Brexit and Free Trade

You have to have a market system that is for the little guy, not for the big corporations, and yes, global free trade is part of that.

Daniel Hannan is a Member of the European Parliament for the UK’s Conservative Party, and known as one of the main advocates of Brexit inside the Tories – The Guardian once dubbed him “The Man Who Brought You Brexit.” Hannan is a writer and journalist. After 17 years as a Member of the European Parliament, campaigning for British withdrawal from the EU, he succeeded in abolishing his job in the Brexit referendum on 23 June 2016. He is the author of nine books, including New York Times bestseller Inventing Freedom: How the English-Speaking Peoples Made the Modern World, and Sunday Times bestseller Vote Leave. In 2017, he founded the Initiative for Free Trade. Our Kai Weiss sat down with him in Brussels last week to discuss the UK leaving the EU, and free trade.

Kai Weiss: You founded the Initiative for Free Trade late last year, and overall, you try to show the benefits of free trade as much as possible, while it is right now being attacked viciously around the world. Just generally, why has free trade been so important?

Daniel Hannan: It has been the thing that has raised the human race to a level of prosperity that our ancestors couldn’t have imagined. The paradox of our age is that just at the moment when poverty is being eliminated and when even people in the poorest countries are looking forward to what our recent ancestors would have regarded as well, we are turning against this system that has delivered it.

The Guardian dubbed you as “The Man Who Brought You Brexit.” You were – and are, a Brexiteer among other things because of free trade – how is that even possible when you leave the EU, the “bastion of free trade?”

I wasn’t only because of free trade, I was mainly a Brexiteer because of democracy. But I do think that leaving the EU provides us with opportunities to have a more open economy. The EU is an internal market, but like all customs unions that internal free trade brought up the price of external protectionism to some extent, partly still through tariffs, especially on food and clothing, but mainly through non-tariff barriers. I hope that outside of the European Union Great Britain can avoid that kind of mistake, and can become a kind of Singapore, or Hong Kong, in its trade policy. To be fair, this argument applies much more strongly to the UK than it would to a lot of European countries. For historical and geographical reasons, we do much more trade outside the EU: the EU last year accounted for 44 percent of our exports. I think we are the only member state that sells more to the rest of the world than to the EU – even in Switzerland it’s 64 percent, for Belgium it’s 70-something percent. So I could see the argument if I were Belgium to say “Well, this is such a big part of our market that it’s worth putting our economic policy within the European market.” But that argument just doesn’t apply so much when your economy is Atlantic rather than European.

One-and-a-half years after the Brexit vote, are you still confident that Great Britain will turn into a sort of Singapore, or Hong Kong, when it comes to trade policy?

That’s up to us, that’s the essence of democracy. Freedom includes the freedom to fail. We could become a Singapore, or we could become a Venezuela – or we could become somewhere in between the two, and that will be our decision. That’s the great thing about responsibility as an electorate, that I would rather live in a country where people are free to make mistakes than live in a country where officials who are immune to public opinion tell me what I’m allowed to choose.

In your book “How We Invented Freedom & Why It Matters” you make the case for the UK focusing again on the Anglosphere. Would you say that that is an alternative, despite anti-trade people like Trump or Trudeau at the helm in some countries?

They are not anti-trade with the UK, interestingly. Trump is always talking enthusiastically about a UK-US trade deal – this is probably the only trade deal he really wants emotionally. But it’s the case in the modern economy, when you have the internet, you have cheap flights, you have low-freight costs, that geography – or proximity, matters less, and ties of language, culture, legal systems, matter more. It would have been very, very difficult even twenty years ago to have done the same volume of trade with someone like New Zealand – and when we look at the growth rates in some of these Commonwealth countries, it just seems to me that over time that argument has to be stronger with every passing year. Now, of course, I want to have free trade with our friends in Europe as well, and we have a very strong interest in the survival and success of prosperous European economies – the last thing we want is to have another crisis in the Eurozone, or a downturn that will make our neighbors poor, because rich neighbors make good customers. In this process, we want to re-balance ourselves slightly towards non-EU markets, but we don’t want that to be at the expense of good relations with our immediate neighbors.

In the UK, you have Jeremy Corbyn on the rise, in the US, Trump, Bernie Sanders, and so forth. What is the solution concerning these anti-trade “populists” all over the world – to stay principled on free trade and make an even more determined case for it, or to rather moderate ones views?

That’s a very good question – a lot of this goes back to the financial crisis, and the way in which governments the world over responded to the financial crisis. There is a study by some German professors on the effects on politics of financial crises since 1870 in 22 countries around the world. The financial crisis is not like a normal economic crisis, it lasts much longer – eight years on average, and it brings out all of the latent suspicions that people have about finance not really being productive – people struggle to understand why optimizing the allocation of capital is a job like driving a tractor. The main contention of the far-left in every country in politics is: “the system is a racket, the rich use it to stay rich, they pretend there is a meritocracy, but actually they are hiding behind the language of capitalism to keep the power they have inherited.” I thought that argument had been comprehensively defeated in 1989. But, after the bail-outs, it seems to have a certain logic, because people said with justice, poor- and medium-income families have been penalized through the tax system in order to rescue some very wealthy people from the consequences of their own errors – and I think Sanders and Trump, and Le Pen, and Wilders, and Syriza, and Podemos, are all a delayed reaction to the financial crisis, and more particularly to the bail-outs that followed. What’s the solution? You have to have a market system that is for the little guy, not for the big corporations, and yes, global free trade is part of that. Free trade is always for the consumer, and the people who oppose it the most are those with vested interests.


  • Kai Weiss

    Kai Weiss is the Research Coordinator of the Austrian Economics Center, a board member at the Friedrich A. v. Hayek Institute, and a graduate student in politics at Hillsdale College.

The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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