There is a line of thinking that runs, 'the real obstacles to trade in the twentyfirst century are no longer tariffs, but non-tariff barriers'.
It is a view that has been expressed by Jacob Rees-Mogg, Brexiter and Tory backbencher, as part of his reasoning for Britain leaving the EU. Breaking these non-tariff barriers, as luck would have it, was also the founding mission of the World Trade Organisation (WTO).
If non-tariff barriers are an obstacle to the UK economy and trading on WTO terms would put us at the heart of an organisation working to undo them, it seems like a simple enough equation. It would appear to be a marriage of supreme convenience.
That view is, however, put to us by Britain's conservative and far-right establishment. That means it requires scepticism and further examination. So what are we missing?
Well, the first thing to note is that there is nothing simple about trade. Trade branches out into all aspects of international relations, domestic lawmaking and standards regulation, and as such encroaches on national sovereignty. And negotiations can take years.
The second, is that the 'non-tariff barriers' being referred to here are domestic laws and standards, created by sovereign parliaments and assemblies to regulate how things are made and sold in their jurisdictions - as well as subsidies favoured sectors.
Going blindly down the road that leads to the untrammelled trade that would-be barrier-breakers like Mogg would like, could lead to a place no one pursuing greater sovereignty had ever considered ending up. So let's be clear about where that road leads.
Background: Barriers to Trade
Historically, the old barriers were taxes - known as tariffs - put on imports. They would produce revenue for the national coffers and protect domestic production. Economics is never simple though, and tariffs were deeply entwined with foreign wars and domestic unrest.
Competition between nations over resources - resulting a mad scramble to occupy and to exploit, to invade and to seize valuable territory, even from neighbours - was the driving force behind war, colonialism and imperialism.
In Britain, the old barriers of tariffs mixed in a toxic brew with aristocratic landownership. The result was landlords with collosal power to inflate prices at the cost of middle class merchants and the working class who could barely afford the cost of bread.
That led to the Anti-Corn Law League, of which liberal free traders Richard Cobden and John Bright were leading activists, which in the 1860s fought to undo taxes on corn imports that poured subsidies into the pockets of landlords and starved ordinary people.
The Anti-Corn Law League eventually won out, but their campaign didn't bring a permanent change of mindset. Rather they influenced the Liberal Party, who continued to vie for power with the Conservatives who supported the system of tariffs.
While Britain went back and forth, other countries such as Germany and the United States used tariffs to protect their domestic industries from foreign competition - trying to catch up and compete with the British Empire, whose colonies allowed for the casting of a far wider net in which to find resources.
The international ramifications of this inward-looking national-oriented system were disastrous. On the foreign front, war between countries as they scrapped for resources. On the domestic front, poverty and civil unrest. It took two world wars, and the rise of democracy for that message to sink in.
Bretton Woods: Peace Through Interdependence
After the Second World War, delegates and economists from around the world gathered in Bretton Woods, New Hampshire, to figure out how to achieve a lasting peace. What they struck upon was the core of what the free traders had been arguing for a century: interdependence.
The result was the General Agreement on Tariffs and Trade (GATT), the International Monetary Fund (IMF), unprecedented international cooperation and the largest surge in world economic growth in history as the Western economies recovered, interwined in peace.
From the 1940s through the 1970s, tariffs were cut and cross-border movement and free access to resources flourished. The predecessors to the European Union were founded on ending the French and German fight over access to, and control of, the Rhine Valley's resources.
Government intervention went hand in hand with this system. It was necessary to ensure tight regulation internationally and to correct market imperfections domestically - most recognisably in the form of the welfare state, aimed at ensuring citizens' economic wellbeing.
There were consequences, good and bad. International cooperation was joined by deep domestic links between states, industries and unions that played it's part in a prosperity that was more widely shared than ever before. Inequality was lower. The wealth gap narrower. Opportunity for social mobility was tangible.
And yet the deep corporate-state links meant that collusion was substantial, while international cooperation gave rise to multinational corporations - businesses with a power that reaches beyond the limitations of national jurisdictions.
