce ourselves isn’t going to be affected by tariff barriers.

    Also we have Lerner’s symmetry theorem to suggest that taxes on imports and exports are functionally equivalent.

    What we can net import will be, as now, more defined by the level of what others choose to net export.

    I’m thinking that possibly the best policy will be to not retaliate if the EU imposes tariff barriers on us and let their exports in tariff free. This will give us the moral high ground but at the same time won’t cost us anything.

    So yes there will be some disruption but its going to be manageable if we keep our nerve and don’t panic. But whether we can rely on any government to do that is debatable!

  • Christopher Curtis 20th Aug '17 - 9:17pm

    But why should we accept any disruption at all? What do we all gain that makes the “disruption” worthwhile? I’ve not seen any reasoned answer to that question before or after the referendum.
    We seem to be creating many more problems than we were promised, for fewer and fewer benefits than we were promised. Leave needs to be held accountable. If we are heading for problems, we need to stop or change direction.

  • Peter,

    It’s nice to see a man getting his excuses in early, not for you the wrong type of Brexit, no your excuse will be

    “So yes there will be some disruption but its going to be manageable if we keep our nerve and don’t panic. But whether we can rely on any government to do that is debatable!”.

    Given Brexit will be carried out by the brave Brexiteer leadership of the Tory party who as we all can see have panic, incompetence, bluster and sheer ineptitude hard-wired into their DNA, it’s a given they will panic and you’ll have your excuse. The problem is you knew who would be running with the negotiations when you voted for Brexit so you can’t say you didn’t know them; although to be fair they have achieved a level of ineptitude that is breath taking even to this none Brexiteer.

  • More cheerful news for the brave Brexiteers. Slovenia PM announces he is holding brave Brexiteers by spherical objects, brave Brexiteer leadership announce they will soon be eligible for Vienna boys choir.

    UK hopes of EU trade talks this autumn ‘will be dashed’, says Slovenian PM

    https://www.theguardian.com/politics/2017/aug/20/uk-hopes-of-eu-trade-talks-this-autumn-will-be-dashed-says-slovenian-pm

  • Katharine Pindar 20th Aug '17 - 10:05pm

    What enjoyable reading – Yellow Submarine sunk by series of depth charges, David Davis floored by Slovenia PM as the first of the 27 to paw the ground with tail waving ominously, and Frankie adding the pepper spray – their faeries are gonners all right, Frankie!

  • @ Katharine and just to complete your day and send you on your way rejoicing, even more good news at HTAFC today.

  • Little Jackie Paper 20th Aug '17 - 10:42pm

    Peter Martin – I think that it goes back to the point I’ve made on here before which is that the problem in this picture is not the EU per se, but the open agenda picture that ‘the system’ of which the EU is a part has given us. At the most superficial level people have just had a gutful. On a deeper level that system has produced a balance of trade which is wholly unsatisfactory. The UK is most certainly not alone here. However a combination of factors interplaying UK policy with the EU’s open has caused significant problems. This is I think a good article on the subject. Note how everything described in this article is prior to the referendum.

    https://www.standard.co.uk/business/anthony-hilton-britains-trade-deficit-is-a-disaster-waiting-to-happen-a3105766.html

    ‘The surge in the value of assets held here is a direct reflection on the willingness of the UK to sell anything that moves to a foreign buyer with a big chequebook and the ability of foreign buyers to run the assets well after buying them.

    The value of our assets in the rest of the world is now less than what the world owns here — and that would seem to limit the possibility for net investment income to recover to past levels.

    But if it is not going to recover, there is nothing to fill the trade gap and finance our current standard of living. So clearly the situation is unsustainable in the long term.’

    One might ask exactly what is liberal about these outcomes.

    Basically we can only sell Gatwick so many times. In the short term the answer is the Norway option. That stabilises the political imperative to leave the EU. Economically my thinking was that there would have been disruption anyway. As my link puts it euphemistically the situation was unsustainable. Some form of national preference would seem the only way forward. It will go down like vomit on a radiator on here – but I don’t see too many other options. May’s industrial strategy was probably the start of such thinking.

  • Little Jackie Paper 20th Aug '17 - 11:02pm

    Peter Martin- On tariffs. I see your thinking, but we may well need to have a discussion on the desirability of tariffs.

    The problem Britain faces is not poor export sales – indeed we rate well on a basic ranking. https://en.wikipedia.org/wiki/List_of_countries_by_exports. Rather the problem really seems a reliance on imports.

