We shouldn't worry if the US is made better off by a free trade deal

As EU-US trade talks could begin as early as next month, it's important to remember why free trade agreements are so important, and that the terms agreed see exchange made as easy as possible between as many countries as possible.

Paul Krugman summarises the consensus on trade excellently in a classic 1987 paper; that if economists are to agree on anything, it should be the value of trade:

If there were an Economist's Creed, it would surely containt he affirmations "I understand the Principle of Comparative Advantage" and "I advocate Free Trade." For one hundred seventy years, the appreciation that international trade benefits a country whether it is "fair" or not has been one of the touchstones of professionalism in economics.

(Is Free Trade Passé?)

It is worth bearing these words in mind when some complain about the disparity in what the US and various EU member states stand to gain from a trade deal.

The gains from trade go both ways. Just as a shopkeeper who sells their products prefers to receive cash than hold goods, the customer prefers to hold those goods than the cash they give up for them. Both value what the other has more than what they possess, so are willing to swap voluntarily.

It's these differences in how we value things that means trade happens at all, and it's a process that makes both parties better off. That the US might earn more doesn't mean that it's a raw deal for the UK.

According to Downing Street, the deal could be worth as much as £10bn a year to the UK, or £380 to each British household. Meanwhile those who agitate ask us to cut off our own noses to spite our collective face.

Free trade deals like these should if anything be more common, and more inclusive. That our politicians feel that they can ordain with who and how we trade with others for basic items is an embarrassment to us. We stand to gain growth, more jobs and higher incomes, as well as access to cheaper goods and services.