AMERICAN ENTERPRISE INSTITUTE

THE FUTURE OF UK TRADE POLICY: REMARKS FROM THE RIGHT HONORABLE LIAM FOX MP, UK SECRETARY OF STATE FOR INTERNATIONAL TRADE

INTRODUCTION: MICHAEL R. STRAIN, AEI

REMARKS: RT. HON. LIAM FOX, UK SECRETARY OF STATE FOR INTERNATIONAL TRADE

DISCUSSION: CLAUDE BARFIELD, AEI RT. HON. LIAM FOX, UK SECRETARY OF STATE FOR INTERNATIONAL TRADE

8:30–9:30 AM MONDAY, JULY 24, 2017

EVENT PAGE: http://www.aei.org/events/the-future-of-uk-trade-policy-remarks- from-the-right-honorable-liam-fox-mp-uk-secretary-of-state-for-international- trade/

TRANSCRIPT PROVIDED BY DC TRANSCRIPTION – WWW.DCTMR.COM

MICHAEL STRAIN: Good morning. I’m Michael Strain, director of Economic Policy Studies here at AEI. Thank you for being here, and thanks to you who are watching us via the livestream, and thanks to all of you who will watch the video later, at a time that’s more convenient for you.

Following , the decision by the United Kingdom to leave the , much work has to be done by the British government. At the forefront of that work is trade policy. So I’m very pleased to welcome back to AEI today the UK Secretary of State for International Trade, the Right Honorable Liam Fox.

Dr. Fox was appointed UK trade minister one year ago, in July of 2016. He has a distinguished career in UK politics. He was elected as the conservative Member of Parliament for North Summerset in 1992. He has served as shadow health secretary, Conservative Party chairman, shadow , and shadow defense secretary. In 2010, he was appointed secretary of state for defense.

AEI is always pleased and honored to have members of the British government on our stage. This is Dr. Fox’s second visit to AEI, following a visit a few years ago while he was defense minister. In recent years, we have hosted , while he was foreign secretary; , while he was work and pensions secretary; and , while he was financial secretary to the Treasury, all for public events. We have also recently hosted , currently environment secretary; , currently secretary of state for communities and local government; , the former chancellor among other MPs. And I’m very happy with the relationship we have with the British government and with the British Embassy here in Washington. I’d like to thank the British Embassy for their work in helping to make this event happen as well.

Following his speech, Dr. Fox will be joined in conversation by AEI’s Claude Barfield. Recognized internationally as an expert in trade policy, the World Trade Organization, and intellectual property, Dr. Barfield is a former consultant to the Office of the US Trade Representative.

Following that, Dr. Fox will take some questions from the audience as time allows. So please join me in welcoming Dr. Liam Fox. (Applause.)

LIAM FOX: Well, good morning. And I’d like to begin by thanking AEI for hosting this today in your new home. It’s nice to see so many familiar faces here this morning. I was going to say friendly faces, but I’ve learned not to push your luck in politics.

As the UK prepares to leave the European Union, Britain enters a new chapter in our history, and we will do so as proud champions in the cause of global free trade, unashamedly promoting the importance of the rules-based system and helping to ensure that the proceeds of prosperity are distributed to all. This is a global responsibility and not one that Britain can realize alone.

To achieve our ambition at home, we will seek a full and comprehensive trading relationship with our European neighbors, retaining the ties of commerce, standards, and shared interests that we have long had together. Yet we will also set our sights on wider and strengthened ties with new friends and old allies alike as we seek to build a truly global Britain.

As far as our own trading relationship with the EU goes, we begin from a mutually advantageous position. Never before have two parties seeking a new trading agreement begun with the advantages of complete regulatory equivalence and a zero-tariff environment. Our challenge is not primarily economic, but practical and political.

At all stages, whether at the WTO in Geneva ensuring the traditional adoption of existing EU agreements or passing trade legislation through the UK Parliament, we will strive to ensure stability, continuity, and no disruption to market access. And throughout this process, our overriding aim is to provide maximum predictability and transparency not only to businesses and consumers alike, but to our international partners also.

