June 21, 2016
That is what an article in the Washington Post seemed to imply, as it indicated that German Finance Minister Wolfgang Schäuble would have the European Union put up protectionist trade barriers as a way of punishing the United Kingdom if the country voted to leave the European Union. Such barriers would likely prove costly to the people in the European Union.
There have been a number of analyses showing that the UK could see a loss of between 2–5 percent in output if it left the European Union (EU) and suddenly faced substantial trade barriers. While the UK is less important as a trading partner for the EU as a whole than vice-versa, it is a very important trading partner for some members of the EU. For those countries, Schäuble’s plans would imply a substantial loss of income. It is striking that a German finance minister would have this sort of power. That could be one reason why people in the UK and other countries have an interest in leaving.
It would have also been worth pointing out that the economic policies imposed by Germany have cost the EU a decade of growth and needlessly kept millions of people out of work. This policies are based on some sort of quasi-religious belief in the virtues of balanced budgets and have been shown to be unmoved by evidence. It is reasonable to believe that if the European Union had pursued policies to promote rather than stifle growth, Europeans would have a more positive attitude toward it.
The article also wrongly refers to the Trans-Atlantic Trade and Investment (TTIP) pact as a “free-trade” deal. It isn’t. With few exceptions, the trade barriers between the U.S. and Europe are already very low and it would not be worth a great deal of time devising a pact to push them to zero. Rather the TTIP is about regulations and investment. Many of its provisions, such as stronger and longer copyright and patent protection, are actually protectionist in nature.
Politicians call pacts like the TTIP “free-trade” agreements because then quasi-intellectual types, like the people who write for newspapers, will then think they have to support them.
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