WTO terms are not frightening – they are just normal business

Pity the poor British businesses who trade with America! Imagine the impossible challenges they face – because they already suffer the fate that we are told is in store for British companies trading with the EU if we leave without a deal. Exporters to the US have already “fallen off a cliff ”, “crashed out”, suffered “catastrophe”. That is to say they trade on the same World Trade Organisation (WTO) terms businesses will face when selling goods to Europe if we leave without a trade deal.

Yet the odd thing is they are doing rather well. The US is our biggest national export market. We run a surplus on our trade with America but a huge deficit on our trade with the EU. And it’s not just with America. Our exports to all the countries we trade with on WTO terms have grown three times as fast as our trade with the single market since it began in the Nineties.

The truth is that WTO terms – far from being a fate worse than death – are the normal basis on which countries trade. They were designed as a safety net to protect member states from discrimination and guarantee each other on Most Favoured Nation terms.

I know that was the objective since I spent nine days negotiating the Uruguay Round Trade Treaty, which created the WTO.

So what is so frightening about leaving without a free trade deal? It would save us the £39billion “divorce” bill. The main negative is that our exporters would face EU tariffs. It would be better to continue trading with zero tariffs under a Canada-type deal, but that could be easier to negotiate once we leave. However, the Uruguay Round, as well as setting up the WTO, halved tariffs between industrialised countries. So the average tariff British exporters would bear is 4 per cent – small beer beside the 15 per cent boost to their competitiveness from the exchange rate movement since the referendum. There would be winners and losers – a 10 per cent tariff on cars, higher still on food. But applying EU tariffs to our imports from Europe would yield £13billion. Even if we slash those tariffs, as we should, it would leave enough to compensate the losers.

Some argue that tariff-free access to the EU market was worth paying for.

But our £10billion net contribution is 7 per cent of the value of our exports. Paying 7 per cent to avoid 4 per cent was not a good deal!

Moreover, we will be free to join the Trans-pacific Partnership and negotiate trade deals with America and others. The truth is that WTO terms in themselves are not frightening, indeed in some respects they are reassuring.

But when Remainers talk about “no deal”, they invoke something else. They assume the EU would engage in a campaign of hostile non-cooperation against us. They will hold up our exports at Calais, delay recognising that British goods comply with EU standards, even though initially UK and EU standards would be identical, and refuse to let planes land etc.

Let us be quite clear: this would be a more hostile action against a friend and ally than the EU applies to any country with the possible exception of North Korea.

To be fair to the EU, it is not threatening all this. The French authorities in Calais repudiate the idea of a go-slow on UK vehicles as “economic suicide” – rightly since Belgian and Dutch ports are eager to offer our traders a better deal.

Deliberate delays would be a breach of three treaty commitments (the original WTO treaty, the Trade Facilitation Agreement and the Lisbon Treaty requiring the EU to behave in a neighbourly fashion towards adjacent states). The paradox is that it is diehard Remainers in this country who threaten this. They want us to revoke our decision to leave an organisation that they postulate would use illegal bullying to punish us (harming themselves) if we do.

The threat is intended to portray leaving the EU as costly. In fact, it demonstrates that membership has no significant benefits. If the positive benefits of membership were significant, their loss would be deterrent enough against leaving.