At the same time, we must ensure that government works closely together with those in our economy that drive our prosperity. Now, this year marks two centuries since David Ricardo introduced his theory of competitive advantage. And as everybody in this room will know, that theory states that if nations are allowed to engage in free and open trade, specializing in the exports of certain goods and the imports of others to meet their needs, then there’s a mutual increase in economic welfare between nations, making those countries richer as a result. It’s one of the most powerful concepts in economics, described by the economist Paul Samuelson as the only proposition in all the social sciences that is both true and nontrivial and remains to this day the most fundamental justification of the power of free trade.

Now, since 1817, the world has changed beyond all recognition, yet the experiences if globalization and of technological advances, unimaginable in Ricardo’s time, have only served to validate his theory. The principles of free and open trade have underpinned the multilateral institutions, rules, and alliances that helped rebuild postwar Europe and the world beyond. They helped usher in the fall the communism and the tearing down of the Iron Curtain. They facilitated 70 years of global prosperity, and they have raised the living standards of hundreds of millions of people across the world.

Commercial liberalism imparts vast economic benefits, but there is also a robust moral case for promoting free trade, which we must constantly reiterate. As the world’s developing and emerging economies have liberalized their trade practices, prosperity has spread across the global, bringing industry, jobs, and stability where once there was only poverty. According to the World Bank, the three decades between 1981 and 2011 witnessed the single-greatest decrease in material deprivation in human history, a truly remarkable achievement.

Take India as an example. In 1993, around 45 percent of India’s population sat below the poverty line as defined by the World Bank. In 2011, it was 22 percent. And it’s no coincidence that in the intervening period, India embraced globalization and started to liberalize its economy. It is hard to imagine an international aid program even as generous as our own that would or could ever have been so effective.

It is also sadly easy to find examples of where a lack of free trade has harmed the most vulnerable. If you want to see the contrasting results of open and closed economies, then look across from China to the Korean Peninsula. In 1945, when North and South Korea began from a very similar base, but while South Korea was eventually more embracing of open trade and free markets, Pyongyang turned inwards with the tragic consequences for its citizens that we see today. Seoul is now at the heart of a thriving economy and dynamic democracy where freedom and prosperity are shared amongst its people. And it should come as no surprise that while over 80 percent of South Koreans have access to the internet, less than 0.1 percent of North Koreans enjoy the same. But, more tragically, there is a 10-year discrepancy in the life expectancy of those north and south of the demilitarized zone.

Yet for all its humanitarian benefits, the value of free trade also lies in its promotion of commercial, industrial, and economic interests. As Adam Smith famously observed, free trade appeals not to one’s benevolence but to the idea that prosperity is achieved when we’re at liberty to pursue our own interests. It just so happens that we have many shared interests ones sough by the UK and the US alike. And it’s perhaps a cliché for a British secretary of state to come to the US and talk about the , yet the fact that a phrase is well used does not make it any less true.

Britain and America are united by language, culture, history, security, and of course, commerce and trade. It’s perhaps fortuitous that we’re also the first and fifth largest economies in the world. So the economic value of our bond cannot be overstated.

The United States is Britain’s largest export market, buying more than $200 billion of UK goods and services every year, more than France and Germany put together. The stock of investment we hold in each other’s economies currently stands at over $1 trillion. The US is the number-one destination for UK investment. Thousands of British firms have a presence in the US, from car companies to financial services. US firms employ more than one million people in the United Kingdom, and the UK firms employ more than one million Americans here. US companies are investing in the UK, seeing a familiar environment built on economic fundamentals, which allowed businesses to flourish. You’re attracted by our low tax and low regulation economy, universities which sit alongside their American counterparts in all global top 10 lists, a highly skilled and educated workforce, a cutting- edge research environment, and the ability to operate in the perfect time zone for global trading.

These fundamentals will not change. And the UK will always be open for business. In fact, the importance of this sentiment is embodied in the fact that one year ago, my department for international trade was founded to promote Britain’s exports abroad, attract inwards investment, formulate trade policy, and protect our closest trading relationships.

Our task is to build a Britain that strengthens our commercial ties with friends and allies across the world, utilizing Britain’s newly independent trade policy to create new opportunities for British businesses.

