A few days ago, I wrote an article in which I mentioned that Britain ruled 57 countries including Malaya at one time. All my readers must be wondering why Britain is in such a mess now.   

Currently all the TV channels are showing vehicles queuing for petrol or diesel at gas stations in London because Britain is short of truck drivers to deliver petrol or diesel to gas stations.

Transport minister Grant Shapps had earlier appealed for calm, saying the shortages were purely caused by panic buying, and that the situation would eventually resolve itself because fuel could not be stockpiled. Earlier, Shapps said the shortage of truck drivers was down to COVID-19 disrupting the qualification process, preventing new labour from entering the market.

Others pinned the blame on Brexit and poor working conditions forcing out foreign drivers. The government on Sunday announced a plan to issue temporary visas for 5,000 foreign truck drivers.

But business leaders have warned the government's plan is a short-term fix and will not solve an acute labour shortage that risks major disruption beyond fuel deliveries, including for retailers in the run-up to Christmas.

Brexit – potential economic consequences if the UK exits the EU If the United Kingdom (UK) exits the EU in 2018, it would reduce that country’s exports and make imports more expensive. Depending on the extent of trade policy isolation, the UK’s real gross domestic product (GDP) per capita would be between 0.6 and 3.0 percent lower in the year 2030 than if the country remained in the EU. If we take into account the dynamic effects that economic integration has on investment and innovation behaviour, the GDP losses could rise to 14 percent. In addition, it will bring unforeseeable political disadvantages for the EU.

The British politicians have been debating the pros and cons for Brexit for many years.

My opinion

As an old experienced business man, I wish to offer my opinion.

My first question is how can the British Prime Minister Boris Johnson, dressed like a clown resolve this complex issue? He cannot even take care of his own hair.

My second question is what was the object for the construction of the Channel Tunnel? 

The Channel Tunnel opened in May 1994 after 6 years of construction. At the time it was being built, the Chunnel was the most expensive construction project ever conceived. It took $21 billion to complete the tunnel. That's 700 times more expensive than the cost to build the Golden Gate Bridge!  

The obvious answer is for mutual benefit. Trading in a larger market has many advantages.

England is no longer an Island!!!

By the way, I am proud to tell you that I know the Chairman of the Channel Tunnel representing Britain, Lord Douglas Crooke. In 1967, he was the Project Engineer for the Muda River Irrigation Project in Kedah when I was a contractor undertaking several contracts. After the completion of our contracts, we changed the name of our company to Mudajaya Construction.

You may like to know what was the object of the Muda Irrigation Project in Kedah?

Before the implementation of the project, we could only grow one crop during the North East monsoon rain. Our government borrowed a very large sum of money from the World Bank for the construction of dams, weirs and irrigation canals to supply more water for rice growing during the dry season. As a result, we can grow 2 crops every year.

After the completion of the Muda Irrigation Project, Douglas Crooke became my constant friend. I used to visit him in England and he used to stay with me whenever he came to Malaysia on business. Unfortunately, he passed away a few years ago.   

Advantages of free trade  

Free trade occurs when there are agreements between two or more countries to reduce barriers to the import and export markets. These treaties usually involve a mutual reduction in duties, taxes, and tariffs so that the economies of every country can benefit from the various trading opportunities. One of the most well-known examples of this approach is the USMC Agreement, which replaces NAFTA to govern free trade across North America.

Free trade agreements allow a country to have access to more markets throughout the world. It can encourage local industries to improve their competition while relying less on subsidies from the government. It is a process that can lead to the opening of new markets, and improvement in GDP figures, and new investment opportunities.

When free trade involves a developed country and one that has yet to fully industrialize, then there can be an exploitation of natural resources that occurs. Some households might see the traditional livelihood fade away for modern jobs. It can even cause problems in the domestic employment sector for all involved parties.

The advantages and disadvantages of free trade show us that any nation deciding to enter into an agreement must take proactive steps to guard their resources and people against exploitation without resorting to protectionism.

1. Free trade creates economic growth opportunities.
The free trade agreements in North America helped the U.S. economy grow by an average of 0.5% per year more than it would have otherwise. When countries can freely move products across borders, then each nation gets to take advantage of the manufacturing, commercial, and industrial strengths of every other economy in the agreement. That means there are lower cost burdens to worry about with each transaction, prices stay lower, and there can be healthy competition in the market.

