Would leaving the EU endanger jobs and trade?
Could the EU put up trade barriers against the UK?
The EU cannot put up trade barriers against the UK. All EU countries are part of the World Trade Organisation (WTO).
Why would EU countries put up trade barriers – if they could?
EU countries sell us more to the UK than the UK sells to them.
|Value of UK goods and services exported EU Countries||£229 billion.|
|Value of EU goods and services imported by the UK||£291 billion.|
|UK Trading loss with EU Countries||£62 billion.|
In other words, EU countries make a profit of more than £1 Billion per week from selling goods to the UK. The UK makes a trading loss of £1 Billion per week by trading with the EU.
The UK has traded at a loss with EU countries since 1972. The trading loss excludes the £10 Billion per year UK memberships fees
Germany, Spain, France, Italy and every EU country will still want to sell us their cars, wine and holidays. [i].
The UK is the fifth largest economy in the world. The UK is a world trading nation. The UK makes a profit by trading with rest of the world. The UK trading success lies in four hundred years of experience. English is the international language of business and science. Foreign companies trust the UK legal system and contract law.
Would still have to comply with EU rules in order to trade with member states?
Yes. Any country that trades with another country has to comply with its rules for exporting goods or services. For example, when we export goods and services to the USA we have to comply with US internal rules on specifications and laws.
There are two reasons why the EU would not penalise UK trade.
a) EU countries gain more from UK trade than the UK.
b) EU countries have to comply with World Trade Organisation rules.
Do all business want to remain in the EU?
No. In February 2016 representatives of 36 FTSE 100 companies signed a letter for the Times calling for Britain to remain in the EU. But that means 64 of the FTSE 100 companies did not sign.
About 200 companies have committed to the Remain campaign. 200 is a miniscule proportion of the 5.4 million companies in the UK.
Some big businesses like the EU because they want to deal with one central regulatory body. Big companies can lobby for the kind of regulation that gives them advantage over their smaller competitors. Some big companies benefit from endless waves of cheap migrant labour permitted by open borders. Wages are kept low. Unions are powerless because their members are simply replaced.
Other big businesses want Britain to leave the EU. For example Peter Hargreaves co-founder of FTSE 100 company Hargreaves Lansdown. Writing in the Daily Mail on 25th February 2016 Mr. Hargreaves said, “(EU) red tape and regulations have stifled enterprise in the UK, not helped.” And that Britain should be, “forging trading links with nations that have fast growth rates and dynamic economies. While we are in the EU we must wait on unmotivated, overpaid Eurocrats”. He concluded by hoping that the electorate would, “decide to leave this disastrous and stifling union”. [xv]
Small and Medium Sized Businesses (SMEs) are even less enthusiastic about the EU. 200 bosses of SMEs signed a letter calling for Britain to leave the EU because of a “constant diet of unnecessary regulations” from Brussels that raise costs, cut profits and force up prices. The letter concluded that, “We believe that our economy can do better without being held back by the EU, thus we should vote to leave”.
The establishment is desperate to stifle any dissent – in March the British Chamber of Commerce’s Director General John Longworth was forced to resign for stating his personal opinion that we should leave. No one has so far been forced out of a job for saying we should say in.
Some say that if we leave the EU we would be like Norway and Switzerland who have to obey most EU laws, pay a contribution to the EU budget, and have open borders. Is this true?
No. When Britain leaves the EU it is not obliged to follow the so-called ‘Norwegian’ or ‘Swiss’ models. The Norwegians chose to be members of the European Economic Area [xvii], and Switzerland had agreed over 100 bilateral treaties which mean adopting most EU law without being members of the EEA or the EU.
Switzerland and Norway have a poor deal with the EU because the EU makes very little trading profit from Switzerland and Norway. The EU does not need Switzerland and Norway. Switzerland and Norway can be bullied. The opposite applies to the UK. EU countries make a trading profit with the EU of £60 billion per year. EU countries need to trade with the UK. How long would Spain and Portugal survive without exports of fruit to the UK and UK tourism? Both are already economic basket cases.
The Swiss Parliament recently voted to withdraw its 24 year-old application to join the EU because the costs of EU membership are too high. In 2006 the Swiss Federal Government carried out a study that calculated that full membership of the EU would cost up to six times that of their existing bilateral arrangements with the EU.
Haven’t some big businesses threatened to leave the UK if we leave the EU?
In February 2016, 36 of Britain’s top companies signed a letter to the Times arguing for Britain to stay in the EU. But two thirds of the 100 top companies did not sign. Those that declined to sign included, Barclays, Sainsbury’s and Tesco.
Other companies, Toyota, General Motors, BMW, Volkswagen, Airbus, Jaguar, Land Rover, Honda and Ford, have all stated their ongoing commitment to UK manufacturing, whatever the result of the Referendum. John Mills the millionaire Labour donor and founder of John Mills Ltd (JML) supporting Brexit, along with Joe Foster and John Caudwell the founders of Reebok and Phones 4U.
