The coronavirus pandemic has provided ammunition for those who would like to see an end to free trade and a more isolationist approach from the UK. Their logic is that the UK is too reliant upon other countries when it comes to food and other goods. As such, they argue that we should be completely self-sufficient, removing the need to trade with other countries.
Moreover, given the fact that the coronavirus originated in China, and that the Chinese government covered up early reports about the virus, they see it as an excuse to cease trading with China and other countries.
There are also calls to follow the lead of President Trump and withdraw funding for the World Health Organisation. Some would go even further and argue that we should stop our involvement with organisations such as the IMF and World Trade Organisation.
In short, they want to end globalisation.
It is certainly true that the Chinese government has acted appallingly, but this is hardly surprising. The Chinese Communist party is an evil regime that suppresses minorities in its own country and has attempted to stamp out democracy in Hong Kong. The WHO hasn’t exactly covered itself in glory, not least on in its willingness to accept the Chinese government’s account of the pandemic.
The WTO has shown itself to be ineffectual when it comes to dealing with the trade wars instigated by Trump. It has often failed to settle trade disputes between nations, and its efforts to encourage greater trade liberalisation have frequently failed.
Then there is the IMF. The way it handled the Greek debt crisis was dreadful, and its incompetence was highlighted by the former Greek finance minister Yanis Varoufakis. It has done little of value in recent years and has merely spent its time telling wealthy countries to increase taxes.
However, despite the failings of these organisations, it would be wrong to abandon globalisation or to withdraw our support for them. Instead, the UK should double down, call for reform, and then be champions of these organisations.
Let’s take the WHO. Cutting funding for it would make it more reliant on Chinese money. This would gift the Chinese government even greater power, effectively making it a puppet for the communist party.
The UK should use its influence with the US to encourage it to increase its funding of the WHO so that it becomes less reliant on China and can instead focus on its vitally important work of tackling pandemics and improving the health of people in the poorest nations.
As for the WTO, it has historically played an important role in encouraging countries to drop barriers to trade and settling disputes between nations. The result has been enormous wealth creation as some of the poorest people on the planet have been lifted out of poverty.
Indeed, there are millions of people who are alive today thanks to the free trade enabled by the WTO. The UK should use its new position as an independent member to strengthen its position and to encourage free trade between nations.
And when it comes to the IMF, its failings should not detract from the important work it has done over the decades. In the 1980s and ’90s, it provided funding for poorer countries and introduced free markets and fiscal discipline which transformed their economies and enabled them to develop dramatically.
Again, the UK should use its influence to ensure that the IMF once again becomes a force for good by encouraging the governments of less developed nations to embrace free trade with the rest of the world.
It is also, of course, the case that shops and supermarkets have experienced shortages of food and other essential supplies such as toilet paper and soap. However, rather than justifying the calls of President Macron and others, who wish to end globalisation, the current crisis actually undermines them.
The shortages have not persisted. The shelves of supermarkets and shops all around the UK are now full again. Free trade has enabled consumers to have access to goods from all across the world, even during a pandemic. This is a great thing and should be a cause for celebration.
And not only has international trade enabled the people of the UK to be fed during a global crisis, but it has also brought wealth to the country over the centuries. Free trade has lifted tens of millions of people out of poverty and has improved the living standards of the poorest people on the planet on a scale that is unprecedented in human history. Of course the UK could retreat from the world stage and attempt to be completely self-sufficient. But we would all be worse off as a result. As Adam Smith explained:
By means of glasses, hotbeds and hotwalls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about 30 times the expense for which at least equally good can be brought from foreign countries. Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of Claret and Burgundy in Scotland?
International trade has improved all our lives and has the potential to bring even more wealth and prosperity to the UK and the rest of the world. We need more globalisation, not less.
