Brexit will unlock the UKs free trade ambitions
I have been in the European Parliament for almost seven years, and for the last two I have been the lead Conservative MEP on the international trade committee. I’ve therefore seen at first-hand how restricted the UK, a traditionally outward looking, free trade oriented country, has become.
Since 2009 the EU has been fully responsible for all our trade and investment deals throughout the world. It means that if our government wanted to strike a deal with traditional allies such as Australia or New Zealand, for example, it would have to ask the European Commission to initiate that procedure and then to negotiate it. We are not allowed to do it by ourselves. Unbelievably, we still don’t have a trade agreement with that part of the world, although Conservative MEPs can take credit for putting it on the Commission’s radar.
It also meant that the European Parliament was given a final say over whether to accept a trade deal or not, and it appears that it is not scared to strike down the efforts of the Commission, trade deals that take years to complete. Our trade deal with Canada that has been cited in the UK press recently took six years and that was with a partner that was relatively easy to work with. MEPs across different parties and Member States are warning that they might strike it down. A negotiated deal with Singapore awaits final signatures but is stuck in an internal EU legal mess. Agreements with Japan, India and the US have slowed to the point of stalling despite our best efforts as MEPs to get them moving.
This is simply not good enough for our country. Our politicians travel the world building ties with other governments in the hope that we can increase our poor export figures; earlier this year we learned that our trade deficit is only widening, growing by £300 million to £34.7 billion in 2015 as a result of a £1.9 billion increase in the deficit of goods trade. Yet small and medium sized businesses, those who would benefit most from trade agreements, continue to be hampered by problems that George Osborne and others cannot fix. Much has been made of UK SMEs and their unwillingness to explore third country markets, leading to the creation of a government-led “Exporting is Great” campaign that seeks to encourage them to look further afield. But if 21st century deals like TTIP cannot get done, deals that look to reduce the amount of duplicative red tape that restricts SMEs, for example, it will still be costly for them to do business in the US. Our government can only do so much with its hands tied behind its back.
That is why I want us to do these deals ourselves. I sit in the international trade committee week in, week out, listening to the ‘priorities’ of other MEPs from other Member States. I can tell you that their priorities are not the same as ours. Implementing a clause in trade deals with Canada and the United States that demands commitments to human rights to ensure continued access to free and open trade agreements is frankly ridiculous. The same arguments take place when it comes to negotiations with less developed countries without an understanding that opening dialogue through trade allows other issues, such as human rights, to be addressed while benefiting local populations through greater access to growth and job opportunities.
The fact that Europe needs to build better trade relationships in order to maximise opportunities for EU companies of all shapes and sizes is given passing attention by many of the MEPs in this Parliament. If we don’t address this we will fall behind; already it is estimated that 90% of growth in the world will take place outside of the EU by 2020. This often doesn’t appear to be a concern for MEPs particularly on the left of the House. Do we really want to be a part of a club that is drowning and which appears to have little ambition to address the real issues?
So what would we do instead? This has been the real question on peoples’ minds for a number of years and while we can’t fully answer the question until we negotiate a deal with the other Member States, it is clear that it is their interests to strike up a partnership that will, in the end, be mutually beneficial. We just need to look at the figures as evidence of this. Were we to leave, the EUs exports to the UK would represent around 3% of its GDP. Given that the EUs annual growth rate in GDP averaged 1.67% from 1996 until 2015, this is a figure not to be sniffed at. It is unlikely that wine producers in France will accept their government deliberately closing down trade with one of their biggest customers.
Meanwhile our exports to the EU keep tumbling. In 2015, 44% of the UKs exports were traded inside the European Union, meaning that the UK is only one of two of the 28 Member States that does more trade with countries outside the EU than inside, the other being Malta. At the turn of the century, the figure stood at 55%. We have achieved these figures with third countries within an EU that is ambitious in rhetoric but in reality doesn’t deliver on the detail. Just think what we could do by unlocking our greater potential.
We need a grown up debate about our trading future that addresses the facts, and trade is one of them. Some say that the EU will penalise us with a bad trade agreement if we leave to ensure that others don’t follow suit but to do so would be to step outside of international law. The WTO guarantees us a basic level of treatment when it comes to trade tariffs – most favoured nation status – a principle whereby members of the WTO cannot discriminate between trading partners. At the very least, therefore, the EU would have to treat us the same as other countries it trades with now; the US, Canada and Japan being three examples. Add to that the domestic pressure that would fall on Member States, such as BMW and Mercedes in Germany, to continue tariff free trade through a renegotiated agreement and you can soon see that continuing to trade on broadly the same basis as we do now is good for the UK and good for the EU.
There are alternatives to EU membership out there. As mentioned previously the EUs deal with Canada has been cited recently, and could be the basis for a future agreement. Within that agreement 99% of all but the most sensitive customs duties will be removed completely; there are deep and comprehensive provisions for public procurement allowing access for companies on both sides; and trade in services will be liberalised, creating access to financial services, telecommunications, energy and maritime transport. All this, without the need to pay into an EU budget; to accept free movement of people across borders; or to be tied to a trade policy that is moving at glacial speed.
It is time for us to take back control.