New growth? Pull the other one (as my old mother used to say)
The Remain Campaign makes much of the Single Market. It is vital for the UK’s trade that we remain in the Single Market. They still claim that outside the EU we should lose 3½ million jobs. Trade would falter. Inward investment would dry up. So we must stay in the EU – or at the very least find some associate status like Norway that gives us “access to the Single Market” (but leaves us subject to the EU’s “free movement” and a lot of the other bad things that eurosceptics are desperate to get out of).
Casting my mind back to my early days as an MEP, fifteen years ago, I recall that when I was challenged to find something good to say about the EU, I would fall back on “Well, the Single Market is a clear benefit” – and also (I am ashamed to admit) – I went on to claim that it was “a great Conservative achievement”. But the realisation gradually dawned on me that perhaps it wasn’t quite all it was cracked up to be. Recently I’ve been saying that “The Single Market is an old-fashioned Customs Union overlaid by a mountain of excessive regulation”.
I want to tackle head-on the pro-EU argument that the Single Market is vital (or at least important) for UK trade and inward investment. And I must draw attention to a brilliant article earlier this week from Roger Bootle “The danger of thinking in slogans on Europe”
If we believe that being in the Single Market offers us substantial benefits, we need to look at countries outside the Single Market and see if they are disadvantaged. And the news is, they are not. The three biggest countries exporting to the EU are Russia, China and the USA. Not only are they not EU members – none currently has any special trade deal with the EU at all. Yet they are hugely successful in exporting to the EU. They clearly have access to the Single Market. Roger Bootle draws attention to recent paper from Civitas with a self-explanatory title: “The Single Market has benefited non-members more than Britain and other founding signatories”. The author Michael Burrows looked at non-EU countries and found that their exports into the Single Market had broadly speaking grown faster that the UK’s trade with the EU.
This is absolute empirical proof that membership of the Single Market is not essential – or even, arguably, helpful – to trade with it. Why on earth do we let the pro-EU camp suggest that membership of the Single Market is essential for trade and investment, when clearly it is not?
Let’s take an obvious example – the car industry. Does anyone suppose that those smart guys in Munich are going to say “Good Heavens! Those Brits have finally left the EU! Let’s punish them by refusing to sell our cars in the UK!”. Of course not. On the contrary, German car-makers (and French wine makers, and many other industries) will be queueing up to demand that the Commission do everything in its power to promote and maintain cross-channel trade. It’s worth recalling that Ford used to have a commercial vehicle factory, making vans, in Southampton. A few years ago they closed it and moved it to Turkey – outside the EU. So never believe the hype that auto makers only come to the UK because we’re in the EU. Ford decided that they could service the EU market better from a non-EU country than from the UK.
Digby Jones is a former head of the CBI and trade adviser to the then Labour government. He says that after Brexit, we’ll have a trade deal with Brussels in twenty-four hours. Why? Because of the enormous commercial benefits to both sides of such a deal, and because of the UK’s strong negotiating position. We are a huge net customer of the EU. We buy nearly twice as much from them as they buy from us. They need us. And after Brexit, the UK will be the remnant-EU’s largest export customer in the world. Bar none.
But imagine, if you will, a worst-case scenario, which would be trade as an arms’ length third country with no trade deal. We should have to pay the duty – the EU’s Common External tariff – on exports into the EU. WTO rules mean that they could not increase those rates, or seek to “punish” the UK with inflated duties. In this case, the annual duty payable on those exports would be around £3½ billion. That’s way less than half our net annual budget contributions. Even in these simplistic, worst-case terms we are Better Off Out.
But of course we will have a free trade agreement, because it is in the overwhelming economic interests of both sides to have one – and even more in their interests than ours.
So every time the europhiles bang on about the importance of the Single Market, we have to put them right, because they simply don’t know what they’re talking about.