Europe or the world? It’s a false choice.

“Do you agree that the UK should leave the EU and trade with the world?” That’s the question on the front page of the UKIP website, and presumably how they want to start framing the referendum debate once they launch their own No campaign later this week. “Out, and into the world,” as it was put in the 1970s.

But that’s a false choice. We don’t have to choose between Europe and the world. We can have both.

Let’s start by emphasising just how important the European marketplace is to British business. Last year, according to figures from the Office for National Statistics, the UK’s exports to the rest of the EU were worth £226bn – 12 times the value of the stuff we sold to China and 33 times what we sold to India. Between 2000 and 2014 the value of our exports to the rest of the EU rose by £80bn; the value of our exports to China rose by £16bn, and to India by just £4bn. China and India are important, growing markets with lots of potential, but let’s not forget just how important Europe is and will remain.

We are in a much better, stronger position in trade negotiations inside the EU than we would be outside. The EU makes up a quarter of the entire planet’s economy. It is bigger than that of China, bigger even than that of the United States. When we negotiate as a European bloc we do so from a position of strength. Of course Britain could hammer out a trade deal with America or China, but we’d not be negotiating with them as equals in a way that we do when we sit down as part of Team Europe. China’s economy is three times the size of ours, America’s is six times larger.

The CBI gets it. That’s why they’ve said that, “We would look to negotiate trade deals with the rest of the world if we left the EU, but we’d be doing so with a weaker hand”.

Roberto Azevedo, Director-General of the World Trade Organization, said last year, “the more that a country or a member is in a position to join with others in defending a particular idea or defending a particular agenda, the easier it is to push through its interests.” His is one of a number of voices in the world, including fellow Commonwealth countries like Australia as well as Japan and the United States, urging Britain to stick with the EU.

And what about the first trade deal we’d have to negotiate if we left, the one with the EU itself? We sell around half our exports to the bloc, but the UK is the marketplace for only around a tenth of their exports. They are a far more important export market to us than we are to them. This is why Poland’s former foreign minister, Radosław Sikorski, said there would be “no prizes for guessing who would have the upper hand in such a negotiation. Any free trade agreement would have a price.”

Anti-Europeans will often argue that free of Europe we can trade with the new, emerging markets. But what’s holding us back from doing that right now? Britain’s exports to Brazil, Russia, India, China and South Africa (the BRICS) amounted to $41bn in 2012, according to figures compiled from the Observatory of Economic Complexity. But Germany managed to sell those same countries goods and services worth $167bn – four times as much. If Germany can do it, it’s not the EU that’s holding us back. As so often happens, we blame the EU rather than holding up a mirror to ourselves.

But this isn’t just about lowering tariffs on selling widgets. By sticking together, European countries avoid a race to the bottom on the social protections that we enjoy.

Take the entitlement to paid leave as an example. In Britain, someone working full time is entitled to 28 days’ paid leave per year. It’s one of the highest in the world. In a recent study by the US-based Center for Economic and Policy Research, 11 of the 12 countries with the most generous entitlement to paid leave are inside the EU. If you look at the G7 member states outside Europe, the entitlements are derisory: Canada and Japan, 10 days per year; and in the United States there is no legal entitlement to any paid leave at all.

Alone, outside the EU, how long before people started to argue that we need to cut the cost of doing business so we can compete in the global marketplace? Without being able to offer investors access to the Single Market, we would need to offer them something else to tempt them back over the Channel, most likely by making it cheaper to hire people and easier to fire them. I have written before about how the No campaign has made clear that this is the kind of Britain they want to see: a Britain of cheaper workers and lower standards.

UKIP’s binary choice – Europe or the world – is a false one. Staying in Europe means we can continue to enjoy unfettered access to the biggest economy on the planet. We can negotiate better trade deals as a part of a powerful bloc. And, as Germany’s experience shows, the EU does not stop us from growing our export markets.

The problem that leaves me with is how to answer UKIP’s question: Do you agree that the UK should leave the EU and trade with the world? Look at it again and you’ll see my problem. They only offer two possible answers: “Yes” and “Undecided”. Democracy, UKIP-style.

* Stuart Bonar was the Liberal Democrat parliamentary candidate in Plymouth Moor View.

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29 Comments

  • David Evershed 1st Sep '15 - 5:29pm

    The main benefit of being in the EU is the lowering of trade barriers within the EU.

    However, the EU exports far more to the UK than the Uk does to the EU. This trade gap is even larger if you deduct exports to Rotterdam which are for onward transport outside the EU.