Yet this will not come at the expense of our European partners. Britain wants the EU to succeed. There will be no closing off of relations, economic or otherwise, and no abdication of our responsibilities. Continuity and stability will be our watchwords. But any who are tempted to see our exit from the European Union as evidence of Britain looking inwards should think again. We have just chosen another path to embrace the wider horizons of a truly global Britain. And as we contemplate our new place in the world, we do so with a renewed confidence and optimism, acknowledging the vast opportunities that lie before us, especially when it comes to strengthening our connection with our single-largest trading partner.

My department recognizes how important our relationship with the USA is. That is why we have established a US-UK Trade and Investment Working Group dedicated to comprehensively strengthening our bilateral relationship. As a priority, the working group will seek to provide stability, certainty, and confidence for businesses on both sides of the Atlantic. Indeed, the first discussions will focus on providing commercial continuity as the UK leaves the EU.

But our ambitions are much wider. The working group is designed to provide a springboard, laying the groundwork for a comprehensive free trade agreement between our two nations post-Brexit — the start of a new and exciting chapter in our special relationship. And as well as strengthening our international relationship, DIT, my department, is also working to build upon the tens of thousands of local commercial ties that bind our two countries.

Tomorrow, I will launch a report that details the UK’s trade and investment relationship with each of the 435 congressional districts within the United States. The report will detail each district’s goods and services trade flows with the UK, identify how many jobs are supported by these investments, and detail the top UK companies in each district. So, for the first time, each member of the House of Representatives will have a snapshot of the importance of UK trade to their district. Equally, we will be able to see where the opportunities lie to strengthen our existing partnerships or forge ahead with new mutually beneficial ones.

We believe that an open, free, and fair trading system is an unequivocal force for good. But for the first time in decades, the established order of fair, free, and open global commerce, which has done so much to enrich and empower the world’s nations, is under threat. In April, the World Trade Organization noted that in 2016, world trade in goods grew by only 1.3 percent, the first time since 2001 that trade grew more slowly than GDP. And this threat to growth and prosperity is going largely unrecognized.

Countries across the world, including the nations of the G7 and G20 are allowing trade-restrictive practices to establish themselves, limiting access to these leading economies for developed and developing nations alike. Research by the OECD shows that protectionist practices have grown since the financial crisis of 2008. By 2010, G7 and G20 countries were estimated to be operating some 300 nontariff barriers to trade. By 2015, this had mushroomed to over 1,200.

This matters because the silting up of the global trading environment has implications beyond mere economics, for the economic prosperity that a liberal trading system generates is a potent force for social stability. That social stability underpins political stability, which in turn contributes to our collective security. Prosperity, stability, and security form a continuum where one element cannot be interrupted without disrupting the whole. And geopolitical stability is particularly important for countries like the USA and the UK with open economies and that hold large amounts of investments overseas. And we understand well that instability in any part of the global economy, whatever the cause, will ricochet across our interdependent globalized world.

So what is to be done? Firstly, we must lead by example and work to encourage our trading partners across the world to support and adhere to the rules-based global trading system. But such a system must ensure that rules are rigorously and effectively policed and enforced. Free trade is not a free-for-all. Playing by the rules means taking firm action against illegal subsidies and dumping. Trade remedy measures can be implemented at relatively short notice and when used proportionately to level the playing field, ensuring that global trade is fair as well as free.

And it’s just worth as remembering that these rules are not an external imposition on our economies, but were largely shaped and codified by the work of successive US and British governments. In 1948, our nations were founding members of the General Agreement on Tariffs and Trade. In 1986, it was the United States under President Reagan that launched the Uruguay round of multilateral negotiations that led to the establishment of the World Trade Organization.

And today, the WTO continues to be a repository of those values, of freedom and fairness in world trade. Of course, the system that we established in 1995 may be in need of some refurbishment, as I said myself in Geneva last week, but that does not mean that we should abandon its principles and its purposes. If the United States and the United Kingdom are to effectively rise to meet the economic challenges of the future, then like the WTO, we too must prepare for the new realities and demands of the global economy.

