Fiona Hall writes: EU exit would jeopardise Britain’s global trade

For years Europhobes have been propagating the misconception that Britain has to choose between the EU and the rest of the world.

 However, this ‘choice’ between the EU and the rest of the world is a false choice. Indeed, being part of the EU is the best way to increase Britain’s trade with emerging markets.  As Nick Clegg pointed out in his speech on Europe last week, the EU has free trade agreements in force with 46 countries and negotiations with another 78 countries are currently under way. In addition, the European Parliament last week lent its weight to launching new negotiations with the USA and Japan.

The European Commission has now confirmed that if Britain leaves the EU, it will lose every single EU trade agreement. Our exporters will face new tariffs, new regulatory barriers and new restrictions to services, investment and procurement in crucial emerging markets. If we leave the EU, we will not just damage our trade with Germany, the Netherlands and other EU countries, but also emerging economies such as South Korea, Mexico, South Africa, Colombia and Turkey.

We will have to start our trade policy from scratch without any guarantees that other countries will want to negotiate with us and, if they do, with the likelihood that we will get a worse deal as we would have less clout as a country of 60 million rather than as a block of 500 million. Britain has not negotiated a trade agreement since joining the EU in 1973 and we would need to create a whole new trade civil service from thin air.

This is car crash politics dressed up as patriotism, ideology and faux nostalgia  – and it would fatally injure British jobs. EU trade deals are worth a huge amount to the UK. Consider the South Korea agreement, which has been in force since July 2011. British merchandise exports to South Korea in the first half of 2012 were more than double exports from the same period in 2011 when there was no agreement *. This was in spite of the recession. If we leave the EU, we lose this agreement with the result that British exporters to South Korea will be at a huge disadvantage compared to their German, French and Italian competitors.

But Tea Party Tories and UKIP don’t care; they are obsessed with one thing and one thing alone, leaving the EU. Not only are they happy to sever UK links with the EU single market but their policies would also jeopardise Britain’s trade with the rest of the world.

* UK exports to South Korea from Jan – June 2011 were valued at £1 063 030 897, UK exports from Jan – June 2012 were valued at £2 387 040 059. 

* Fiona Hall is Leader of the UK Liberal Democrat Delegation in the European Parliament and MEP for the North East of England.

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25 Comments

  • Leaving the EU would utterly destroy Britain. We need a few more people saying that.

  • Richard Dean 6th Nov '12 - 5:24pm

    For years …

    > no-one has really explained to the electorate what Europe is or how it works or why we’re there
    > most have missed the simple fact that being in Europe enhances rather than diminishes our sovereignty
    > few have understood that national identity is not threatened but does need to be grown
    > UK politicians with nothing to say have found that criticizing Europe gives them something to say
    > ….

    which neglect probably explains a lot.

  • Eurosceptics are under the impression that Britain’s negotiating position is stronger than what it actually is; furthermore, they’re intoxicated by this ignorance of impotence. Perhaps a referendum would be a good thing in order to make matters clear to the public at large and allow some realism to enter our national discourse.

  • Anyone who believes that the UK would be fine outside the EU, needs to ask themselves why it is that Switzerland and Norway pay more into the development funds per capita than the UK does. Do they think it is just for charity or what?

  • So if your guess is that Switzerland and Norway pay so much to the EU because their economies are “overwhelmingly dependent on neighbouring European nations for trade”, if it transpired that the UK was dependent on neighbouring European nations for trade, you would accept that the UK would also have to continue into the EU development funds.

    I cannot understand the ignorance of the EU. People in Germany find it much easier to understand. Money goes into the EU budget. Money is used to develop industry and infrastructure in poorer regions (largely the ex Soviet countries). There is a bidding process for the work. Germany, being high tech wins quite a lot of it as do other technologically advanced economies. The new industry creates more demand, which Germany and others are very willing to cater for. This is how Germany gets to have healthy exports. Basically Germany and others pay a lot in and in return benefit from increased demand.

    Unfortunately, insular, monolingual attitudes (yet somehow still maintaining fantasies of empire) in England dismiss investment in the less developed regions of the EU as waste.

  • >being part of the EU is the best way to increase Britain’s trade with emerging markets.

    However, we shouldn’t forget that in order to join the EU we had to reduce the amount of trade with the Commonwealth countries which has changed our relationships with them. It would seem that being in (or out) of the EEC/EU is a double edged sword…

    Agreed being in the EU the is probably better for the UK, but we need to become more effective and influential within the EU political institutions – perhaps rather than worrying about Lords Reform we should be forcing the pace of democratic reform of the EU political institutions.

