One was from the Fresh Start Group, of 100+ Conservative MPs, led by former MEP Chris Heaton-Harris, with Andrea Leadsom and George Eustice. Chris and Andrea are from my region, and I know and respect both of them. George Eustice I know less well. Their laudable objective has been to provide a well-researched and considered basis on which the government can seek to renegotiate our relationship with the EU. The document is entitled “Options for Change”.
But I found their work a great disappointment.
They first of all propose three possible alternative models:
1 The EEA, or “Norwegian Option”.
2 A Free Trade Agreement, the “Swiss Option”, or
3 Remaining in the Customs Union (but not the EU): the “Turkish Option”.
They then proceed to dismiss all three in a manner so brisk as to be almost peremptory, citing “major drawbacks”. Many of the drawbacks are, in fact, either minor, or don’t apply at all.
So they fall back on renegotiation, which is a failed aspiration that has been around for years. Some in my Party insist that it’s impossible to renegotiate the treaties, citing the acquis communautaire and the Commission’s well-known “Occupied Field” philosophy. I don’t think that’s necessarily true, but any renegotiation would require a very tough-minded approach, and would, in my judgement, necessarily require a credible threat of withdrawal to make any progress. Unfortunately our Prime Minister has just recently sold the pass on any such negotiation, by insisting that he would never campaign for British withdrawal. We’d ask for concessions. They’d say No. And that would be the end of that.
Others in my Party have suggested that the whole Fresh Start Project is a set-up by the Tory High Command, to appease their sceptics and to draw the teeth of the Better Off Outers, and they point to William Hague’s support for the project to back their view. I don’t believe that either Chris or Andrea would be part of such a cynical plan. But sadly, their document rather adds credence to the idea.
They make two key errors. First, they assume that Britain (after we leave the EU) will be “like Norway or Switzerland”. As I have pointed out elsewhere , both Switzerland and Norway have per capita GDP more than double the UK, so it’s not immediately clear that being like them is a bad thing.
But there’s a more fundamental objection. Why compare the UK, one of the world’s top ten economies and a major global trading nation, with two small countries heavily under the influence of Brussels? Why not compare us to the USA, or Japan, or Korea (with which Brussels has just concluded a Free Trade Agreement)? Does the Fresh Start team imagine that Washington and Tokyo and Seoul live in daily fear of “regulation by fax” arriving from Brussels? They do not. But they do trade, very successfully, with the EU, on an arm’s length basis.
When we joined the EU in 1973, average industrial tariffs were 30 to 40%. Today they are more like 3 or 4%. The average duty on imports under the EU’s Common External Tariff is less than 2% (though there are sectoral issues, for example in automotive, which need to be addressed). So even if we were entirely at arm’s length from the EU, the duty impact would be minor. But of course we should not be arm’s length. If Korea can negotiate a free trade agreement (and the EU has, or is negotiating, FTAs with nearly half the countries in the world), who can doubt that we too should negotiate such a deal, especially as we have a trade deficit of £50 billion p.a. with the EU. Naked self-interest, if nothing else, would force the EU into a deal. That’s not “The Swiss Option”. That’s the British Option.
The second key error is the assumption that whatever else is wrong with the EU (and it’s a great deal), at least the Single Market is the Crown Jewel of the relationship, and must be defended at all costs. I have a confession to make: I thought the same five years ago. I was wrong, and so is the Fresh Start Group.
The Single Market is first and foremost a Customs Union, which is an old-fashioned trade structure, generally superseded by the much preferable Free Trade Area. This Customs Union is particularly bad for Britain, because our patterns of trade are far more externalised than those of most EU countries. The Customs Union, for example, prevents us from establishing free trade with the Commonwealth, and exploiting our linguistic and cultural links with it. (And don’t forget that the sometimes-derided Commonwealth is just overtaking the eurozone in terms of GDP). It would also prevent any FTA with the USA.
But the Single Market is also the vehicle and the justification for the onerous and destructive regulation that the Fresh Start Group wants to remove. Employment, Health and Safety, Environment, all these issues are justified on the basis of the Single Market.
The costs of the Single Market outweigh the trade benefits by a factor of two or three to one. And we don’t even have to make that choice, because as an independent country with an FTA, we should have most of the benefits of access to the EU market, without the costs.
The government of Switzerland in 2006 undertook a cost/benefit analysis of Switzerland’s position, and decided conclusively that it was better off with a free trade deal than it would be as an EU member. Switzerland is Better Off Out. So should we be — and we could negotiate a much better deal than Switzerland. The British government has been repeatedly asked to do a similar cost/benefit analysis, but has declined to do so, on the basis that “the outcome is self-evident”. It is indeed self-evident, which explains why the government refuses to do the study.
The other document I read on the train was the Ruth Lea/Brian Binley paper for Global Vision, “Britain and Europe: a new relationship”. It is wonderfully succinct and clear, and it goes through the options for Britain, and the benefits of independence, with fascinating cogency. It effectively rebuts the points made in the Fresh Start paper. I won’t try to summarise it, because I could scarcely do so without simply retyping most of it. But I do urge you to read it. I will however draw attention to one key point, which is often missed. Discussions tend to focus on the effects of withdrawal on our EU trade, and ignore the opportunity costs of EU membership in terms of what we could and should be doing with the rest of the world. Lea & Binley address this point, along with many others.
In fact I defy any reasonable person to read this document with an open mind, and not to reach the same conclusion as Ruth Lea and Brian Binley: Britain would be Better Off Out.