Dealing in disaster
MEP The idea that Britain can do better outside the EU is just fiction
Brexiteers including Jacob Rees-Mogg and Boris Johnson say crashing out of the customs union and single market on March 29 will let the UK strike lucrative new international trade agreements.
But, here, Scottish MEP David Martin – a former vicepresident of the European Parliament and lead reporter on the Maastricht and Amsterdam treaties – argues Britain will struggle even to replicate the deals already in place.
Less well understood is the fact that we are also leaving trade deals that the EU has struck with more than 70 countries covering close to 50 per cent of the world.
It is a nonsense the Brexiteers are pushing on trade – the idea that Britain can get better deals with countries around the globe than a place the size of the EU is just complete fiction.
They say they don’t want to be in the customs union but, in the same breath, admit their plan is to try to replicate the agreements we already have. The problem is that even to strike those same deals will be extremely difficult.
Should Theresa May’s withdrawal plan or something akin to it survive, you will have this transition period for two years during which we’ll hope to roll over all the trade agreements the EU has at the present time.
So Britain will ask Japan and other countries whether they want to copy and paste their EU agreements into a UK agreement or negotiate separate deals.
In my view, most countries will say they want a new deal because the EU will always have been able to squeeze more out of them than a smaller entity like the UK.
Japan, for example, was desperate to do a deal with the EU because it gave access to a market of half a billion people – the UK just doesn’t have that same bargaining power.
The deal that has just come into force with Japan means it can export cars to the EU with no tariffs. If we leave without a deal, Britain will have a 10 per cent tariff to sell cars into the European market, so why would Japan continue to produce cars in the UK in these circumstances? I think we’re already seeing the repercussions of this in the announcement from Nissan that they are reducing future investments in the UK.
Meanwhile, the price we would need to pay for a deal with America – and I know we have heard this before but it is true – would be to allow chlorinated chicken, hormone-injected beef and cheap agricultural products that would undermine our farmers.
In Scotland, the trade deals that we have through the EU have been good for the petrochemical industry in Grangemouth. They have given us better access to the Korean market and Japan has been opened up enormously.
All the deals have made it easier for Scottish whisky to get access to third markets, either by giving name protection so nobody else can sell something like it and call it Scottish whisky or by reducing tariffs – and in some cases both.
In the agricultural field, some of these countries which were previously very closed to our food exports are opening up, offering enormous potential to businesses.
If we crash out without a deal, I doubt it will be as dramatic as the headlines about running out of medicines and food. My greater fear is Britain will just slowly decline as an economy.
We are already seeing very little investment in Scottish industry and that eventually feeds through to jobs and into competitiveness.
In 20 years’ time, we will look at this and it will be too late and we will find other things to blame for why it happened.
There’s historic justification for this view because when we joined the European project in the 70s – and then there were only six countries compared with 27 today – it was because the countries of the Common Market, as it was then, were doing much better than we were. The only explanation was that they had a much bigger market on their doorstep.
In terms of the implications this has for Scottish independence, there are two opposing thoughts in my mind. On one hand, I don’t want to be attached to an England that’s more insular and, as a result, slowly declining economically.
On the other hand, I look at the difficulties we are having trying to leave a union we have been in for 45 years and I wonder how much chaos it would cause to leave one we have been in for 300 years.
If we ended up with full membership of the customs union and close to full membership of the single market, then dire predictions may not come to pass.
But if we end up with World Trade Organisation rules, as the Tories keep talking about, then I think we will be in deep trouble.
The Prime Minister is playing a dangerous game of running the clock down. She’s hoping the Commons blinks and accepts something close to the deal on the table or the EU blinks and offers a radical change to the backstop – as things stand, I don’t see either happening.
My feeling is we’re going to need an extension to Article 50 – the problem is that we can extend but don’t know what the solution is.
The potential impact on jobs and investment of leaving the EU single market of more than half a billion people is well documented.