  • “We will have to start our trade policy from scratch without any guarantees that other countries will want to negotiate with us …”

    “Other countries” also includes members of the EU it should be pointed out.

    Should they decide they are in no rush to help a bunch of UK Euro-skeptics out and happy to stick the UK at the back of the (back-logged) “trade agreements to be negotiated” queue, what then?

    No doubt, the Euro-skeptics have a well funded and well thought out “Plan B” to help British firms left to deal with the consequences of their decision, right?

  • @ Jedibeeftrix and Tom Papworth

    The point of the article was not to focus on the benefits or not of access to the single market. That is a different debate. The purpose was to show that withdrawing from the EU would also harm Britain’s trade with the rest of the world for the reasons explained in the article. I would also like to make clear that I have never said Britain would fall into Armageddon if we leave and I recognise that we would still trade with the EU. However, it is clear that we would not fulfil our economic potential. Our trade with both EU countries and the rest of the world would suffer. We would not create as many jobs, export as many products or receive as much foreign direct investment. I would certainly not be satisfied with such an outcome.

  • On some of Tom Papworth’s specific points:

    Most Favoured Nation (MFN) status under the WTO does indeed allow many tariff free exports to the EU. However, there are still significant tariffs in certain sectors. For example, 50% of the vehicles built in Britain are sold in the EU. If we leave the EU, cars would face tariffs of 10% and some lorries 22%. In 2011, 57% of British chemical exports went to the EU and many would face a 5 – 6.5% tariff under MFN status. In 2011, 87% of British beef exports went to the EU and they would face a 12.8% tariff under MFN status.

    In many other countries, the situation is even worse. For example, the EU is negotiating free trade deals with Canada and India to remove, among other things, Canada’s dairy tariffs of 200-300% and India’s car tariffs of 100% and sprits of 150%. MFN rules have a long way to go and Doha seems stalled for the foreseeable future.

    Perhaps more importantly, international trade has moved beyond tariffs to tackle other issues such as regulatory barriers to trade (technical standards, conformity procedures etc), intellectual property rights and market access in services, investment and procurement. EU rules in these areas extend far beyond WTO rules which are the bare minimum and if we are not part of the single market then we risk being excluded. A good example is the REACH directive which governs the chemical industry. On its introduction, many Swiss firms (particularly smaller businesses) were unable to continue their access to the EU market because they did not fulfill the same regulatory requirements as REACH. This leaves non-EU governments in the unenviable position of either choosing the Norway scenario which maintains full access to the single market by automatically adopting 75% of EU legislation without having any influence or democratic control. Or the Swiss scenario where they regularly have to choose between being locked out of the single market or having to unilaterally adopt EU legislation, a process known as autonomous adoption. Studies have estimated that EU law is unilaterally adopted in 40-60% of Swiss federal laws, again raising issues of influence and democratic control.

    Yes, the potential of the services directive remains to be fulfilled and pushed further but it goes well beyond WTO commitments. It is also clear that in financial services, the UK’s industry has taken full advantage of the EU’s single market while Switzerland has no deal with the EU on financial services and routinely faces being locked out. One little noted fact is that being part of the single market has hugely increased EU investment into the UK. In 1990 31.9% of inward investment came from the EU. In 2009, it was 53.8% – http://www.theyworkforyou.com/wrans/?id=2011-09-05a.66958.h&s=section%3Awrans+speaker%3A11494#g66958.q0. It is doubtful is BASF chemicals or BMW would stay in the UK if they faced tariff and regulatory barriers to trade with the EU.

    On imports, I agree that the removal of tariffs does bring benefits to consumers and our import industries. However, unilaterally removing all barriers to foreign imports would leave us with no leverage to gain further crucial market access through free trade agreements for our exporters and investors abroad who also bring huge benefits in jobs and growth. Sadly, it won’t just be the Koreans that lose out if they don’t offer us an FTA, it’ll be our companies and workers too.”

  • To Roland:

    Yes, I agree that joining the EEC did represent a fundamental shift in our relations to the Commonwealth. However, this reflected economic shifts that were already occurring, our exporters and importers were already exporting / importing more to / from Europe rather than the Commonwealth and our accession reinforced rather than caused this trend.

    In 1960, the UK’s top export destinations included 2. Australia (7%), 3. Canada (6%), 5. South Africa (4%), 6. India, 9. New Zealand. By 1970 (before we entered the EEC), Australia had fallen to 6th (4%), South Africa to 8th (4%), Canada to 10th (4%) while India and New Zealand disappeared from the top 10 altogether. Their export share was taken over by Germany, Ireland, Sweden, the Netherlands, France and Belgium. (Source: UK trade statistics, SNEP 6211, House of Commons Library)

    That said, what is important is the present economic situation. As I said in the article, it isn’t a choice: if we leave the EU, we lose both EU trade and trade with non-EU countries because we will lose the EU’s trade agreements.

