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The point of trade is the imports

Summary:
As Adam Smith pointed out, the purpose of all production is consumption. So too the purpose of trade is to gain access to the imports:Securing an FTA with Australia would be a fillip to them. But an Australian deal is running into strong opposition from all the usual suspects for all the usual reasons. When it comes to discussing trade arrangements, many people are obsessed with the interests of producers and think that the interests of consumers don’t matter. Accordingly, they believe that it would only be sensible to “concede” foreign access to our domestic market if we secure equivalent access to their market. In the Australian case this is particularly relevant because Australian exports to the UK will potentially rise by substantially more than British exports to Australia.This is

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As Adam Smith pointed out, the purpose of all production is consumption. So too the purpose of trade is to gain access to the imports:

Securing an FTA with Australia would be a fillip to them. But an Australian deal is running into strong opposition from all the usual suspects for all the usual reasons. When it comes to discussing trade arrangements, many people are obsessed with the interests of producers and think that the interests of consumers don’t matter. Accordingly, they believe that it would only be sensible to “concede” foreign access to our domestic market if we secure equivalent access to their market. In the Australian case this is particularly relevant because Australian exports to the UK will potentially rise by substantially more than British exports to Australia.

This is often presented as a reason why we should not favour an FTA with Australia. But this is bonkers. Much of the gain from trade comes to consumers in the form of lower prices, higher quality or wider choice. If Australian exports to Britain rise by more than British exports to Australia, then potentially British consumers can gain more than Australian consumers.

Quite so. Which is why Patrick Minford’s work has always so appealed. Britons, therefore Britain, would gain substantially from the simple declaration of unilateral free trade. Thus we should declare unilateral free trade.

Just as we did with the repeal of the Corn Laws and just as we benefited mightily when we did so. Time to get all 1846 on the enemies of free trade, time to get Victorian.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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