Trade deals work both ways
“If the UK leaves the EU, it will be free to strike its own trade deals”. So say the Leave campaign – but it makes little sense to me. Whilst I suppose it’s a true statement, is this really something that the UK really wants or needs?
I won’t provide any facts and figures, because in the current nasty campaign there’s a danger of this article getting tagged as scaremongering or just plain lies. So let’s just think about it in general.
Britain already has pretty good trade deals with most countries through the EU, and has always been one of the major trading nations of the world. The Leave campaign cites USA, India and China as countries that the EU doesn’t have free trade deals with, and says that the UK needs them.
The USA is already – by a long way – the biggest export market for the UK. The EU has been trying to negotiate a trade deal for many years – and it’s still negotiating. Nothing has been agreed because some American demands are unacceptable to Europe. Yes, trade deals work two ways – a free trade deal doesn’t only open markets for us, it opens up our market to them!
Among the things that America insists on but Europe won’t accept are reductions in data protection and import of genetically-modified food and beef fed with hormones. Are these things that the UK on its own should accept? Britain led the way in consumer rights since the 1960’s, and most EU legislation is derived from that – and now we walk away? I don’t think most voters would agree.
Removal of trade barriers opens up markets to us – but brings with it a clear danger that we will end up importing more than we do now, and tip the trade balance further against us. We can only benefit when the overseas market is eager to buy UK products and services and we have exporters ready to take advantage – and, sadly, there’s little indication that is the case.
India is a good example. It’s another of the countries that Leave cite as needing a free trade agreement – but existing barriers are low, and UK trade under the current regime has actually been declining year on year. Despite special trade missions to India, lots of government-funded activity to encourage exports, and long-standing ties between the countries, recent years have simply seen a growth in imports whilst India’s interest in buying British – and hence exports – has reduced.
And China? That’s the most difficult market of all to read. One certainty is that one reason for the “steel dumping” that has led to the virtual obliteration of the UK industry is that, for other political reasons, our own government vetoed the EU imposing tariffs on Chinese steel. There seems no doubt that China would only agree to a free trade deal if they thought that would increase their own exports more than the new imports they would be letting in.
Conclusion? Free trade is great, but removal of barriers on their own can create new problems. The UK has been well served by the EU trade agreements. Apart from the strength of a much larger negotiating bloc, I’d argue that the EU has added the social responsibility that we lack on our own. It would be madness to throw it all away and leave. Let’s Remain.
by Oliver Dowson, CEO at ICC – International Corporate Creations