    Also, EU countries have a more protectionist mentality than the Uk which has traditionally been a more open trading nation, reinforced by Liberal free trade thinking that protectionist policies are damaging for consumers in the short run and damaging for business in the long run.

    EU countries protectionist attitude to non EU countries is of course currently damaging for EU consumers and in the long run will be damaging to EU businesses which become uncompetitive.

    Lib Dems have been traditionally against protectionist policies (remember the Corn Laws) and should be seeking world wide free trade and not backing EU potectionist policies.

  • David Evershed 1st Sep '15 - 5:30pm

    Incidentally off thread:

    STV will make television history when it becomes the first broadcaster in the UK to televise a Scottish court hearing live and in full. STV News cameras will be operating inside court one at the Court of Session in Edinburgh to report on proceedings brought on by the legal challenge to the election of Liberal Democrat Alistair Carmichael as MP for Orkney and Shetland.

    The case will examine Mr Carmichael’s conduct over the leak of a memo about First Minister Nicola Sturgeon’s meeting with a French ambassador. The case, which could see Mr Carmichael removed as MP for Orkney and Shetland, will be heard by judges Lady Paton and Lord Matthews in the Election Court, which will sit for the first time in Scotland since 1965 on Monday, September 7 from 10.30am.

  • Two points.
    1 David Evershed – trading conditions and relations between nations around the world have changed significantly since the 19th Century. I am not at all convinced that the “free trade dividend” is still there, or at least to the same extent in a so-called globalised world.

    2 Surely a key dividend of being in the EU is that we are working with others to create (politically) a better Europe for those living in all countries – rich and poor – by trying to create level playing fields and a fair deal for all.

  • Freeborn John 1st Sep '15 - 5:40pm

    We can trade with Europe while being outside the EU as Norway, Switzerland and the vast majority of countries in the world do today, many from Chile to Korea doing so tariff-free. There is no evidence that being in tbeEU makes it easier to negotiate trade deals with the rest of the world. Indeed the evidence is the opposite as Iceland and Switzerland have FTAs agreements e.g. with China which Brussels has not been able to achieve.

    The real choice is about democracy. As Greeks and Irish now know, EU integration means their elections decide less and less as real power over their lives in decided elsewhere. If the UK wants to be a democracy it must leave the EU and have a free trade-only relationship with it as so many others like Canada, Mexico, North Africa, Korea etc do already.

  • Richard Stallard 1st Sep '15 - 7:33pm

    @Freeborn John
    You may have been born free, John, but if things carry on the way they are, I’m very much afraid you’ll die a slave in an eu federation where democracy has become a dirty word. Poor old Ireland was bullied into voting again until it gave the ‘right’ answer and I’m sure we’ll get the same treatment if the referendum goes the ‘wrong’ way!

  • It is astonishing that the world’s fifth largest economy should have no trading negotiation rights with the rest of the world since it handed these over to unelected bureaucrats in Brussels. This country also handed over control of its borders. It further handed over its rights to produce principal legislation in the areas of food, fisheries, agriculture, transport, business and commerce, employment and most other aspects of the lives of its citizens.

    If this were not bad enough, it hands over £55million pounds per day in return for such disadvantages.

    We really are a terminally stupid nation.

  • I’m sorry if I’m seen to be trolling this site, but this argument based on “social protection” is false.

    Firstly, there is no reason why social protection measures could not be brought into being by our own democratic process; we have over the years fought for many working protections and rights – Factories and Health and Safety Acts, for instance.

    And, as I’ve pointed out before on this site, it is all very well having these social protections scenarios if a person is actually in work, the opening up of our public contracts to EU-wide tender and the preference of employing large numbers of cheaply available migrant workers puts those at the bottom of the pile at a disadvantage.

    Believe me, I’ve seen it at first hand, in a world of short term contracts you either are willing to work double shifts at the weekend or your contract doesn’t get renewed; the same applies to 28 days leave/year – people find that they are laid off on holidays, thus breaking up their contract periods.

    I realise that this detail may seem of little relevance to those that consider themselves above such considerations, but the LibDems have to decide where they stand – protection and development of those at the bottom in this country, or a fully liberal (corporatist) EU.

  • Matthew Huntbach 2nd Sep '15 - 11:16am

    Peter

    It further handed over its rights to produce principal legislation in the areas of food, fisheries, agriculture, transport, business and commerce, employment and most other aspects of the lives of its citizens.

    If this were really so, how come most political discussion in this country is about what the Cameron (and previously Cameron-Clegg) government is doing or proposing? How come there is almost no discussion about practical aspects of what you say the EU is doing? If the EU was now our major legislator, wouldn’t news and political comment be dominated by EU personalities and what they are doing and proposing?

