Free trade is bipartisan - and rightly so

By Alex Singleton | 13 November 2005

When it comes to trade policy, one noticeable thing in Britain is that support for free trade is bipartisan. Neither Labour nor the Conservatives accept the argument that protectionism works. The argument for developing country protection may seem plausible, but the fact is attempts to protect infant industries have largely been a failure. In India, protecting infant industries for thirty years after independence caused the economy to stagnate.

Developing countries that open themselves to globalisation grow faster. A study by Jeffrey Sachs and Andrew Warner of 117 countries in the between 1970 and 1989 showed that open developing countries had an annual growth rate of 4.5 percent, compared with 0.7 per cent in closed developing countries.

As Prof. Tony Venables, Chief Economist of Britain's Department for International Development, has said: "Import growth is the flip side to export growth. If you want to really engage in the world market and have export growth then you have to have import growth. If you restrict your imports then your currency will be overvalued and you won't stand a chance of getting your exports growing."