Conceptually, we need to reevaluate some of our traditional institutional frameworks. In the face of the rapidly changing global economy, this means a reassessment of the great 20th-century structure, the geographical bloc. The concept of geographical blocs for the purposes of defense as a former defense secretary still makes sense to me, although greater flexibility and wider, more diverse global alliances will be necessary to navigate the multiplicity of the security elements of the globalized economy. For trade, however, the case is less clear. The more mature an economy becomes and the more it diversifies into services rather than goods, then this offers new opportunities on top of those traditionally available through a geographically contiguous trade bloc.

For the most advanced economies, like the US or the UK, where almost 80 percent of our economic activity is service-based, we can afford to seek closer partnerships with those whose demands complement our output, not necessarily those who are geographically proximate. As I have often said, if Francis Fukuyama had called his book “The End of Geography” and not “The End of History,” it would have been much closer to describing the world in which we now find ourselves.

I’m not in any way underplaying the importance of our trade in goods, especially for developing markets, but we also need to harness the speed and flexibility that the globalized world demands. This requires the ability to sell more into the full range of global markets developed and less developed, mature and maturing even if they’re further away. We cannot forget though that free trade has the capacity to spread wealth to all nations, the rising tide of affluence that lifts all boats.

It is, therefore, incumbent upon all developed nations to extend the benefits of free trade to emerging economies and offer them the same route to prosperity that we ourselves took. Those who have benefited most from an open, liberal trading environment have a duty to ensure that others are able to take advantage of the same benefits in the future. After all, such action is not simply altruistic; it develops the trade partners of the future and allows developed nations to build links to those economies that will becomes the future drivers of global growth. This principle underpins our pursuit of free trade. If we’re to continue to prosper in an age where knowledge and services are as economically important as oil or cars, then we must work to build an international framework that keeps up with modern demands.

Over the past 70 years, much work has been done by the United States, Britain, and our partners to abolish tariffs on the movement of goods. All of us here today have witnessed the prosperity that this has created. It is time to realize those same benefits for our newest and most innovative industries. Extending trading freedoms to our service sector means unlocking new global markets for our tech companies, our finance industry, and a wider knowledge-based economy.

These are the areas in which advanced economies can continue to lead the world. We should ensure that we give our industries the right conditions to retain that competitive edge. That is why the United Kingdom supports the conclusion of the Trade and Services Agreement, or TSA, as soon as it practicable. Fundamentally, it aims to bestow upon our newest industries those same freedoms that powered global growth in the last century. It’s about giving this generation the chance to match the success of the last.

I will say again: This is not to forget the contribution that manufacturing still brings to our respective economies, nor does it seek to duck the challenges of productivity and the opportunities of automation. It is an acceptance of the economic reality of today and the trading potential that it brings. We must never forget that trade underpins our prosperity, that prosperity underpins our security, and that security is the basis of our freedom.

And so I will leave you today with the words of President Reagan: The freer the flow of world trade, the stronger the tides of human progress and peace among nations. There can be no greater prize for us than that. Thank you. (Applause.)

CLAUDE BARFIELD: Thank you very much for being here, Dr. Fox.

DR. FOX: It’s a pleasure.

DR. BARFIELD: I would commend to you. This morning, Dr. Fox has a piece in . It very briefly goes over some of the things that he talked about today. And the other thing I would commend to the audience, because I read it over the weekend, and again, some of this was in your speech today, was a speech that he referred to in Geneva last week. I guess it was last week.

DR. FOX: This is longer, but —

DR. BARFIELD: You should be here with the Trump administration. That thing that struck me was the theme that went back to remind us that while we all hope that we will work toward and succeed in a UK-US free trade agreement, a UK-EU free trade agreement, it’s the multilateral system of the WTO which we talk about, myself included, all too infrequently these days since our thoughts are with bilateral or regional agreements. But that’s really where — from an economic point of view, from a geopolitical point of view, that’s where we need to go back.

At any rate, a couple of questions in the brief time we have remaining. You’ve been quoted as saying that the forthcoming negotiations between the EU and the UK should be the easiest negotiations in history. And you referred to that this morning, talking about tariffs are low, the regulatory systems are more or less in sync.