WTO: Drive for Efficiency
At the end of the 1970s, stagflation brought to an end the soaring economic growth of the era. Global growth hit a wall that capitalism has been trying to find a way around ever since.
The next phase for trade would be driven by the overthrow of the careful system of controls and regulations. The Bretton-Woods system had fostered within it the huge multinational corporations that now, as growth stagnated, threw their weight behind the Reagan-Thatcher system and the deregulation boom.
It was struck upon that, even with tariffs world wide brought down to historic lows, there were yet other barriers to doing business that might be limiting growth. Beginning with the Uruguay Round of negotiations, the drive was now achieve maximum global efficiency through the elimination of non-tariff barriers.
The GATT was superseded at this point by an organisation founded on and dedicated to achieving these goals - these new underlying principles. This was the World Trade Organisation, the WTO.
If Bretton-Woods and the GATT was about achieving peace through interdependence, achieved by a gradual reduction in tariffs, then the purpose of the Uruguay Round and the WTO was to take that interdependence and use it as leverage to eliminate non-tariff barriers and pursue market efficiency.
As with the Bretton-Woods model, there were consequences. One of the most obvious impacts has been the global stagnation in wages for low-skilled workers in the new era - with labour embattled, their hard won rights being undermined and squeezed.
Not all of this is the result of globalism. But the benefits were not widely enough shared, technology undermining rather than enhancing workers' security, and gains were often made through doors being opened to exploitation. Income inequality accelerated.
In the now
The body known as the World Trade Organisation is the arch-mover of globalism. A forum for diplomats and lobbyists, it is where the negotiations are done for deals that break down not only borders, but the so-called non-tariff barriers - in reality, domestic laws and standards that protect the quality of products.
The groups of elite Brexiters, most of them very wealthy, who are selling the idea of leaving the EU on WTO terms, have hitched onto the back of the campaign for national sovereignty. But leaving on WTO will do nothing to enhance sovereignty in terms that most people would recognise.
Within the EU, the UK has a say alongside other members on how it interacts with each of them and how it's domestic standards and regulations are set, while also having a say on how the whole EU bloc interacts with trading partners around the world.
Exiting the EU will downgrade the trading relationship between the EU and the UK. And if the UK reduces it's standards to attract new trade with other non-EU countries, it will make it harder to trade with the EU - as most of the EU's trade barriers depend on products meeting their high internal standards.
Any change of policy will require long term negotiations with the more than one hundred and fifty WTO members - all of whom will want their say to prevent their own trade being adversely affected. And let's not forget the WTO mission to reduce non-tariff barriers.
The drive to align standards within the EU has been one of getting countries to agree and enforce the highest common denominator. On the outside, the only 'advantage' to be gained is through the pursuit of the lowest common denominator on standards.
Whether it's the banning of plastic packaging to regulations about what chemicals can be used in the production of food, from the regulation of working conditions to the terms upon which businesses can receive subsidies or support - there is money to be made by opening the doors and lowering regulations.
But the reality of trade on WTO terms means few countries actually negotiate on their own. Most have spent decades building mutually beneficial deals and blocs - like EU - to increase their influence and reinforce their position to protect domestic conditions.
Switzerland and Canada have spent the better part of twenty years trying to negotiate their trading relationships with Europe. And the North American countries - USA, Canada and Mexico - have been back and forth over how to organise their trade for mutual benefit.
Even at present in America, their far-right President upset and forced a renegotiation with the countries neighbours by trying to reestablished protective tariffs to favour domestic production - a move that hurts trade partners and pours money into the pockets of the wealthy domestic business and land owners.
In such a complex web of negotiations, the confrontational approach of Brexiters and their supporting organisations - like the IEA - who have argued for ligitigation at the WTO to force the EU to lower it's standards, is unlikely to win the UK any allies.
In the future
The WTO was established in 1995 as the product of the Uruguay Round as the forum for negotiating global trade and as an arbiter for settling trade disputes. It has been the forum where successive agreements have been negotiated to reduce countries' tariffs and pursue deregulation of domestic standards.
