27 separate trade deals: It seems incredible that some people seem to think when we leave the EU we’ll need separate trade deals with each of the EU’s (other) 27 member-states. Yet they do – as evidenced by claims on Twitter. Really people should get their heads in gear before they Tweet. The whole point of the EU is that it makes trade deals on behalf of its members. It will continue to do so after we leave, so we’ll need a single trade deal with the remnant-EU, not 27 deals. I have set out elsewhere the reasons that the EU will do a deal, but briefly: (1) Direct economic interest; (2) WTO; and (3) Article 50 of the Lisbon Treaty.
Problems for auto exports: We’ve heard a lot from Toyota and Nissan about why we should stay in the EU (these are the guys who were telling us fifteen years ago that if we didn’t join the €uro, the sky would fall in). But in fact we buy, by value, nearly twice the cars that we sell to the continent. I’m not happy about that ratio, but it does mean that they need us more than we need them. Mercedes, Audi and BMW are not going to stop selling us cars when we leave. This is just a single-industry take on the general point that we will be the EU’s largest export customer and largest net export customer when we leave. We’ll have a very strong negotiating position.
Outside the EU, we won’t be able to negotiate trade deals: Odd, then, that both Switzerland (population 8 million) and even little Iceland (population only 320,000) have trade deals with China. But the EU doesn’t. And so we don’t. (You could argue that trade deals are not that important anyway: of the top ten countries exporting to the EU, fully six – including the three largest, China, Russia, USA – have no trade deal, but seem to trade successfully anyway).
But Switzerland is an interesting case. It has trade deals with most of the countries with which the EU has such deals. But it also has trade deals with others (List A), and vice versa the EU has some deals with countries where Switzerland does not (List B). List B (EU deals but not Swiss) comprises five countries with a combined GDP of $0.716 trillion. List A, on the other hand (Swiss deals but not EU) consists of seven countries with a combined GDP of $21.333 trillion. That’s almost thirty times the size of List B. And they tell us that small countries, outside a major international trading group, can’t do trade deals. Sadly, in the decades we’ve been relying on the EU to do our trade negotiations, the Foreign Office has run out of skilled trade negotiators. No demand for them. Maybe we’d better hire the Swiss.
If we leave the EU, the USA will not be interested in a trade deal with us: I’d put it the other way around. If we hadn’t been in the EU for forty years, we have had a transatlantic trade deal a quarter of a century ago. And if we leave the EU after their transatlantic deal TTIP is in place, I’d expect it to be grandfathered.
But let’s look at the proposition on its merits. The USA (they say) wouldn’t be interested in a trade deal with a top-ten economy like the UK. So how come the USA has trade deals with twenty countries smaller than the UK: Australia, Bahrain, Chile, Colombia, Costa Rica,
Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Israel, Jordan, Korea, Morocco, Canada, Mexico, Peru, Oman, Panama and Singapore?
Few things infuriate me more than the proposition that “The UK is too small to prosper outside the EU”. Or “too small to negotiate trade deals”. Ask Switzerland. Or Singapore. A brief look at the trade facts show that these arguments are nonsense. Outside the EU, we can maintain our trade with the declining European market, while rebuilding ties with the rest of the world – where the growth is.
Thanks to William Earl of Dartmouth who drew my attention to these particular stats at the launch of his excellent paper “Out of Europe, into the World”.