    We don’t have the industrial base now to handle cheap stuff from China. TTIP would have been great if there had been anything like reciprocity in the relationship – there wasn’t. Now obviously tariffs are hardly problem free to say the least. However I would argue that an industrial policy that was effectively EU membership (up and downside) was hardly problem free. Now, yes obviously this problem does not start and stop at the EU. Anyone who thinks leaving the EU is a magic bullet is an idiot. But I don’t think at least a discussion on tariffs can be totally avoided all things considered.

  • Little Jackie Paper 20th Aug '17 - 11:08pm

    Peter Martin – On my previous comment, it is worth noting that Macron seems to be thinking some sort of ‘buy European’ policy.

    ‘“We have had a naive approach to globalization,” Macron wrote in his election program. “Globalization is a tough fight because not everyone always respects the rules … So we will turn the protection of European industry into one of the major pillars of reinventing the EU.”

    The most striking element of the election program is his proposal for a “Buy European Act” to restrict public procurement in the EU to companies that have at least half of their production in Europe.’

    http://www.politico.eu/article/macronomics-french-front-runner-seeks-to-reinvent-eu-trade/

    I can’t see that flying, but the thinking of some sort of preference is certainly there.

  • I fear you may be right Katherine, already I detect less and less brave Brexiteers, perhaps as the summer draws on they feel the need to migrate to more fairy friendly climes, order-order, the Daily Mail or the Express. The cold wind of reality has started to blow and fairy friendly it is not. Apparently we are not special and the EU does not appear to need us more than we need them, other staggering bits of reality seem to be hard on faeries and they have started to drop like flies. Only by seeking new more friendly, fantasy filled websites will the survive at least for a little while.

    Jackie as the chances of the Norway solution, in the EU but with no control is very unlikely to fly, given hard Brexit looks much more likely would you still have voted for it?

  • Frankie,
    The reason there are less leave voters going on and on about the same thing is because they’ve moved on as have a substantial number of remain voters on the other kettle of monkeys are stuck in a repetitive cycle of refighting a war they’ve lost. My guess is that eventually with the current strategy the Lib Dems will play to a core of 28staters who agree on little except membership of the EU.
    Personally, I never read any of the newspapers you mention. Few people do. This why pundits got the election so wrong and why people who think the press is enormously powerful are also wrong.

  • Should read.
    . On the other kettle of monkeys some remain voters….

  • Peter Martin 21st Aug '17 - 7:20am

    @ Christopher Curtis

    You ask: “But why should we accept any disruption at all?

    The areas which heavily voted Leave have already seen that disruption to their lives and communities. Factories and mines have been closed down. Communities are in severe recession. Pubs and shops in the town centres are boarded up. What jobs are available are of poor quality and on minimum wages.
    Of course you can say it’s not the EU’s fault. Except that somehow they are in even much worse recession.
    But people have had enough. If the vote had been a decade ago there would have been an easy win for remain.

    @ Little Jackie Piper,

    At least Macron is being honest. He’s recognising that the EU is a protectionist bloc. It’s the wrong approach. There’s nothing wrong with globalisation and which is inevitable anyway. Globalisation doesn’t have to mean neoliberalism too.
    That’s the real problem.

  • Peter Martin.
    I disagree. 10 years ago the great recession was showing signs of kicking in, Gordon Brown was PM and immigration was pretty much top of the agenda. I think it would have been a walk over for Leave. Twenty years ago at the height of New Labour, maybe. However, regrets about staying in the EEC were already high in 1979 and really no PM was comfortable enough to go through with a referendum. . I suspect a vote on Maastricht would have killed UK involvement in the EU stone dead and that the chances of a Remain win were always much slimmer than has been suggested. It really took Cameron’s desperation over party unity and fear of UKIP to make the difference. Even then, I think he may have been expecting a continuation of the coalition with the Lib Dems to kick the issue into the long grass.

  • Dear Glen,

    How is Lexit going, O it isn’t. As to Brexit going away, you wish, but it isn’t is it. We have the next stage of the talks next week, care to take a smaller wager that Davies will be told to come back with something else after he’s done his home work.

    Brexit will run and run and run, the plus side is you and your fellow Brexiteers own it. I intend to have fun pointing that out, I suspect as it progresses there will be very little fun for you.