That raises two questions for me at any rate. One, if everything is in pretty good shape, why does the UK want to leave the EU? What is it about the common market that is holding back since you have low tariffs and you have regulatory systems that are not that far apart? That’s on the one hand.

And on the other hand, to challenge that in the sense that, yes, it’s true that this may be the easiest free trade agreement being negotiated but you’re going to be in other — we talked about this earlier — you’re going to be in other free trade agreements, like you’re here, to the United States. The United States and the EU do not always agree on trade matters, on GMOs or trademarks, data protection. Is it going to be a fairly dicey balancing to be negotiating — I’ll just take us as an example — with the United States on the one hand and the Europeans on the other, and if you give way to one, the other is not going to be happy? I mean, there’s a great deal of unhappiness here right now, but Japan gave in or seems to be giving in on trademarks to the European Unions. So aren’t you going to be facing those kinds of dilemmas as you go into negotiations, not just with the United States but with other countries?

DR. FOX: Well, first thank you for saying what you said about the WTO and the global trading environment. We’ve been trying to re-orientate the debate from its lowest level back to the highest level. For the United Kingdom, global liberalization of services, for example, would be more valuable to our economy than any number of FTAs and goods. So understanding where the economy of scale lies is really important, which is why I was in Geneva, and it’s why we’ve been doing these series of meetings in this particular order.

When it comes to our relationship with the EU, the negotiations, as you know, have two parts. One that is the separation, and that’s the future rights of citizens, what may or may not be our financial liabilities as we leave one to the other. And then, of course, there will be the future relationship — the future trading relationship. The first part to me was always going to be the more difficult of the two, the separation of the status quo rather than the future trading relationship because when you think about it, it’s to our mutual advantage to maintain an open and liberal and deep trading partnership. I think most governments accept that.

And just before I came here today, I did an interview with the BBC. When they said, “But don’t you think that for the European Union, the political project is more important than the economic interest of its citizens?” To which my view was their citizens may have a view on that in a democratic system, and that remains to be seen. We’ve just got the German elections coming up, as you know, very shortly.

So, technically, with political considerations out of the way, to get a free trade agreement with someone where you have zero tariffs and complete regulatory equivalence wouldn’t be a difficult thing to do. So it’s the politics there that get in the way. And you may well see a difference between the position of the commission, the position of the elected governments, and the position of the stakeholders such as the Spanish businesses I spoke to last week, who said, “We need to get to the second stage of the process quickly so that we can see the shape and, therefore, achieve greater business stability.” So you’re right. There will be some things for us to look at.

But we also have our own differences in some ways with European Union positions. For example, some of the restrictions on data movement, we take the view that you can’t have a functioning global economy with free movement in goods and free movement in services, but not free movement in data. And so if the data localization is used in Europe are not being held up by the UK but some of our partners, we may find ourselves closer to the US in that position than others. On others, on GI, on trademarks, we might have a difference again.

But why did we choose to leave? Because the European Union itself says that 90 percent of global growth will be outside Europe in the next 10 to 15 years. And, for me, as one of the leaders of the leave campaign, trumping any economic argument, even then was the issue of sovereignty. And if you said to the American people that in NAFTA, the Supreme Court had to be answerable to a NAFTA court that had authority over it, then I think Americans would find that a difficult concept to swallow. Yet, in the EU, that’s exactly what we face.

So for me it was mostly an issue of sovereignty, of our ability to determine our own affairs, to control our own borders, to control our own money, and to control our own laws. We just had a general election where over 80 percent of the population voted for parties that were committed to the result of the referendum and leaving the EU.

DR. BARFIELD: That’s a good lead into my second question.

DR. FOX: I knew.

DR. BARFIELD: It’s well done. Not to be negative here, but I will have to say that — I was struck by two things and both of the sources you might suspect but they come — their attitude, one. On Friday, The Economist had a lead which said — that talked about the disaster of Brexit and went into details of what was going on. At the same time, The New York Times had a long piece the theme of which was chaos, that there’s chaos in the government about what it wants and what it will accept. But beyond that — and you referred to this with the election among other things — could you give us a bit of a bigger picture? I understand that you’re a proponent of this, of the politics of this in Britain now as it’s evolved in terms of the parties, in terms of public opinion, in terms of the sense in Britain now as opposed to when the vote was taken before. Where are you going?

