A proper rejoinder to an empty threat

From yesterday’s Open Europe news summary:
French Economy Minister: UK “won’t be in a position to negotiate something better” after Brexit

French Economy Minister Emmanuel Macron told an audience in London yesterday, “After a Brexit vote, you are not in a position to negotiate something better…Leave the club and you will be alone. What will be your position with the Chinese? I’m sorry to say, but exactly the same as Jersey and Guernsey with the EU.”

The proper response to M. Macron is “Why would the UK have to negotiate anything?” The UK–or any nation, for that matter–can freely open its borders to the imports of the entire world. It does not have to negotiate something that it can do unilaterally. Of course, the French Prime Minister is speaking about his own country’s trade barriers to deny the importation of UK goods. No nation can control the self-defeating actions of others. If France wants to embargo goods from the UK, it certainly can do so and there is nothing that the UK can do about it. But so what? Who is harmed? The French! The French do not enjoy UK products that they would prefer over products from anywhere else, including France. Otherwise, what is the purpose of embargoing UK goods? When the French sell goods into the UK market, they take pounds in payment. What are the French to do with these pounds? Stack them in the vault of the Bank of France and never spend them? Fine. Now the French have given UK citizens free gifts of their goods.

One of the greatest and most persistent fallacies in economics is that a nation suffers when it lowers its barriers to imports and the exporting country does not reciprocate.

Patrick Barron

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