On 17th February 2016, 80 business leaders, including Pasha Khandaker, President of the UK Bangladesh Caterers Association, Moni Varma, owner of rice suppliers Veetee, and Tariq Usmani, CEO of Henley Homes, wrote to the Prime Minister saying that Britain’s ‘was damaging trade with the rest of the world’. They continued, “As long as Britain’s trade policy is controlled by the EU, we cannot sign bilateral free trade agreements with Pakistan, India, Bangladesh, Australia, New Zealand, or for that matter any other non-EU state”. They added, “Vested interests on the continent sustain a relatively protectionist policy. We have apply the EU’s common external tariff to exports to Commonwealth countries – hurting customers and consumers here”.
Aircraft maker Boeing chose Britain for its new European headquarters in March 2016. Sir Michael Arthur the President of Boeing UK and Ireland said that “The prosperous partnership between our country and our company goes from strength to strength”. Boeing employs 2,000 staff in the UK and has invested £1.8 billion.
Interestingly in 2013 Jim O’Neill, the former Chairman of Goldman Sachs’ asset management business said, “We should not be scared of leaving it [the EU] and exploring a without it. The opportunities that arise from a dramatically changing world are huge and I don’t think that a lot people in our area, never mind in Brussels, are that interested or understand it”.
But isn’t 50% of our trade with the EU?
No. This figure is exaggerated: it only refers to international trade: exports and imports. According to the Government’s Pink Book (2014) [iii] 44.4% of our total exports in goods and services were to EU countries. This figure is reduced when we take into account the so-called ‘Rotterdam effect’. Exports first landing in Rotterdam are counted as exports to Europe even when they are destined to pass on to other countries outside the EU such as China. Even a conservative estimate says the Rotterdam effect reduces the total figure to about 42.8%. So it is fairer to say that just under 43% of our international trade is with the EU.
Office of National Statistics figures show that only 15.6% of UK businesses are concerned with exports and imports. Of these no more than 5% trade with the EU. [iv] While approximately 20% of our economy is concerned with international trade approximately 80% of the economy is purely domestic within the UK. Of the 20% concerned with exports only approximately half of that goes to EU countries – and yet 100% of our businesses have to comply with EU laws and regulations.
Britain’s trade with the EU has been declining over the last twenty-five years. In 1999 54.7% of our international trade was with the EU. By 2014 that had reduced to 42.8% And again, to repeat, while this trade is important to Britain it would not be endangered when we leave the EU as it cannot put up arbitrary trade barriers against the UK.
But what about the international trade deals that the EU has negotiated with the rest of the world – would we not be excluded?
Britain is the fifth biggest economy in the world, and a major trading nation. Outside the EU those countries who signed the trade deals with the EU would surely want to continue mutually beneficial trading arrangements with the UK. They would have a great incentive to quickly agreeing a continuation of trade on the same terms. When Britain regains her seat on the WTO and control of our own international trade policy we could also no doubt negotiate better trade deals for ourselves – as we did it for hundreds of years or more before we joined the EU.
Would leaving the EU exclude Britain from the Single Market?
The EU and the Single Market are not the same thing. Norway, Iceland and Liechtenstein are members of the Single Market but not the EU. The EU has 28 members, the Single Market has 31. But even so, we don’t need to be in the EU or the Single Market in order to trade with it. . Many countries trade with the EU without finding it necessary to join the EU or the Single Market, for example China, India, Japan, the USA, the list is endless. World Trade Organisation rules prevent the erecting or arbitrary or unilateral trade barriers. Outside the EU Britain could negotiate a trade deal with the EU from a position of strength.
OK, but what about the EU’s Common External Tariffs?
The EU was formed as a Customs Union rather than a Free Trade Area. The EU erected trade barriers known as Common External Tariffs against non-EU countries.
The World Trade Organisation has been negotiating down trade barriers internationally for many years. Trade barriers are now generally low.
Pro-EU organisation ‘British Influence‘ states that “UK exporters would still have to pay 15% on average for food and 10% on cars to trade with the EU”[ii]. The UK could impose the same trade barriers. However, EU countries sell Britain far more than we buy from them. 10-15% on UK exports to the EU is very much smaller than 10-15% on EU imports to the UK. It would not be in the interests of EU to impose tariffs – they would lose billions.
Euro-realist ‘Business for Britain‘ issued a report that says that the tariffs borne by British exporters if we were outside the EU on exports to the EU itself (even if they were applied) would only be an average of 4.3%. ‘Business for Britain‘ calculates that the total costs to business would be lower than the current UK net contribution to the EU budget (which is of course is rising).
Outside the EU, it would be cheaper for the British government to pay exporters’ tariffs for them than rather than paying into the EU budget.