    If this were not bad enough, it hands over £55million pounds per day in return for such disadvantages.

    Is that all? In terms of overall government expenditure, that’s a tiny amount of money.

    The reality is that the scale of the world today means we cannot control ourselves as we could decades and centuries ago, not unless we become a fortress-like nation as North Korea. Real power has been ceded to global finance, and it will remain ceded to global finance whether or not we are in the EU. Indeed, what is behind much of the anti-EU campaign is people who are part of the global finance network who dislike the EU because of the way its international co-operation acts as some sort of barrier against their control. What they mean by “principal legislation in the areas of food, fisheries, agriculture, transport, business and commerce, employment ” is the sort of stuff which stands up against global companies trying to play one nation off against the other, by threatening to pull out and take their money aways from any country which does not kow-tow to the big business lords and master by reducing employment rights or letting them get away without paying their fair share of taxes and so on.

  • How come there is almost no discussion about practical aspects of what you say the EU is doing?

    Um, you may have missed this, but the newspapers at the moment are kind of filled with discussion about EU policy re: migration.

  • Peter Hayes 2nd Sep '15 - 1:28pm

    John, the Norwegian agreement with Europe includes freedom of movement and everything except agriculture and fishing. You may have noticed their fishing grounds, unlike ours, do not have other countries bordering them. They also pay more per head of population.

  • Richard Underhill 2nd Sep '15 - 5:16pm

    Freeborn John 1st Sep ’15 – 5:40pm Why do you think Norway is outside the EU in trade?
    Their prosperity is based on having half of North Sea oil, a much smaller population than the UK and saving.

  • Richard Underhill 2nd Sep '15 - 5:29pm

    Freeborn John 1st Sep ’15 – 5:40pm Switzerland is surrounded by the EU. Swiss companies need to trade in the EU market, so they are affected by EU regulations, which makes it not worthwhile having different regulations in Switzerland. They do not have a motor or aircraft manufacturing industry. some years ago they had seven simultaneous referendums on trade with the EU and voted Yes, Yes, Yes, Yes, Yes, Yes and Yes.

  • @ Matthew Huntbach
    Yes, it really is so, Matthew. The EU has Competency in most of the areas I mentioned. That means the EU decisions outweigh the decisions or wishes of member states in these areas of policymaking.

    Your second point is a good one. Our political leaders have relatively little power and it is rapidly diminishing. A few decades ago a senior Civil Servant pointed out to our government that the increasing power of the EU should be concealed from the people “for fear of alarming them.” The people were always told that being a member of the Common Market involved no loss of sovereignty. That was a blatant lie, but the policy of under-reporting the role of the EU has remained. All other EU countries, as far as I know, devote hours of TV news to EU government matters.

    Keeping the masses in ignorance has allowed our politicians to integrate the UK into the EU.

    I’m surprised that you consider £55 million a tiny amount of money. It would build two or three new hospitals a week.

    Your final point about big business is wrong. The CBI, IOD and other organisations representing global businesses are very pleased with the EU and warn against us leaving. They have strong links with the EU and influence the regulations to make it very difficult and expensive for smaller businesses to compete with them. The EU therefore stifles small businesses, competition and job creation and enhances the power of the multinationals. EU capital transfer laws allow these huge companies to shift their profits around to avoid paying tax in the countries where they create their wealth.

  • Matthew Huntbach 3rd Sep '15 - 10:13am

    Dav

    (Me: “How come there is almost no discussion about practical aspects of what you say the EU is doing?”)

    Um, you may have missed this, but the newspapers at the moment are kind of filled with discussion about EU policy re: migration.

    Sorry, but that does not answer my point. I was replying to a claim that the EU has control over most aspects of the lives of its citizens. If that was the case, the EU would be discussed in terms of all those aspects. In the case of immigration, it’s the issue of refugees from outside the EU that are filling the newspapers at the moment, and it is not the case that the EU has complete control over how we handle these refugees – discussion is very much about how British political leaders want to deal with them. If it was all controlled by the EU, British political leaders wouldn’t figure in the discussion unless they held EU posts.

  • Matthew Huntbach 3rd Sep '15 - 10:21am

    Peter

    I’m surprised that you consider £55 million a tiny amount of money. It would build two or three new hospitals a week.

    In terms of the overall state spending budget, which is predicted as £760,000 million for 2016, it’s small.

  • Matthew Huntbach 3rd Sep '15 - 10:25am

    Peter

    Keeping the masses in ignorance has allowed our politicians to integrate the UK into the EU.

