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Brexit means trade opportunities

Published in Insights, The New Zealand Initiative’s newsletter, 24 March 2017

Before she became British Prime Minister, Theresa May announced that “Brexit means Brexit.” Ever since, we have been wondering what she meant.

It is now nine months after the Brexit referendum. In the meantime, Britain got a new Prime Minister. The UK Supreme Court had to decide on the correct procedure for leaving the European Union. Following that, Parliament needed to pass legislation to allow the UK government to formally start the process. It will probably happen sometime next week.

In other words, we have witnessed nine months of busy procedural preparations towards Brexit but little guidance on what Brexit would mean beyond, well, Brexit.

To help us make sense of this, we invited Peter Lilley to New Zealand.

Like few others, the former UK Trade Secretary and current member of the House of Commons Brexit Committee is well placed to discuss the trade implications for Britain and the world.

Mr Lilley spoke to the Initiative’s members and guests at a dinner in Auckland last night and will address a lunchtime seminar in Wellington on Monday.

To those commentators who portray Brexit as a revolt against globalisation and free trade, Lilley’s position may come as a surprise. He is an arch-Brexiteer who has been critical of the EU for decades. But he is also a committed free trader who sees the United Kingdom’s future as part of a globalised world economy.

These two positions are not at all contradictory. They are, in fact, completely compatible.

Even though the EU likes to present itself as the beacon of free trade, it has always been an organisation focussed more on facilitating trade between its members.

To the outside world, meanwhile, the EU is far less liberal in its trade policies. Just ask African countries for their experiences in trying to export agricultural produce to Europe.

As Lilley argues, Britain has little to lose from leaving the EU’s customs union. In fact, this would free the UK to enter trade and service deals with the huge, fast-growing but protected markets of Asia, Africa and Latin America.

At the same time, the fall in Sterling combined with the UK’s trade deficit with the EU might improve British trade prospects even if the EU introduced tariffs on British goods.

And as for us? Brexit might not just mean Brexit but a surge in trade between the United Kingdom and New Zealand. Bring it on.

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