We need to be citizens of the world

Theresa May is not to be envied. Her job as prime minister of Britain is awkward. She must lead her country out of the European Union after the referendum in June, even though she herself actually belonged to the remain camp. Some members of her cabinet are excited about the opportunities Britain will have outside the EU, but most economists doubt that they are making sense.

It is indeed bizarre to claim that Britain will become the global champion of free trade by quitting what is actually the world’s most important free-trade area. Liam Fox says so, nonetheless. He is May’s secretary for foreign trade and a leading proponent of Brexit. Fox and his political allies believe that Britain will benefit more from trading with China, India and other far-away places than with its European neighbours. For obvious reasons, however, trade normally is most intense with immediate neighbours, not distant partners. Moreover, people’s per-capita purchasing power is higher in western Europe than in emerging markets. It will be very difficult to turn Brexit into a triumph of trade policy. Good luck, Mr. Fox.  

Prime Minister May is an enigmatic leader. It is still impossible to tell whether she will opt for a hard Brexit, with Britain severing all ties to the EU, or whether Britain will stay in the Single Market, which would basically mean that Britain would stay inside the EU in many relevant ways, though not as a full member. On the one hand, she has repeatedly used nationalist rhetoric emphasizing sovereignty, on the other hand, she recently promised the car maker Nissan that Brexit would not hurt its business model. Most cars Nissan produces in Britain are exported to the European mainland.

I personally found a statement May made at her Conservative party’s conference in Birmingham a few weeks ago irritating. She outlined the vision of a nation living in solidarity, which is an idea I appreciate, but I fundamentally disagree with limiting the sense of solidarity to the nation. May said: “If you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word ‘citizenship’ means.”

As a matter of fact, many Britons see themselves as “citizens of the world”. One of them, Jem Eskenazi, responded forcefully in the Financial Times:    

“Anybody with an ounce of intelligence understands that climate change, pollution or epidemics know no frontiers; that extreme poverty in one region has stability implications for the whole world; that terrorism is a global problem with global solutions; that wars are not started by citizens of the world but narrow-minded people with a blind belief of their superiority; that some of the greatest minds in any society are descendants of immigrants and refugees. I do understand very well what citizenship is, Mrs May. It is to have a balanced view of the interests of your family, your neighbourhood, your town, your country and your world.”

I couldn’t agree more.

May’s two sentences spell out precisely what bothers me most about Brexit. It is the idea that a good citizen is loyal to his or her nation, but that the nation has no lasting duties outside its borders. We cannot have a fair and sustainable world order if every government is always out to get the best bargain for its own country and demands renegotiations whenever it feels it is at a disadvantage.

It is worth remembering that Britain insisted on expanding the EU to the east in the 1990s. That policy meant that citizens of formerly communist countries would eventually enjoy freedom of movement. When leaders such as Liam Fox agitate against immigration from eastern Europe, they are stepping back from international commitments Britain made – and even demanded from all other EU member countries as well. Expanding the EU made sense in order to promote the peaceful transformation of eastern Europe, but it meant paying a price. The politicians that prevailed in the Brexit referendum told the people they did not need to pay that price. 

Our planet is small, and humankind is growing fast. We must protect global commons in a spirit of reliable cooperation. It is profoundly wrong to only feel loyalty to one’s own country.  

P.S.: I am not opposed to doing trade with China, India and other far away countries. Not at all. But it is obviously not Europe’s common interest to start a kind of race to the bottom, with every European country offering China more favourable conditions than others in the hope of attracting the attention of Chinese investors or getting preferential access to China’s market. All summed up, this is what Secretary Fox’s approach to foreign trade is about. I suspect Fox is shooting himself (and his country) in the foot. China’s leaders are likely to be more interested in the much bigger EU market than in Britain’s.

It’s worth pointing out, moreover, that Britain’s business relations with non-European countries have benefitted substantially from EU membership. Many companies that wanted a presence in the EU opted for Britain, simply because English is the language their staff members speak anyway. That’s basically why Nissan set up a car plant in Sunderland, for example, and now needs protection from the impacts of Brexit. There are reasons why May may yet opt for soft Brexit…

P.P.S.: For good reason, Jagdish Bhagwati, the eminent Indian trade economist, has always insisted that preferential trade agreements are not free-trade agreements, though they are often called so. (I must admit that I use the misnomer myself because in journalism it often makes sense to use the terms that are familiar to most readers rather than introducing more precise, but less common ones.)

Bhagwati explained matters in D+C/E+Z a few years ago. His point is that free trade should apply to the world, whereas preferential trade agreements result in a complex spaghetti bowl of diverging rules that apply to trade with different partners. Preferential trade agreements do not result in the kind of market transparency and open competition that benefits all economies involved, but rather boosts the position of the strongest players. Moreover, it is a kind of fancy employment scheme for lawyers who can sort out exactly what rules apply to exactly what deal.

In Bhagwati’s eyes, the EU and the USA have acted destructively by focusing on preferential trade agreements in recent years instead of pressing ahead in the multilateral WTO context. What Brexiteers want is to insert more spaghettis into the bowl.