  • Glenn 21st Aug ’17 – 7:48am………… 10 years ago the great recession was showing signs of kicking in, Gordon Brown was PM and immigration was pretty much top of the agenda. I think it would have been a walk over for Leave….

    Well, Glenn, if you are right, history, yet again, shows that we were getting things wrong…
    Unless my memory is failing I seem to remember that 10 years ago Nick Clegg wrote a petition demanding a vote on EU membership…

    The leaflet called for a “real referendum” on UK membership and denounced Labour and the Tories for not doing the same thing.

    The leaflet declared: “It’s been over thirty years since the British people last had a vote on Britain’s membership of the European Union. That’s why the Liberal Democrats want a real referendum on Europe. Only a real referendum on Britain’s membership of the EU will let the people decide our country’s future……

    Whoops!

  • Frankie.
    It’s going considerably better than Remain.

  • Well past remain Glen, we are into holding the brave Brexiteers feet to the fire. Is that the odour of burnt toes I small, I rather think it is. By the way have you mustered the courage to tell your friends you are a brave Brexiteer or are you still telling them you voted remain?

  • Frankie,
    I told my friends what I would vote before I voted. It turned out that more of them voted leave than I thought would, especially the Labour ones. Despite the claims of seething wars it turns out that most people are not actually at each others throat either. A couple of arguments here and there, mostly with college kids . The thing is most of the people I know are grown adults and disagree about lots of things even when they agree on others. Like most people I’m not surrounded by media commentators (lets be honest people who are paid to produce hyperbole and hot air at least once a week for a suitable fee ). It’s support for the Lib Dems that caused me some issues.

  • Maybe – and just maybe – Theresa May’s position is to make the prospect of a “Hard Brexit” or a “No Deal Brexit” look so bleak that enough Leavers will have changed their minds before the exit door slams shut in 2019. She will announce that, due to the prospect of economic depression, that it is in the “national interest” to halt the process and revoke Article 50 – just like she U-turned over calling for an election. But wait – the election thing didn’t quite work out, did it?…. Just dreaming…

  • Really Glen but you told us you’d voted remain, are we not your friends or have you forgotten that or have I misremembered?

  • Philip Knowles 21st Aug '17 - 11:38am

    @Peter Martin
    You say what we produce ourselves will not be affected by tariff barriers but, in practice, there is very little we produce contains something that has not been imported. Items imported from the RoW will potentially be no different but raw materials (and finished goods) sourced from within the EU will now be subject to tariffs.
    Since 1992 the sourcing of materials has changed beyond all recognition with manufacturing moving throughout the EU and flowing through tariff free borders. People like Cadbury’s use economies of scale to have factories producing only one or two lines and source from throughout the EU. I believe Creme Eggs are now produced in Poland would we be prepared to pay over 20% more for a Crème Egg?

  • Frankie,
    I never said I voted remain on here. I wrestled with the idea and then opted for leave which I stated I was going to do openly on LDV before the referendum.. I can’t remember you cropping up until after the vote, but I stand corrected if I’m wrong.

  • Malcolm Todd 21st Aug '17 - 1:14pm

    Frankie,

    Glenn certainly did not claim to have voted Remain. I recall having quite a few trenchant arguments with him before and immediately after the referendum over his support for Brexit. I don’t remember him ever resorting to childish taunts in the way you have on this thread. (I hope I didn’t either, though I may be remembering myself too kindly.)

  • Malcolm Todd,
    Thank you for that. No you did not resort to taunts.

  • Katharine Pindar 21st Aug '17 - 5:58pm

    Strategy papers are the latest government wheeze: produce them, ignore the unbelieving stares and immediate expert put-downs from the EU (see e.g. yesterday’s Observer reporting), then run and hide. Thank heavens, they must whisper, for the proposed transition period! – alias time for a desperate rethink and hope that Christmas will bring goodwill to all, even to the DexEU. You really can’t blame Frankie for enjoying the spectacle; as for me, I then sat back and watched Match of the Day 1 (recorded) and 2 with much pleasure, yes, David, thanks!

    Moreover, yesterday’s Opinium/Observer poll finds now 37% of voters already in favour of our proposed referendum, and there’s Professor Bogdanor sounding the drum – ‘Why Britain’s voters must have a second referendum on Brexit.’ Just remember, outside world, we Lib Dems have been saying that for the past year! Onward and upward – but not to faeryland, Brexiteers, because you can’t fly.