DR. FOX: So let me begin with the usual suspects.

DR. BARFIELD: I know that The Economist and The New York Times opposed Brexit. I understand that.

DR. FOX: And as those who opposed us leaving the European Union told us very explicitly, as soon as Britain votes to leave, then this economic chaos will come down on us, that we require an emergency budget, a rise in taxation, the economy will slow down. What have we seen in the first few years since the referendum, OK? Growth in the stock market, a continued growth in the housing market, foreign direct investment in Britain at an all-time high in the first few years since the referendum. We’ve continued to see growth in employment. It’s now as its highest levels since records began, a continuing fall in unemployment, a rise in our exports in recent months. I mean, where is this dreadful economic Armageddon that was going to happen to us?

DR. BARFIELD: It’s in Martin Wolf’s columns.

DR. FOX: Well, you know —

DR. BARFIELD: Martin Wolf is a columnist with the Financial Times. Most people know that probably.

DR. FOX: People here describe the process in Washington as being extremely tribal and that, you know, people take absolute positions. Part of the problem in the UK is that there’s been a similar pattern, but it’s revolved around the referendum. And there are those who despite the evidence still tell us that this is economically going to be dreadful for us and that we can never make it work.

And the government’s position’s been very clear. The prime minister set it out in a speech in Trafalgar House, which is basically the route map that we set out, that we are going to leave the European Union, and if there’s anybody in this room that is under the illusion that Britain might somehow stay, it’s not going to happen. We’ve already begun the legal process of separation, and we’re going to do that. We’ve got a majority in the House of Commons to get our Brexit legislation through, and we will leave the European Union at the end of March 2019. There’s no doubt about it.

However, many people don’t want it to happen and wished the referendum went the other way. You know, I would give them a dictionary, and I would underline the words “democracy,” “binary,” and “referendum.” And what don’t they understand about the process? So we are going. The question now is the process by which we go and how we diminish and instability.

And I think you’ll find that there’s a growing consensus amongst the cabinet that we will leave the European Union, but we will have a transition and implementation phase. We were outside European law but voluntarily would choose to keep a number of rules and part of the — (inaudible) — to give our businesses in particular and our inwards investors the stability to understand what the new environment is going to look like because it would be nice to think we can get a full free trade agreement by the time we get to March 2019. But that would be an optimistic view of recent free trade agreements.

DR. BARFIELD: And there’s no chance as some argue that you would be willing to be governed in some way by the European Court of Justice after?

DR. FOX: We’re leaving the European Union. It would have jurisdiction — that’s what jurisdiction is about. We will not be part of the European Union. So we will have control of our own laws. And, you know, part of this idea that European citizens inside the United Kingdom would be under the jurisdiction of the ECJ while the rest of us are under the UK courts, I mean, it’s just — it’s a very, very strange view of jurisprudence, so it’s not going to happen.

So we are going to leave. We’re now discussing how we leave. And those who are still intent on trying to thwart the process while seem to hope that something will magically appear that will change the referendum results, they’re dreaming. And it would be better to put their efforts into constructive ways in which we disaggregate ourselves rather than trying to nullify a democratic referendum.

DR. BARFIELD: Well, thank you very much. I think there are some people here who also wish that there was some magic thing that would appear that changed some of the results here. But it’s not going to happen. Thank you very much for —

DR. FOX: But there are more people who voted for one thing, and that’s what ends up being.

DR. BARFIELD: That’s true. That’s what it ends up. Thank you very much. (Applause.) Thank you.

DR. FOX: I have 10 minutes if you want to do some questions.

DR. BARFIELD: You do?

DR. FOX: Yeah.

DR. BARFIELD: All right. Well, then let’s go. Let’s go — here. I have a hand right here.

Q: Good morning. I’m — (off mic). We are a strategic partner to the Exporting Is Great campaign, and we support British businesses going two ways, into the US and into India. They’re our primary market. My question to you is under the veil of the EU, Britain had a strategic partnership for the Eurofighter and it was a big strategic European project for manufacturing, which is a real boost to UK jobs. Under the new free trade agreements, do you see Britain having more strategic bilateral arrangements with the US for such projects?

