Friday, June 06, 2014

Tories, Tariffs and Trade

There's an interesting piece by Phil Collins in the Times today about the historic fault line running through the Conservative party. This is identified as those who seek an "open" policy against those who want a "closed" policy, as defined by Tony Blair in his recent speech at Blenheim Palace. Collins identifies three issues over which the Tories have split:
In 1846 the Conservative party split over whether it should allow corn to be traded freely or whether the merchants should be protected. The market-minded liberals, those in favour of opening up to the world, left the party.
The same fissure opened again when Joseph Chamberlain resigned from Balfour’s government in 1903 to campaign for preferential tariffs for the colonies. He was opposed by, among others, Charles Thomson Ritchie, the chancellor, who put the Adam Smith-inspired case for free trade...
The argument over Europe reared up again in the late 1980s when Geoffrey Howe, with the worst famous speech on record, began the process that ended in the political slaughter of Mrs Thatcher. The uncivil argument carries on to this day. It has to, because there can be no reconciliation between those who wish to be open and those who wish to be closed.
I thought I'd written about this before, but if I have I can't find it (although I did leave a comment on Sunny's old site on exactly this point) - the Tories have split 3 times on the issue of free trade vs protectionism. Corn Laws; Imperial Preference; and Europe. On each occasion, after splitting the party, the protectionists lost the argument and either left the party or changed their views.

I find it odd, therefore, that both Collins and Blair, when drawing up the line of battle, seem to get the protagonists mixed up. In the current Tory split, it is quite clearly the pro-Europeans who are following the protectionist standard. Indeed, the parallel with Imperial Preference is pretty stark - both were preferential trade areas, supported by external trade barriers. Both were designed partly to shore up political association and partly to defend high cost economies from low cost competitors. In abandoning the remnants of Imperial Preference (the Commonwealth Trade Area) for the EEC, the Tories were switching the form in which they supported protectionism, rather than changing their view on it.