Whitehall’s free trade farce is a woeful muddle

Westminster mandarins are at a loss as to how to respond to new geopolitical challenges

Poor old Liz Truss. Off she goes into battle for British exports, but all she gets is pelters.
Last week we learned that Truss, as a backbencher, had urged officials to allow the sale of military equipment to China. Officials weren’t keen. Her lobbying effort came after she’d visited Taiwan last year, where she called the People’s Republic “the biggest-long term threat to Britain”. 
But wait: if China is our biggest threat, then why sell them such useful gear? Why sell China landmine clearance equipment, when a vital part of Taiwan’s defensive strategy against an invasion from the mainland involves mining the shallow seas and the shores?
The rest of Whitehall is just as schizophrenic. Last week the Government published its “critical imports and supply chains” strategy, and it mirrors her contradictions exactly. 
It readily admits that “increased tension in the Taiwan Strait and South China Sea” are a major risk but proposes deepening international ties as the answer.
This muddle reflects the fact that MPs and civil servants are tying themselves in knots over how to respond to a world in which we aren’t all friends.
Fretting about supply chain security wasn’t a concern at the zenith of globalisation. Apostles such as Kenichi Ohmae, the former McKinsey guru who introduced corporate America to Japanese business methods, described the nation state as “an unnatural, even dysfunctional unit for organising human activity and managing economic endeavour in a borderless world”.
Better to simply follow the market instead, he believed. We should import everything we need, from oil to PhDs, if it is cheaper abroad, he argued.
Anyone arguing against lower costs and cheaper goods needed to make a very compelling case. 
The free trade argument already enjoyed considerable moral force, since a Government conspiring to artificially inflate prices ultimately hurts the poor the most. The world then saw an unprecedented explosion of prosperity from globalisation. Surely it was a morally good force?
The logic of globalisation required that nothing short of arming a live battlefield opponent should be inhibited.
“The concept of security can be seen as having a decreasing utility,” one expert summarised in 2014, “as it is not possible to prepare and respond to all imaginable threats effectively, and especially cost-effectively.”
Cost effectiveness was the name of the globalisation game. But this required permanent peace.
Events do happen: events like wars, pandemics and promising trade partners arbitrarily breaking the rules by dumping products and then scoffing at the punishment. Some turn out to be not quite as friendly as we hoped. Such events break supply chains.
The policy elites’ answer has been to devise a new word to justify strategic interventions in untrammelled globalisation. “Resilience” was declared Word of the Year in 2018 by one foreign policy journal. It is used to refer to inhibitions on foreign investment or control, or state subsidies for key firms meant to bolster our domestic strength. 
“Resilience” or “resilient” appeared 80 times in last spring’s Integrated Review and 130 times in last week’s strategic review. This waffle metric means we’re already 62pc more resilient than we were a year ago.
But neither official strategy document – and there are many like it – grapples with a basic problem, which is: if we diverge from pure free trade, and declare certain products to be “strategic”, and thus deserving of protection, which will these be and how much will this cost us? For example, does the list of strategic supplies include steel?
On Friday, Tata announced it will close the Port Talbot blast furnaces, used to generate high quality virgin steel. It is converting the facility to house electric arc furnaces, a net zero alternative, with the help of £500m of taxpayer subsidies.
David Cameron didn’t think steel was strategic when he entered office in 2010 and promptly cancelled a loan to Sheffield Forgemasters, which was producing material for our submarines and aircraft carriers. By 2021, Forgemasters had been nationalised and become part of the Ministry of Defence.
As it is, the outcome defies logic. We’ll subsidise Tata with hundreds of millions but Port Talbot will produce a product not suitable for many applications, as the defence think tank Rusi has been warning. 
The new electric arc furnaces can only recycle steel, for lower grade applications, and finding scrap steel of sufficient quality is “a particular challenge in the UK,” Rusi warned last year. In other words, we’ll pay for the subsidy but not get the security.
Shortly before Christmas the US banned imports of Russian uranium. It is slowly and painfully reopening mines for critical minerals in response.
You’ll look in vain for any such clarity of thought and action in Britain. The latest strategy paper is little more than a montage of anecdotes assembled by civil servants. 
A “food security” paper last year couldn’t even agree on what the term meant. (For NGOs, it’s synonymous with not being able to afford a meal, aka food poverty, rather than security of supply). That paper devoted more space to obesity than how to secure vital supplies of basic foods and ingredients.
Instead of clarity, we’re promised a new quango: a “Critical Imports Council”, which will “[bring] together government and businesses in critical and growth sectors to develop collective understanding of priority issues”. 
More talk, in other words. And there’ll be much more “capacity building”, which means more work for civil servants to do, developing “toolkits, guidance and information campaigns”.
One prominent political figure can explain both the need for, and the cost of, protectionism in very clear and vivid terms. The coming year is likely to be dominated by Donald Trump’s election campaign. 
He thinks free trade is a gigantic swindle and isn’t willing to cut China any favours. 
Even if he fails to be re-elected, his rhetoric will dominate the campaign. And such a simple proposition is likely to resonate much more strongly than anything our foreign policy intelligentsia, or the finest brains of Whitehall, have so far been able to come up with.