DR. FOX: Well, I would differentiate between European and EU. The EU is a political organization. Europe is a continent with sovereign nations. And we’ve always cooperated on defense in a different way from the EU, and of course, defense doesn’t fall at the moment under EU competence. So I imagine that we’ll continue, and I think that in terms of security, we’ll be driven by global reality.

And we pull our sovereignty in a very different way from the legal relationship we have with the EU in NATO. And NATO has worked to preserve the peace since World War II, and I think that will continue to be our defense relationship. We, of course, would like to have better access to the American defense market, and hopefully, that will be one of the areas we discuss as we go forward. But I don’t think in terms of security there’s really very much difference at all, if any, in terms of the UK’s exit from the European Union.

And I think this argument that is often put forward, like the EU is synonymous with Europe, is to fail to grasp that real global reality.

DR. BARFIELD: In the back. We’ve got lots of questions. Please be brief because we can’t get to you all.

Q: Thank you very much, Dr. Fox. Matthias Matthijs. I’m an assistant professor of political economy at Johns Hopkins across the street. There does seem to be a contradiction with the Brexit position of a global Britain. Lots of evidence has shown that many voters for Brexit wanted more protection, like were anti-trade. So I wonder what are you going to do for the losers of trade deals of globalization and so on, many that have supported the campaign that I imagine will lose out even more if you cut trade deals left and right with the US, New Zealand, and so on? Does the May government have a plan to retrain them, to reinvest in them, and so on, as part of its Brexit strategy? Thank you.

DR. FOX: Well, first of all, no one negotiates anything that’s to their own detriment. So we would only agree to something that we thought on the whole improved our economic well-being, otherwise who would sign it?

But you’re right, and it’s not just in trade. It’s some of the issues of globalization, certainly the issues of automation and technology that leave some people, including here in the US, feeling that they have not themselves felt the full benefits of this overall increase in prosperity. It’s much easier to show the short-term losses in specific sectors or specific locations than the long-term prosperity gained by a more open trading system.

For example, in the UK, in the past 25 years, we’ve seen about a reduction in 50 percent in real terms of electronic products. So despite the huge advances in technology, we’ve got it cheaper, or basic clothing falling 38 percent over that period. But there’s undoubtedly a feeling among some people that they’ve not — they haven’t felt in a way that they can identify some of these benefits.

Now, there are two elements I think to this. The first is to make the case for free and open trade and to show how consumers can benefit. I sat through a meeting in Davos with trade ministers. It took 52 minutes, because I was timing it, for anyone to use the word “consumer” in the entire discussion. It was all producer, producer, producer, without focusing on what consumer gains could be made.

So I think we’ve got to make the case for free trade. We’ve got to make the case for consumer gains. But we’ve also got to accept that where in an open and competitive global economy there are those who are dislocated from that, that we have the means of helping them. The way I would often put it is that it’s not our responsibility to protect jobs. It’s our duty to protect people and to ensure that in any transition in an economy we’re giving people the appropriate skills in the medium term to get them back into a new working place and to provide them with the financial support to transition them during that difficulty. So mitigating some of the downsides I think is part of getting public acceptance of a working capital’s economy. And so we do need to do that.

And I think that we need to do one other thing, which is a big cultural shift, and it will be true for both the US and the UK, and it’s this: that we need to get people to understand that education or training is not something you go through once as a barrier to get into the workplace or into a career but something that will require to be lifelong as the pace of technological change picks up.

And that I think is quite a big challenge for us to get people to recognize that. In the UK, we’ve moved some, you know, from what was I think a wrong obsession with academic education back into vocational education. Our apprenticeship schemes have been very successful. But there is no silver bullet. We’re going to have to do a whole lot of things culturally, politically, economically to make sure that the prosperity generated is felt by enough people to maintain that consensual support for an open trading global capitalist system.

DR. BARFIELD: Let me take two over — we’ve got so many. Take two here, right in the front, and then — or in the back briefly.

DR. FOX: And if you don’t ask difficult questions, I can give quicker answers.