  • Jedi,
    the alternative to ‘ever-closer union’ is ‘ever-greater division’.

    Unity equates to peace, division to conflict.

    Peace equates to prosperity, conflict to devastation.

    While I can happily agree that the manner by which continental politicans of different stripes seek to integrate our neighbourhood is damaging, this is because they are not yet won over to the cause of liberal democracy.

    Were the EU more liberal and democratic (by which we could also say open and accountable, and thereby legitimate) then virtually all the criticisms would evaporate overnight!

  • Jedi,
    legitimacy of common governance is a prerequisite for social existence.

    If you don’t accept it then politics is meaningless to you because you cannot therefore recognise law or equality before it, and it seems perverse for you to participate in debate as you would appear to be saying you refuse to abide by agreements – it’s a wonder that you are able to communicate at all in our shared language given this can only arise through common rules!

    It is simply laughable to refuse to recognise the human ecology and the relationships we have with our fellow beings, and accepting the concept of sovereignty is to accept the principle of legitimate common governance. The only question which remains is how far you can extend it in practice.

    Alternatively you’re arguing something you either don’t believe or don’t properly understand, as would otherwise be inferred from your actions.

  • Richard Dean 8th Nov '12 - 1:30pm

    Common governance is a red herring that Euroskeps use to confuse and frighten people. It has no basis in reality.

  • Jedi,
    No, that is incorrect, I did not.

    I made a case for political integration from first principles, and I stated that once the principle is accepted you must answer how far you can extend it.

    You did not reject the principle of the matter. On the contrary you continue to accept it, and merely made a qualified negative case for extending it only up to and no further than our national boundaries.

    I have no problem in principle with common governance with any land or population, as I see borders as nothing more than artificial administrative and bureaucratic restraints which divide up the global human geography along physical lines. I’ve seen a bit of the world, and from what I’ve seen people are not inherently incompatible – quite the reverse, in fact!

    However sovereignty only works when it’s in conjunction with territorial integrity (potentially a significant reason why Greece is less well-adapted to the European project than those closer to the core, and easily a reason why Britain’s coastal borders reflect a major mental hurdle) as well as a political class committed to civic values. Consequently the pace of integration and the direction it will take is both up for discussion and subject to events.

    Seriously, do you see this as a relevant debate in 200 years time when we’re off exploring the galaxy? By that time we’ll need to be working more closely together than ever!

    Frankly you’re expressing a sentiment which is nothing more than petty and selfish. Britain has far more to give and to recieve than we could ever lose.

    And I wholly reject the idea that the desire for guaranteed peace and prosperity is a minority opinion in this country. In case you’ve forgotten we aren’t remembering the ultimate sacrifices of untold millions this week on account of our ancestors wish to find new means of creating poverty, mass barbarism and slaughter!

    You’re arguing a false premise. The real question isn’t whether or not to integrate, but how to integrate and how fast do it.

  • Richard Dean 8th Nov '12 - 4:22pm

    No, jedibeef, common governance is completely off any realistic agenda, including Merkel’s. But causing confusion isn’t! The EU is the battleground that the Second World War became. The UK won’t be winning anything anytime soon if it succumbs to the propaganda war.

  • On the question of a referendum the country needs to be clear about the issues involved in the debate, which means all prospective propaganda needs unspinning. We should be cautioned that a mandate for action results from the content and quality of debate, not just the decisiveness of a vote.

    My grandmother once said something which applies here, “there are knits and knots. Knits are good, knots are bad.”

    We need to get knitting, by unknotting the European economy. We want a strong European economy because this means we can deal with people and trade with companies across Europe. So we want stong institutions to resolve disagreements and free up action.

    Economy infers polity, which infers unity.

    The unity we share with our partners is based on our shared equality and our shared equity in outcomes.

    A liberal democatic Europe says Europe shares a future because Europe shares a past. The speed of integration follows our understanding about how we develop our relationships in meaningful ways where we appreciate the values we place on this shared history. We don’t believe in the status quo because we want better.

    Our investment in the connected ideas of Europe and unity has produced peace in our time, has produced unrivalled prosperity and is being spread well beyond our borders. We must build on this success.

    What’s most noticable is the failure of critics and phobes to acknowledge the success of Europe. If you unravel the knit you’ll start knotting. My grandfather had a very different experience than my grandmother, he was a knotter.

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