6 April 2016

Brexit campaigners have more positions than the Kama Sutra

By Nick Herbert MP

Do you have a clear idea of what Britain’s trade arrangements would be if we left the EU? Don’t feel embarrassed if not – because neither do Brexit campaigners. In fact they’ve adopted more positions than the Kama Sutra.

Their first idea was that Britain should forge a new alliance, the “Anglosphere”, attractive because it wasn’t French or German, spoke English, played cricket, and owing to its historic ties would embrace the motherland once again. But this argument ran into the buffers when the Anglosphere told them it would rather Britain stayed in the EU. John Key, Prime Minister of New Zealand and Julie Bishop, Australia’s foreign minister, are the latest to endorse remain. Even the former Australian Prime Minister, Tony Abbott – no friend of the EU – believes it’s better for Britain to stay and reform from within. The United States has shown unusual bipartisan consensus on the issue: both President Obama and Senator John McCain want us to remain. Where once Brexit campaigners courted leaders across the Atlantic and the Pacific, they are now reduced to demanding that the Anglosphere keeps its opinion to itself. Their one significant friend, Donald Trump, is unlikely to take that advice.

Next, Brexit campaigners eulogised about trade agreements with emerging “BRICS” economies. Out of the EU, they said, Britain would have signed a free trade agreement with China years ago. But when the Port Talbot crisis hit the headlines last week they suddenly changed their tune. Now the most ardent free market ideologues have shamelessly morphed into protectionists, blaming the EU for preventing us from propping up the steel industry. It wasn’t long ago that the Mayor of London very publicly toured China and defended its investment in London’s infrastructure. Only last month, he said that Britain could strike free trade deals “based on trade and getting rid of tariffs”. Now he lambasts those who “suck up to the Chinese” and criticises Brussels for preventing tariffs against Beijing.

There is clearly a strong case for anti-dumping measures of the kind which Britain has successfully been pursuing in Brussels. But raising tariffs generally would be counterproductive. Unlike the US, we are a net importer of steel. Such action would increase the price, raising costs for our car and aerospace industries – with the potential loss of more jobs in these industries than we would keep in steel production. By all means let’s have the debate. But those whose declared goal last week was free trade agreements with countries like China cannot this week credibly call for trade restrictions with them, or criticise Brussels for disallowing protectionist measures.

Brexit campaigners are making an unattractive habit of blaming the EU for any calamity, even rushing to Twitter after the Brussels terror attack while emergency workers continued to rescue victims. But their opportunistic attempt to ignore the fact of global overproduction and pretend that quitting the EU would solve Port Talbot’s problems won’t wash. Half of Britain’s steel exports go to the EU. Massive economic uncertainty as we negotiate a new relationship, and a risk of the EU imposing costly anti-dumping tariffs once we’ve left, wouldn’t help the steel industry – they could finish it off.

It’s hard to keep up with the differing models for Britain’s trade arrangements outside the EU which Brexit campaigners suggest. They are split between the anti-immigration Farage camp who want to pull up the drawbridge, even if it harms Britain’s economy, and the internationalist ideologues who want Britain to be the new Hong Kong with “generous levels” of migration.

Nor can they decide what Britain outside the EU would look like. Some of them want to rejoin the EU in a fantasy reunion after a second imaginary referendum. Many want to be like Norway, which would still mean paying into the EU, accepting free movement (Norway takes in twice as many migrants per head as we do), and being subject to EU laws without having a vote or veto – hardly reclaiming sovereignty. Others want to be like Switzerland or Canada, whose arrangements took years to negotiate and give only limited access to the single market. Boris Johnson flirted with a Canada-style deal only to abandon the idea days later. Some Brexit campaigners even fall back on adopting World Trade Organisation rules, which would mean damaging new tariffs on 90 per cent of our exports to the EU. Oh, and by the way, there are WTO rules on state aid as well.

Fundamental to the Brexiteers’ objections to Europe’s single market is that it necessitates supranational adjudication of the trade rules, resulting – they claim – in a loss of sovereignty. But so, if to a lesser extent, do other modern trade agreements – including the North American Free Trade Agreement (NAFTA), Canada’s deal with EU, and the proposed Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU. Tellingly, Brexit campaigners have even begun to turn against TTIP, a deal which could boost the UK’s economy by £10 billion. Last week Peter Lilley said that the UK should negotiate only “a pure free trade agreement restricted to abolishing remaining tariffs” – which he admits would yield nothing like the benefits.

The EU is now much more than a tariff-free zone for goods. As the single market for services is completed, the opportunities for Britain’s modern economy are immense. Our service industries are growing at a rate of nearly 3 per cent a year on average. They account for almost 80 per cent of our economy and 40 per cent of all British exports – with Europe being by far our biggest exporting market. So the 116,000 small businesses which export services to the EU, and the 2 million people in jobs which are either directly or indirectly linked to service export to the EU, have a huge interest in maintaining full access to the single market. They are unlikely to be impressed with the Brexit campaign’s blithe assurance that it will somehow be alright on the night. And as the Prime Minister said this week, “no real-world alternative to EU membership would come close to what we have now”.

In recent days one independent economic study after another has shown that Brexit would result in economic damage for our economy – and not just a temporary shock, but a permanent loss of output. There would be a cost in jobs, prosperity and our ability to fund public services. Hard working people would pay the price. It’s no good Brexit campaigners crying foul as one credible voice after another warns of the consequences. Since they cannot guarantee the same access to the world’s largest market as businesses enjoy now, they should hardly be surprised that business is so concerned. Taken together, the surveys show that a huge majority of firms – 80 per cent – want to remain in the EU.

Brexit campaigners have had 40 years to come up with an alternative to the EU. Their failure to do so speaks volumes. They can’t even agree on the principles of Britain’s trading relations with the world. Do they want to be open to trade, or retreat behind a tariff wall? Do they want to trade with China, or start a trade war with it? Do they want to do a deal that include services, or just forget about the single biggest component of our economy? And, most importantly, what do they say to the millions of families whose standard of living would be put at risk by the years of damaging uncertainty that would ensue? Perhaps in the remaining 77 days before the referendum they will come up with an answer.

Nick Herbert is Conservative MP for Arundel & South Downs and Chairman of Conservatives IN.