    Er, so the Daily Mail, Daily Telegraph, Daily Express, Sun and Times newspapers, all of which are heavily critical of the EU, and take every opportunity they can to point out its bad side, count for nothing?

    Sorry, but given the general inclination of most newspapers in this country against the EU, your claim that people are kept in ignorance because no-one is telling them about things it is doing that they wouldn’t like is ridiculous.

  • Matthew Huntbach 3rd Sep '15 - 10:31am

    Peter

    Your final point about big business is wrong. The CBI, IOD and other organisations representing global businesses are very pleased with the EU and warn against us leaving. They have strong links with the EU and influence the regulations to make it very difficult and expensive for smaller businesses to compete with them.

    It tends to be people on the fringe of the finance industry who are funding UKIP and pushing the anti-EU line. See, for example, this link.

  • Re: the £55m figure… it’s not accurate: https://fullfact.org/economy/cost_eu_membership_gross_net_contribution-30887 The true figure is well under half that figure. It’s about 37p per day each.

  • Sorry, but that does not answer my point. I was replying to a claim that the EU has control over most aspects of the lives of its citizens. If that was the case, the EU would be discussed in terms of all those aspects. In the case of immigration, it’s the issue of refugees from outside the EU that are filling the newspapers at the moment, and it is not the case that the EU has complete control over how we handle these refugees – discussion is very much about how British political leaders want to deal with them

    Ah, I see the equivocation you’re making: you’re claiming that ‘control’ means ‘complete control’.

    The point isn’t that the EU has ‘complete control’ over any particular aspect of British law (ie that it dictates exactly what must happen), but rather than the EU sets the limits within which British politicians can act. And therefore the British parliament is no longer sovereign: it can no longer do whatever it wants, but is constrained to act within the broader context of policy dictated to it by the EU.

    It’s as if the EU said that Britain was allowed to set corporation taxes no lower than 20%, and you were claiming that newspaper coverage of a debate between British politicians over whether they should be 20% or 25% showed that in fact the EU doesn’t have any control over British tax rates.

    Do you deny that the EU thus constrains British sovereignty in all kinds of areas, leaving just enough freedom for British politicians to fiddle with the details that it looks like they have some control?

    (And that’s before we even get to the whole philosophy of the EU which is to see national parliaments as the equivalents of local councils, to whom powers are delegated by the EU parliament, rather than as sovereign governments who can do whatever they like.)

  • @Stuart – The £55m figure is accurate; according to the article you linked to, just that it is the gross figure. With the net contribution being around £33m – also according to the article.

    I remember we had a discussion about this previously on LDV and I argued (I think!) that we need to be mindful of both figures, because only the gross contribution can be projected with any certainty; the receipts and rebates are more variable and uncertain. Being confident of both figures and how the gross figure is reduced to give us the significantly lower net contribution, I think is a much more mature and credible discussion than getting bogged down in whether the figure is £55m or £33m per day.

    For example, if you belonged to a discount club, regardless of discounts received, you would still be expected to pay in full the membership fee every year; You would use the amount of discounts actually received to determine whether the membership was worthwhile or not.

  • @Dav
    Do you deny that the EU thus constrains British sovereignty in all kinds of areas, leaving just enough freedom for British politicians to fiddle with the details that it looks like they have some control?

    The problem is that it was various incarnations of the Westminster crowd that signed away parts of our sovereignty. So the problem we now have is: given the same crowd will either be negotiating any further integration or exit, can we be certain that in either negotiation they will trade sovereignty for market access…

    Personally, given the quiet debate in Europe about sovereignty – remember the UK is not the only country to raise this concern. I’m reasonably comfortable that the EU will be modified. Being outside the EU will mean we will be constrained to whatever was agreed to in a treaty…

  • I’m reasonably comfortable that the EU will be modified

    I’m sure the EU will be modified; I’m just doubtful that it will be in the direction of giving countries more sovereignty, rather than less.

    For me, the renegotiation has to end up with an explicit statement that ‘ever closer union’ is dead, at least as far as the UK is concerned; that powers belong to Westminster and are delegated to the EU, not the other way around (ie, in the same way powers exercised by the Scottish Parliament rightly belong to Westminster and are delegated to Holyrood), and that at any time Westminster can overrule the EU and repatriate a power or area of legislation; and that it is made clear that the EU is about sovereign nations coming together for mutual benefit, and not about setting up a new level of government above that of individual parliaments which can set policy.

    Basically, it needs to be Europe a la carte, where we can pick and choose the bits which we want and that are good for Britain and leave the rest, and can change our minds later about the bits we picked too.

