by Guest Author Richard Barber
5. Trade
Brexiteers: If we left the EU we would be able to retain full access to the markets of the EU while striking much more favourable free trade deals with everyone around the world.
(a) Trading with Europe
Membership of the EU has been a huge benefit to the UK’s trade (up over 50% since 1975). On our own we’d lose the benefits of being members of the world’s biggest trading block.
EU member states will be determined to prevent the contagion of disintegration among its member states resulting from a Brexit: so they will never make it easy for us to leave and will exact tough terms from us in prolonged negotiations. As President Hollande said, “there will be consequences”.
We should not assume that we are such a huge market for them that it would be in their best interests to strike a deal favourable to us quickly. The EU takes 44% of our exports; but the UK takes merely 10% of theirs. They hold all the cards — and will not congratulate us on our decision to desert them.
So it is extremely unlikely that the UK will be able to retain access to the EU single market without protracted and difficult negotiations. UK exporters wouldn’t find out the rules of the game for years.
For exporters, the free transit of UK goods across Europe would be replaced by the nightmare of multiple forms & admin costs in transiting across numerous frontiers and jurisdictions with all the economic and business uncertainty that will entail.
No Brexiteer has been able to say which of four possible trade scenarios would replace our EU membership, i.e.:
1. Join the EEA (Norway, Iceland & Liechtenstein). They have full EU access in goods and services without any CAP or Fisheries constraints.
BUT
- they must abide by all the trade rules,
- they must accept Schengen’s open frontiers
- they must make a huge budgetary contribution to the EU (Norway’s per capita contribution is at 90% of the UK’s)
and they have no say whatever in the way those rules are administered and develop.
2. The Swiss Model. In Switzerland’s deal, the EU allows them:
- only partial access to the Single Market (financial services not included)
- no say over the application or development of the rules & regs
AND
- they must make a major budgetary contribution to the EU
- they must accept Schengen (free movement of people).
And Switzerland’s financial services industry is excluded from their agreement on single market access.
3. Apply WTO rules like everyone else. But EU tariffs are significant (10% on cars, 11% on clothing, 15% on food) and unavoidable, while services are outside WTO rules.
4. A special UK-EU trade deal. See above. This would take many years of trade and economic uncertainty to negotiate (Canada’s trade agreement with the EU — cited by Boris Johnson as a ‘model’ for the UK — has so far taken 7 years to negotiate and is still not signed).
Brexiteers are quite wrong to suggest that our market is so important to Europe’s member states that they would wish to see a new trade deal in place on favourable terms and quickly. They would be unforgiving if we turned our backs on them. As the Canada experience shows, negotiations would be complicated, time-consuming and tough.
Whichever of these relationship we choose, if we were outside the EU we would still have no say whatever in making, changing or proposing the subsequent rules under which we would operate with them, we would have to continue to make significant budgetary contributions and we would have to accept open frontiers.
Furthermore any EU-UK deal would have to be ratified by 27 separate countries, each with separate agendas for favoured industries or interest groups, as well as by the European Parliament. All complex, potentially acrimonious and very time-consuming.
Thus Brexit would be followed by several years of deep uncertainty, affecting economic and business confidence to the detriment of our national prosperity and highly discouraging to foreign direct investment into the UK.
(b) Trading with the wider world
It is quite unrealistic to think that China or India would give us more favourable trade deals on our own than as part of a trading and negotiating bloc of 500 million people.
Brexiteers are also wrong to suggest that EU membership is a barrier to doing favourable trade deals with the rest of the world: negotiating as a member of a trading bloc of 500 million is far more powerful than we ever could be alone. Germany for example exports to China, India are three times more than the UK’s.
Also a “Transatlantic Trade & Investment” (TTIP) deal is currently being negotiated between the EU and the USA. This will “set the standards or a huge chunk of world trade in the future, and we wouldn’t be part of it” (The Economist). Outside the EU, the UK would not be part of that.
6. Migration
Brexiteers: If we leave the EU we would regain control of our frontiers, reduce migration from the EU and increase our security. Leaving the EU would insulate Britain from the movement of people around the world
There are four separate but interconnected migration issues:
1. Free movement of labour within the EU
2. Visa-free travel — Schengen
3. Refugees and asylum
4. Undocumented migration
Free movement of labour within the EU: Brexit would require a negotiation in which terms of access to the single market would be made conditional on accepting the free movement of labour. Any attempt to restrict the free movement of labour would likely result in:
- Less favourable access to the single market
- Less favourable conditions for UK nationals living in the EU
- Fewer jobs for UK nationals in EU institutions
Visa-free travel — Schengen: Schengen is a visa-free travel zone including most EU members, but not the UK. There are no border controls within the Schengen area, except in an emergency. Countries outside the EU wishing to have access to the single market (Norway, Switzerland) have been obliged to join Schengen. If the UK tries to negotiate access to the Single Market post-Brexit, it will face the same problems as with the free movement of labour, above. Wolfgang Schauble, the German Finance Minister, said this month “Norway and Switzerland have had to sign up to Schengen to obtain access to the EU Single Market. The UK would have to do so too”.
Refugees and asylum: The UK is a party to the 1951 Convention and the 1967 Protocol on the Status of Refugees. This would not be affected by Brexit.
Undocumented migration: Unlike Italy and Greece, for example, the UK is not a prime destination for undocumented migration by land or sea. Access by air is difficult. However, migrants arriving in Italy or Greece attempt to reach the UK through Calais, leading to the appalling situation there. That these scenes are not played out in Dover is due to a bilateral agreement with France, negotiated in 1991 between two members of the EU, to move the UK border controls to Calais. In the event of Brexit, both the French Economic Minister and the Mayor of Calais have said “If Britain leaves the EU, all bets are off regarding the UK frontier continuing to be in Calais”. In that case, the French could seek additional concessions or payments from the UK as the price of continuing the agreement.
Note too that the economic benefits of immigration into the UK comfortably exceed the net cost since EU migration contributes massively to the UK’s flexible labour market. While non-EU migration would be unaffected by Brexit, any limits to EU migration would make it harder for businesses to find the skilled workers it needs; gaps in the job market would soon open up. Economically we would lose out.
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