  • Katharine Pindar 21st Aug '17 - 6:06pm

    Ah – can I add just two small points more – Glenn, though I agree people aren’t fighting each other over Brexit , my best Leave-voting friend rapidly changed the subject when I tried to raise it a couple of days ago. And though I can’t remember where I saw it, I did read somewhere that EU growth (Peter Martin) is now better than Britain’s.

  • Peter Martin 21st Aug '17 - 6:22pm

    @ Katharine Pindar,

    Stephen Hawking rightly took Jeremy Hunt to task recently for “cherrypicking”. This is just choosing data points to suit a particular argument. Climate change deniers do it all the time. They choose some figures released by NASA which show that the Earth was slightly cooler this year than last year and argue that we can all forget about Global Warming.

    I”m sure its quite possible to “prove” anything you like by looking at the right quaters GDP figures. The performance of the UK hasn’t been great. The performance of the EU has been even worse! But the performance of the USA under President Obama has been much better. We should have been doing what he was doing not what the EU dictated with their calls for deficit reduction.

    But don’t take my word for it. Google {UK GDP} The first thing on the list will be a graph. Click on “explore more” in the bottom LH corner of the graph. Click on countries on the list on the LH side to add or remove them from the graph. The graph shows a history over many years. A single quarters result is quite meaningless.

    See what I mean about the USA?

  • The eurozone economy has grown twice as fast as the UK in recent months, according to official figures that underscore the divergence between Britain and its neighbouring currency bloc after the Brexit vote.

    GDP in the 19 countries that use the euro expanded 0.6% in the second quarter of 2017, building on growth of 0.5% in the first quarter, according the EU statistics body Eurostat (pdf).

    In the UK by contrast, the latest official figures released last week showed the economy grew by just 0.3% in the second quarter of 2017 following 0.2% expansion in the first three months of the year. The economy had shown resilience in the immediate aftermath of last year’s EU referendum, confounding forecasts of a downturn. But growth has slowed markedly since the turn of the year as a weaker pound has raised the cost of imports, pushed up inflation and squeezed consumers.

    https://www.theguardian.com/business/2017/aug/01/eurozone-economy-grows-twice-as-fast-as-the-uks-figures-show

    Developing a bit of a trend here. As time goes on we will see if the trend goes on, my bet is it will. I await an explanation of it if it does.

  • Peter Martin 21st Aug '17 - 6:41pm

    @ Glenn,

    I’m not quite sure when this leaflet was produced but Nick Clegg does look very youthful. It would have been well before 2010.

    I may be wrong but I don’t expect that he’d have been calling for an EU referendum if he wasn’t absolutely certain he’d win it.

    http://www.newstatesman.com/sites/default/files/images/Clegg-referendum-page-001-353×500.jpg

  • Peter Martin 21st Aug '17 - 7:33pm

    @ Frankie

    “As time goes on we will see….”

    No need to wait. Just look at time gone by. There are excellent graphs available for free on Google. See my comment to Katharine just above yours.

  • YellowSubmarine 21st Aug '17 - 8:47pm

    Katharine Pindar 20th Aug ’17 – 10:05pm
    What enjoyable reading – Yellow Submarine sunk by series of depth charges.

    Not so fast there me hearties, I still be afloat ! As a brexiteer I am still waiting for the full explanation for how the UK can pay the EU many billions per year membership fee and then accumulate a further $100 billion bill on top.

    Is the EU worth the costs whatever that happens to be ? Because it appears to have been costing us a small fortune.

    I am sure the EU’s brexit bill demands are entirely fair and beyond doubt ? So, how much would you say it is worth to have a smother customs arrangement and so on while running a $70 billion trade deficit and having to argue your position against 27 other nations if you want anything done. 😉

  • Peter,

    We have decided on Brexit, I think that is a game changer and will be looking with interest on the figures going forward. you appear to feel it is of no consequence, as I said time will tell.

  • Katharine Pindar 21st Aug '17 - 10:19pm

    Thanks, Frankie, that must be where I saw the information about the eurozone economy growing faster than ours. Peter M., believe me, I know my limitations and don’t argue about economics! I don’t try to cherry-pick, therefore, but was genuinely enquiring, because you had said (at 7.20 am) that the EU ‘was in even much worse recession’ than we are. I have been known to read through tremendously long comment threads on economics here, trying to make up for my lack of education on the subject! And I am really disappointed we are not to have the expected motion on the economy at Bournemouth from the Economy Working Group, whose consultation I attended at York, since apparently the timing of the GE prevented final conclusions on that.

