Brexit Highlights Need for Trade Without Costly Regulations

Britain’s vote to leave the European Union serves as a lesson for U.S. trade negotiators that the goal of trade agreements should be to increase economic freedom and opportunity, not to create new regulatory and political bureaucracies.

The arguments made against Brexit included the possible loss of free trade benefits between Britain and other EU countries, and potential economic costs resulting from initial uncertainty about what would come after Brexit.

No one was publicly arguing that a cost of Brexit would be a loss of oversight from European bureaucrats.

In fact, the loss of political and regulatory sovereignty to the EU was a big factor in the pro-Brexit campaign. For example, when environmentalists pushed the EU to ban Britain’s most widely used weedkiller, the country’s farmers rebelled.

According to a Politico report: “’Distance from government in the end breeds contempt or distrust,’ said Michael Seals, a beef and row crop farmer in Derbyshire and spokesman for the pro-Leave group Farmers for Britain. ‘We feel very, very remote from Brussels.’”

His statement echoes the sentiment expressed in President Ronald Reagan’s historic “Time for Choosing” speech:

This is the issue … Whether we believe in our capacity for self-government or whether we abandon the American revolution and confess that a little intellectual elite in a far-distant capitol can plan our lives for us better than we can plan them ourselves.

Former British Prime Minister Margaret Thatcher knew a good agreement when she saw one. She observed in 1992:

The big joy at the moment is that American has formed this North American Free Trade association. Another example of free trade without all the regulations and paraphernalia that attaches to the [European] Community.

Thatcher’s 1991 comments to the Chicago Council on Foreign Relations are a reminder of the difference between agreements that promote economic freedom, and those that reduce it:

Can you imagine what you would feel like if NAFTA [the North American Free Trade Agreement] entailed not only free trade but a common currency with Canada and Mexico, a common foreign and defence policy and the abandonment of many of the rights and liberties of the American citizen to unelected bankers, bureaucrats, and judges luxuriously ensconced in Acapulco? I am sure you would not relish it at all.