Trade Myths exploded


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”.

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24 Responses to Trade Myths exploded

  1. Patriot says:

    Nolt only German cars, what about all the French etc.
    We could in fact buy every car produced in the UK ourselves and keep more of the profits in the UK.
    Plus buy some of the European market
    It has always amazed me how countries like China, Korea etc. do well in the UK without being a EU member!

    • barrymx5 says:

      The old Common Market was aimed at avoiding tariffs. Now industrial tariffs only average 3.6% worldwide the EU has lost its original purpose. It is a 20th century solution to a now non existent problem.

  2. Me_Again says:

    Excellent roger, thanks for this. Very useful bullets to fire at europhillic dunderheads.

  3. what is UKIP’s Brexit’s Strategy, not sure if we have one yet?

  4. Richard111 says:

    We don’t have a trade deal with China?
    Amazed they sell us so much stuff. /sarc

  5. Mike Stallard says:

    Did you see that programme on TV about Lord Digby Jones who advised the wool manufacturer in Scotland to concentrate on the Japanese and Chinese markets and not to waste time on northern Europe?
    Gradually it is becoming very clear that Europe is not the place to expand into. And, in EFTA we could quite easily thrive. Brexit – Flexit, surely even the Foreign Office could understand that?

    • Me_Again says:

      My brother runs a group of companies which develop, produce and sell a variety of literally cutting edge medical equipment and technologies. He doesn’t bother with the EU. He uses a German supplier for some of his stuff but doesn’t sell to Germany or anywhere else in the EU.

      Majority of his business is with India and China where the number of millionaires increases exponentially. He’s looking at Brazil but has difficulty meeting his existing production dates, the demand has increased so much, so that’s on hold for a while. In India their national health care equivalent is poor to non existent but the private medical industry is booming and so is demand for his revolutionary theatre fogging system which eliminates wound infection from environmental sources. Same in China. He buys certain things from the US but trade protectionism is rife there so they don’t sell any equipment that didn’t originate there -which is actually quite a loss for the Americans whom we think of as at the top of the tree when it comes to medical advances and technologies, but they aren’t. A company wishing to trade in the medical world there has more rules regulations and impoverishing statutes to observe than even the EU -a victory for the litigators but a pyrrhic one.

      So the EU and America are not the place to do business for all things and are in fact, under the guise of protecting the population, preventing technologies being available for their own people which are available here and in Europe. Best example is in the breast implant business. They aren’t allowed to use the current gold standard for implants in the US because of protectionism bizarre or what?

      I’m sure there are many examples of companies choosing not to do business in places where the protectionism is rife in an apparently free trade environment.

  6. barrymx5 says:

    Thanks Roger. Very useful. I helped William Dartmouth with his paper as I have first hand knowledge of the WTO as a UK trade negotiator. That experience and numerous meetings in Brussels representing the UK convinced me we are better off free from the ghastly bureaucratic nonsense that is the EU. As others have commented, for the majority of British exporters the best prospects are in the expanding ROW rather than the sclerotic EU.

  7. Barry Davies says:

    The TTIP like every other trade agreement is a pile of doggy doo too, we don’t need grandfathers rights for it, just an agreement that benefits us more than the one sided in americas benefit TTIP.

  8. Right wingery says:

    What about the massive capital flight that would result from having the City of London outside the EU?

    • Me_Again says:

      Why would us being out of the EU result in a massive capital flight. Where from anyway?
      The EU has been losing capital like a very leaky sieve – no correction, like a sink with the plug gone- so what capital are you talking about?

      Tip: City of London works on electronic transfers, the money can be anywhere………….

    • catalanbrian says:

      I think that you and me probably come from different ends of the political spectrum but I believe that we are ad idem as regards Europe and the EU. We both care about the UK and can see the alarming damage that would be done to the UK by pulling out of the EU, unlike the Little Englanders who make up most of the UKIP membership. There is little point in arguing with them as none of them are capable of looking beyond the narrow views of UKIP policies.