    Otherwise it’s an ‘out’ from me.

  • (It’s all fairly irrelevant anyway: the Eurozone cannot continue to exist as it is, lurching from crisis to crisis, so within five to ten years either it will have dissolved, probably taking the EU with it, or the Eurozone countries will have taken further steps towards integration as a super-state with its own monetary policy, etc, and eventually foreign policy, co-ordinated social and employment legislation, etc, so that even if the UK has not de jure left the EU it will de facto be in an ‘outer ring’ of non-Eurozone countries.

    Basically, in the next decade or so, if the EU still exists, then even if the UK doesn’t leave the EU, the EU will have left the UK.)

  • Richard Underhill 3rd Sep '15 - 2:50pm

    Paul Reynolds 30th Aug ’15 – 7:11pm Forecasting is speculative, especially with regard to the future.
    Have you noticed how much time the weather forecasters spend describing the recent past?

  • Richard Underhill 3rd Sep '15 - 2:52pm

    Correction:
    Dav 3rd Sep ’15 – 2:37pm Forecasting is speculative, especially with regard to the future.
    Have you noticed how much time the weather forecasters spend describing the recent past?

  • Matthew Huntbach 3rd Sep '15 - 5:20pm

    Dav

    It’s as if the EU said that Britain was allowed to set corporation taxes no lower than 20%, and you were claiming that newspaper coverage of a debate between British politicians over whether they should be 20% or 25% showed that in fact the EU doesn’t have any control over British tax rates.

    Setting corporation tax is just the sort of thing where international co-operation is needed to stop big business playing one country off against another. THAT, my dear Dav, is why the British Parliament no longer has full sovereignty, how often do we get told “Oh no, we can’t do that, big business would object and move its money and jobs elsewhere”?

    As you show here, you are the opposite of what you claim to be. You oppose the EU because you want us to kow-tow to big business in that way, and you gain simplistic populist support for it by claiming that steps to stand up against big business by international co-operation are an attack on sovereignty.

  • You oppose the EU because you want us to kow-tow to big business in that way, and you gain simplistic populist support for it by claiming that steps to stand up against big business by international co-operation are an attack on sovereignty

    I have no problem with international co-operation, provided it’s in the UK’s interest and we can stop co-operating any time it stops being in the UK’s interest.

    I note you didn’t answer the question. You accept, then, that the EU limits the UK government’s freedom in all sorts of areas?

  • @Dav – ” the EU limits the UK government’s freedom in all sorts of areas?”

    This if you remember is what really kicked the current debate off, when it became clear that Westminster was effectively signing away sovereignty with the signing of the Lisbon (Reform) treaty and it’s commitment to ever greater integration without public consultation; along with the blatant rerunning of votes in other member states until they gave the EU approved result. Hence through various campaigns all political parties in 2010 committed to holding a referendum over further integration and relinquishment of sovereign powers. This has through the combined efforts of vested interests and the media been transmuted into the Remain/Leave referendum. My concern is that if the result is ‘Remain’ that the political parties don’t forget their commitments to hold referendums over any future treaty changes they might be thinking of agreeing to…

  • Rebecca Taylor 26th Sep '15 - 10:41pm

    @David Eversheds: you say that “EU countries sell more to the UK than we sell to them”. This is true only in goods, not services. The UK economy is 79% based on services and the single market in services isn’t yet completed.

    To all those citing Norway & Switzerland:

    – Norway has full access to the EU single market by signing up to around 75% of EU laws (with no say in their development) and paying a contribution to the EU budget that is 80% (per citizen not in total obviously) of what the UK pays. If you want this option, please sell it to the British public, I don’t think it’s that attractive.

    – Switzerland has partial access to the EU single market through 120+ bilateral agreements. They pay into the EU budget and are even in the Schengen (border free area) zone. This means that some sectors of the Swiss economy don’t have access to the single market. If you want this option, please explain which economic sectors you want to include/exclude, how long it will take to negotiate over a hundred bilateral agreements, how much it will cost and then sell your solution to the British public.

    To those saying “US, Japan, etc can trade with the EU”, please note:

    – “trading with” is NOT the same as full access to the world’s biggest single market. No EU trade deal (or any trade deal anywhere else in the world) gives the trade equivalent of being part of a single market.

    – If the U.S. already had sufficient access to EU markets (and vice versa), please explain why negotiations for the trans atlantic trade and investment partnership (TTIP) are happening.

    – If Japanese companies already had full access to the EU single market, why do all Japanese car makers have EU manufacturing facilities and sell only EU produced cars to the EU market?

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