In pursuing those goals the WTO has been accused of undermining the sovereignty of member nations with it's rules - much like Brexiters have loudly and virulently alleged of the EU project.
People who supported Brexit have hoped the UK might use it's historic influence protect some domestic sectors, but any such provisions would immediately irk other WTO members whose export opportunities would be limited.
The reality is that a No Deal Brexit, exiting onto WTO terms, does nothing to improve Britain's sovereignty. It means trading much as we do now, but without our open access to the Single Market - and the investment boost that gives us - and any EU specific deals through which we had previously enjoyed trading access to third party countries.
The main possible benefit would be, as Rees-Mogg himself has claimed, would be in slashing trading tariffs - ostensibly, it would seem, with the US, India and China. But the only way that would have any impact would be if our non-tariff barriers - our food standards, for instance - where lowered substantially as well.
And allowing our domestic policy to be driven, slashed, by the demands of overseas corporations who want to pour lower standard goods into the UK - likely undermining domestic businesses - is unlikely to be seen as an increase to national sovereignty.
If Britain could even manage to unilaterally start slashing it's tariffs and standards to attract America and Chinese suppliers - over likely objections and litigation in the WTO - the cheaper supplies would be of much lower quality, taken on at the cost of major damage done to domestic supply chains.
The post-war world has achieved interdependence on an historic scale. It cannot now be undone. Our predecessors choose to give up total sovereignty for that interdependence and the peace it brought. No one should be under any illusions: an exit from the European Union on WTO terms is another aggressive step into, not away from, globalisation, which does not restore sovereignty.
As we stand our sovereignty is pooled. We take part in building a consensus in Europe that affects our domestic laws. The future under a WTO/Hard Brexit will not restore sovereignty, and may even instead undermine it as domestic laws are driven by what opportunity it sells to our trade partners. These are the extremes of what is on offer when discussing Brexit. Neither will turn back the clock.
References
Jacob Rees-Mogg's 'READ: Full text of Jacob Rees-Mogg’s Brexit speech'; from Brexit Central; 25 January 2018.
Ian Dunt's 'The garbled nonsense of Jacob Rees-Mogg's new press release'; on Politics; 11 September 2018.
Hugo Dixon's 'Jacob Rees-Mogg and his gang want to hoodwink voters with talk of 'clean Brexit' and then push us off the edge of the cliff. This is why we should not fall for it'; in The Independent; 18 August 2018.
Harry Mance's 'Eurosceptics back plan to take Brexit legal action: Proposal to take Brussels to WTO if it does not make concessions in EU divorce talks'; in the Financial Times; 24 September 2018.
'Why the “WTO option” for Brexit will prove tricky: Setting new, independent tariffs and quotas will be a tortuous process'; in The Economist explains; in The Economist; 9 January 2017.
Chris Morris' 'Brexit: What is the 'no deal' WTO option?'; on the BBC; 11 August 2018.
Andrew Walker's 'What is the World Trade Organization?'; on the BBC; 16 December 2015.
Haley Edwards' 'What global trade deals are really about (hint: it's not trade)'; TEDxMidAtlantic; on YouTube; 17 May 2017.
James O'Brien's 'What Trading On WTO Rules Actually Means: An Expert's Alarming Explanation'; on LBC; 25 July 2018.
Aoife O'Donoghue's 'An introduction to the World Trade Organisation'; from Full Fact; 27 April 2017.
Therese Raphael's ''Computer Says No' to Jacob Rees-Mogg on Brexit: Falling back on WTO rules wouldn't be a panacea for Britain'; in Bloomberg Opinion, on Bloomberg; 9 August 2018.
Frances Coppola's 'The Mystery Of Jacob Rees-Mogg's Recklessness'; in Forbes; 9 February 2018.
John Ashmore's 'Trade deals are 'a distraction' from real benefits of Brexit - Jacob Rees-Mogg'; on Politics Home; 23 January 2018.
Nikil Saval's 'Globalisation: the rise and fall of an idea that swept the world | It’s not just a populist backlash – many economists who once swore by free trade have changed their minds, too. How had they got it so wrong?'; in The Guardian; 14 July 2017.
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