      • Barry Davies says:

        Oh dear another little european who can’t see that the eussr is very small compared to the rest of the world, it isn’t even the largest, as is claimed by europhiles trading bloc in the world. There is little point talking to those sheeple who believe the nonsense that spouts from the likes of Clegg, Milliband, and Camoron, who like their predecessors think that propaganda is the means of fooling the people of Britain. We would be far better off out of the eussr, with whom we would still trade, and also be able to trade under our own terms with the rest of the world without needing permission from an unelected trade commissioner.

        Only 5% of our companies actually trade with the eussr nations, but 100% of the regulations holding us back come from Brussells, we have a negative trade balance with the eussr nations unlike our larger and positive trade balance outside of it, only little europeans consider that we are incapable of running our own nation and need unelected foreigners to tell us what to do.

        It’s a shame that these sheeple have such a narrow and negative view, and have no policy other than to do whatever the unelected commission of the corruption ridden democratically deficient enterprise killing tells them to do.

      • barrymx5 says:

        Not little Englander, quite the opposite. Britain thrived in the 19th Century with a worldwide vision. We declined in the 20th Century concentrating on disastrous Continental involvement. EU was so 20th Century.

      • Patriot says:

        As a citizen of the UK I am 100% behind you Roger, but do none of your` critics realise that once Scotland and then Wales break away from the UK that they will be citizens of a tiny part of Europe called England with no influence whatsoever, this was envisaged by the EU many years ago and has crept up on us very, very slowly, helped by MP`s and some union leaders of all parties who were selling us out and feathering their own nests. Hence any referendum on Europe to be held after a Scottish referendum. And remember a No would be followed by another referendum until a Yes, then that would be forever. I don`t want my grandchildren to be Europeans I want them to be British, many people have given their lives for them to be able to do this.

      • Me_Again says:

        I’m curious about this ‘influence’ you refer to. If England rules itself [i.e. out of the EU] and the other countries have chosen to go their own way then we shall do just as well. I’m a libertarian so whilst I would lament the loss of our Scottish brothers [didn’t know Wales was up for leaving] if they go, I applaud the use of democracy to allow it.

        We need not influence anything except as an example of hard work. We are not an empire and don’t need one. As members of the WTO and with a top ten economy we need only trade as we always have done -before the EU- and reach out.

        I do not lament this loss of ‘influence’ if you are referring to influencing world affairs.

      • Barry Davies says:

        Patriot you do realise that there is no certainty that Scotland will secede form the UK, and therefore the eussr, and there is no intention in Wales to secede anyway. Even if both countries, and even if Ulster joined them England would still be a major world economy not a little nation at all, because all three nation put together would only take about 10 million people out of our economy. The Federalisation of europe was dreamt up decades ago and we have very little influence in governing our own country now because the eussr constitution, renamed the lisbon treaty has superiority over our, and every other nation subsumed by this monster’s constitutions. I agree that the unelected commissars in brussells will undoubtedly expect all referenda that could take nations out of its control, such as Scotland if it secedes from the UK, to keep voting till they get it right.

      • Perhaps you need a mirror ! Go look into it and read your comment again. How is handing over control of the UK to the EU looking after the UK if we are being told what we can and cannot do ?

  9. Barry Davies says:

    Typical defeatist attitude, there is no evidence that the world wide capital that comes into London through the City would be in any way affected if we leave, on the other hand within it frankfurt is desperately trying to get the business.

  10. DougS says:

    Great stuff Roger – you’re on a roll at the moment – all your posts are punchy, to the point and hugely relevant.

    Keep up the good work.

  11. dave/r says:

    please read the racoons latest offering well worth a read and do not be put off by the opening sentence

    • barrymx5 says:

      Our membership of the WTO gives us Most Favoured Nation rights with ALL members of WTO inc EU. Also protects us from “vexatious trade actions”. Bilateral trade agreements can be negotiated at our leisure as the icing on the WTO cake.

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