Dr Charles Tannock

Member of the European Parliament for London

When free trade becomes a free-for-all

Conservative Home - June 24th 2008

An embracing enthusiasm for free trade is one of the defining characteristics of the modern Tory party but it was not always thus. Traditionally Liberals adopted a more laissez-faire approach to external commerce and Tories tended towards protectionism, at least until the landmark Corn Law repeal of the 1840s.

In recent years particularly after the phenomenal success of the Thatcherite reforms some in the party, and in the conservative movement in general, have swung radically the other way towards unfettered and unregulated - some would call it pure unrestricted free trade. This purism has become an ideological and zealous badge of honour in some quarters.

I am in favour of organised and well controlled free trade. It has made our country one of the most sophisticated, resilient and diverse market economies in the world. There is also a strong moral case to be made for free trade and its capacity to make poor countries wealthier by incentivating local competition and change. But equally there are moral pitfalls when free trade is allowed to run riot.

I realise that my refusal to surrender entirely to the market is likely to be denounced by some in the libertarian wing as protectionist heresy. But the moral benefits of free trade can also be counterbalanced by moral liabilities. We are now seeing this situation come to pass in the financial markets with the current credit crunch. The market is a wonderful thing but left entirely to its own devices it can sometimes be a force for destruction as well as creation by pandering to short-termism and greed.

Unfettered free trade will inevitably create even more wealth for some than regulated free trade but the downsides are proportionate. Without sufficient safeguards in the form of well negotiated bilateral or multilateral Free Trade Agrements, subject to policing and conflict resolution mechanisms, unrestricted global free trade will almost certainly lead to exploitation by favouring trade with jurisdictions which will employ much cheaper child labour or even forced labour, permit animal cruelty, and encourage environmental degradation with little or no consumer health safety standards ensured for their inevitably cheaper products.

Managing global competitiviness is one of the props of David Cameron's '3G' strategy for the EU (along with combatting global warming and relief of global poverty). Extending and regulating through modest but proportionate supranational regulation the benefits of globalisation is, I believe - and again, at the risk of sparking more opprobrium - one of the things the EU can usefully do, as opposed to the many things it cannot and would be best returned to the member states.

I don't dispute the arguments in favour of free trade but I dispute the notion that trade should not be regulated in any way to ensure a fairer world. The current multilateral system we have, overseen at EU level and through the WTO, is by no means perfect but it can by engendering a level playing field with built-in safeguards potentially bring even more liberalisation and prosperity in an orderly and more equitable fashion.