Q: Hi. Craig Fordham (ph) with Inside US Trade. In your remarks, you make a clear commitment to rules-based global trading system, WTO, not being inward looking. Some of these ideas are seemingly — run counter to what this administration has said. And other global leaders have been critical of certain aspects like the Section 232 report that is expected. How are you going to reconcile these seemingly different ideas in the US-UK working group? And how can those ideas move forward with the US in a potential free trade agreement?

DR. BARFIELD: Let’s take one more, and then you can — think about the reconciliation.

Q: Dr. Fox, Nick Allen from . A slightly simpler question: Would you personally feel comfortable eating chlorine-washed chicken?

DR. BARFIELD: I didn’t hear that.

Q: Would you personally feel comfortable eating chlorine-washed chicken? There’s been a bit of a controversy in the UK about some of the standards that would be incorporated in a free trade agreement.

DR. FOX: I’ll do that one first. In a debate which should be about how we get — make our contribution to global liberalization and increased prosperity of both the UK, the US, and our trading partners, the complexities of those, the continuity agreements, the short- term gains that we may make, the opportunities that we have in our ability to work jointly towards both a free trade agreement and WTO liberalization, the British media are obsessed with chlorine-washed chickens, a detail of the very end stage of one sector of a potential free trade agreement. I’ll say no more than that.

On the position of the US in terms of the trading agreements, well, I judge people on their actions. So we’ve begun a trade working group, trade and investment working group. We’ve begun to look at our continuity agreements to maintain as open and flexible relations as we can. We’re looking at bilateral ways that we can while we’re still members of the European Union achieve trade liberalization on a number of fronts on science and technology, for example. And we are looking to — (inaudible) — in a future free trade agreement with no preconceptions attached to that. And the United States government was very quick to take up our offer to work together to see how, when Britain takes up its independent seat in the WTO after we leave the European Union — how we can work together on big issues — the big multilateral, big issues on global liberalization of trade.

So I will judge people by the actions they take. And it seems to me that the administration is moving perfectly in line with what we would like to see. And it does appear to me to be an acceptance of the need to strengthen the WTO and make it work better for us rather than any attempt to question its legitimacy.

DR. BARFIELD: Shall we take one more? And before I shift, to the guy who’s worried about the chlorine chickens, you’d be happy to know that we have just negotiated with the Chinese that we’re now going to be able to have cooked Chinese chickens in the United States. So if they don’t want the chlorine chickens, you can have the Chinese cooked chickens.

DR. FOX: We work on the premise that the British press corps in Washington never eats American chicken or beef while they’re here due to their health worries. (Laughter.)

DR. BARFIELD: When we moved into this building last year, because everything wasn’t finished, we lived on Chick-fil-A for at least two weeks, didn’t we, Michael? All right. I’ve got one more, right there.

Q: Hi, Dr. Fox. Thanks for taking my question. Brian Bradley with International Trade Today. As you probably know, the US has taken stock of its current free trade agreements, as well as any paused negotiations. I was wondering if TTIP negotiations were to restart, how you think those would bode for chances of a post-Brexit US-UK FTA?

DR. FOX: Well, I think the drag on TTIP wasn’t necessarily the US, but you’ve seen the sort of demonstrations we’ve seen in Europe against what they perceive as — wrongly — a one-sided agreement that would suit the United States more than it would Europe. There are — there’s quite a strong lobby from the European left against any future free trade agreements.

And I would issue a challenge to them, which is if you don’t like free trade, which they say they don’t, which countries in the world would you like to remain poor? Which countries in the world would you like not to have access to the global markets? Because that is, in effect, what you are talking about. If you’re talking about that we raise protectionist barriers, that we refuse to consider further global trade liberalizations, what are the impacts going to be on developing countries? And what will happen to the stability in those countries that might come back to bite us in terms of security? I would say, beware, and we should not listen to the siren voices of the anti-trade left because what they might do could be fairly catastrophic were they to get their way.

DR. BARFIELD: Well, that’s a great note to our own anti-trade left here. So let’s stop here. Join me in thanking the minister for taking the extra time to be with us. Thank you very much. (Applause.)

(END)