    Ship ahoy, Yellow Submarine, I’m sure you will be holed eventually, but as you can gather from the above I should leave budget considerations to more expert contributors around here!

  • Peter Martin 21st Aug ’17 – 6:41pm….I’m not quite sure when this leaflet was produced but Nick Clegg does look very youthful. It would have been well before 2010…….

    The leaflet sates that it was over 30 years since the UK last voted on Europe…We last voted in 1975..Over 30 years would mean 2006 at a minimum; hardly well before 2010.. .

  • @ Katharine From my research your comments on EU/UK growth comparisons are correct.

    Also, a speech which I know you’ll enjoy – the contents apply to any ‘small’ organisation such as the Lib Dem Party.

    David Wagner & Dean Hoyle Speak At Huddersfield Town Promotion …
    Video for huddersfield town celebrate▶ 4:30

  • Peter Martin 21st Aug '17 - 11:21pm

    @ Katharine,

    All I was suggesting is that you look at a few graphs like this. And I agree that it might not be immediately apparent that the UK has done better than the EU. We’ve all done very badly. Germany has sort of done OK but you can see definite problems with France, Italy, and Spain.

    https://1drv.ms/i/s!Ahd6HBglf_oYgUFch7cqkvZBuCRr

    But the USA has done much better

    https://1drv.ms/i/s!Ahd6HBglf_oYgUI-WGfRJ_MsInQw

    So doesn’t this indicate that our economic policy should be more like the USA’s? Like it was under President Obama, I mean. We’ll have to see what that graph looks like after Donald Trump has been running things for a while. It may start to look more like ours!

  • Arnold Kiel 22nd Aug '17 - 8:23am

    @ Peter Martin,

    “what we can produce ourselves” is a pre-industrial, pre-global concept. Every production process today in the modern world uses globally sourced materials and components, and targets a continental or global market to have competitive scale.

  • Katharine Pindar 22nd Aug '17 - 9:41pm

    David R., thank you so much for sharing that joyous video! I had read about Dean Hoyle being a pretty ideal owner, and how well he and David Wagner and the rest of the staff work together, in contrast to Mike Ashley, etc., at Newcastle, and the video certainly conveys that this is a happy ship. Long may they prosper! When you consider how little has been spent on the players, that positive attitude and good atmosphere at the club should certainly help them in the big struggles to come. (I am also a long-term Man U supporter, even saw Cantona play, so am pleased they too made a great start to the season! But Town’s rise is something special.)

    Peter M., admit it, you were a bit het up in your previous comment to me, but thank you for calming down and just trying to make your point with various graphs now. I am rather impressed anyway at the ease you chaps have in including outside informative data in your comments.

  • Peter Martin 22nd Aug '17 - 10:57pm

    @ Katharine,

    Possibly a bit het-up! Sorry if I was too adrupt.

    @ Arnold Kiel,

    I wouldn’t disagree about the need for every country to interact with the ROW rather than trying to do everything themselves. So “what we can produce ourselves” doesn’t mean that we produce everything from scratch. It’s the value that we can add through our efforts. Every company can only exist if it creates something extra. Even a retailer who doesn’t actually make anything creates added value.

    We can still add that value even if our imports and exports are the subject of tariffs. The WTO has done a good job in reducing the extent of tariff barriers over the years. I’d like to see them reduced further – even abolished altogether.

    Most people would agree with the proposition that we are all better off if everyone trades freely. So then the question arises about a country that deviates from free trade. Is it is self-harming or is it stealing an advantage? We tend to think that they are stealing an advantage but are they really?

    Let us imagine a situation where all countries freely trade with each other. This also must mean that no country deliberately manipulates its exchange rate downwards in order to run a surplus. All countries have floating exchange rates so their trade (including the invisibles) must balance (or close to it).

    Say that one country breaks ranks and applies an import tariff. Because a tariff is a distortion of trade someone will end up worse off and it will largely be the inhabitants of that country. They will have deprived themselves access to cheaper markets because of the imposition of the tariff. If their exchange rate floats their trade will still balance. To achieve a surplus they’ll need to suppress their currency which is even more self harm.

    I know that the objection to all this is that we live in a world where we don’t have free trade and where countries do manipulate their currencies, but if one country chose to be completely different would it be the one self-harming or would it be the one stealing an advantage?

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