2. There are more opportunities for foreign direct investment.
When nations remove the barriers that are in place for free trade, then more companies are willing to invest in other countries. There are new investments, partnerships, and opportunities that develop because of this approach in markets of any size. That means you can focus on creating deeper, more fulfilling relationships with other governments who share the same perspective of the world today. Countries with shared borders can promote a better standard of living because it is harder to go to war with someone who is your economic partner.

Between 1994-2019, the policies of free trade allowed for an average of $25.6 billion in foreign direct investment to support the American economy each year. The second quarter of 2018 saw a record of $55.83 billion in that three-month period alone.

3. It lowers the taxes that consumers and businesses pay.
The inclusion of tax and investment protection in free trade agreements make it possible to guard the interests of local business owners more efficiently. When these safeguards disappear, then the result tends to favour the consumer because more competition from global agencies can happen at the level of consumption.

This advantage reduces stagnation within markets, though at the risk of eliminating smaller businesses from the equation. Lower assessments and fewer restrictions to entry can also reduce pricing for customers.

4. Fewer government expenditures occur because of free trade.
Several domestic industries receive financial benefits from the government, including farming and other areas of agriculture. This money goes from the taxpayer to the producer as a way to counter the impact that tariffs have on the import and export markets.

By injecting new best practices and creating new competencies into the domestic delivery systems, less government money is necessary to keep prices affordable at the local level. This advantage means that the tax revenues can go toward infrastructure needs, social programs, defence, or other community requirements without keeping unprofitable business ventures afloat.

5. It creates better goods.
When free trade occurs, then each market receives more access to higher-quality goods at lower prices. Cheaper imports help to ease the pressure of inflation in the United States because of the American relationships with China and Mexico. Prices are held down by over 2% for every 1% share in the market of imports that come from countries with a lower income level. That means the average U.S. household has more money to spend on other products. The requirement of innovation here means that businesses are constantly finding ways to solve problems for consumers.

6. Free trade involves more than just consumer goods.
At least 50% of the imports to the United States each year are not consumer goods. They are inputs for producers who are based in the U.S. so that domestic production costs can go down. This advantage also promotes economic growth because it diversifies the supply chain for an organization of any size. Even micro-businesses, freelancers, and gig specialists can benefit from this advantage because the Internet provides immediate access to cheaper goods, new research, and service expansion opportunities.

7. It helps the people who have the least amount of money to spend.
Some people believe that more wealth can only come when a country can export more of its goods or services to other nations. The economic reality of free trade is that it is the total level of imports and exports that accurately reflects prosperity. When the people at the lower tier of the national income levels have more money to spend, then the entire economy benefits. That’s why the removal of tariffs is such an integral part of this process.

Cheap sneakers that come from China might have an import as high as 60% some years in the United States. If you were to purchase a part of Italian leather dress shoes, the tariff might be less than 9%. Regular drinking glasses have a tariff of almost 30%, but crystal glasses have one at 3%. When more Americans can buy cheap imports, then it encourages non-Americans to invest more in the country.

8. Free trade creates more opportunities to solicit workers with expertise.
Automakers sent jobs to Mexico because of NAFTA, and then decided to import the vehicles back to the United States because of the favourable tariff policies. Although this issue took some jobs from American laborers, it also gave companies the chance to find workers from almost anywhere in the world with the right levels of expertise. By looking to foreign markets for this help, the costs stay down for the manufacturing process to maintain pricing at competitive levels.

This advantage also means that multiple economies around the world can benefit from this approach. It is one of the reasons why India has one of the fastest-growing Middle Class sectors in the world today.

9. Experts get to have access to the most resources with free trade.
Free trade agreements attempt to put the most opportunities into the hands of the people who can create successful outcomes. There are no border restrictions to this advantage. That’s why anyone can become whatever they want to be in life if they have access to an economy built on this principle. The amount of competition that becomes available is the primary driver of what local populations think is possible. Anyone can become what they want to be in life if they work hard enough to reach their goals thanks to the fewer economic restrictions that exist with this opportunity.