28 November 2016

The Remainers still don’t understand how free trade works


Nick Clegg and his friends at Open Britain have decided to treat us to another report on the horrors of Brexit and of being outside the Single Market. Mr Clegg will be joined by Chuka Umunna and Anna Soubry today to detail the coming disaster.

It goes without saying, of course, that their underlying report, from the Centre for Economics and Business Research, is wrong. Or perhaps it does need to be said.  Yet again they are making a grossly incorrect statement:

“If the UK ends up outside of the single market and without a free trade arrangement, importers and exporters would face tariffs.”

But, let me say again: there is no requirement whatsoever, in EU, UK, WTO or Uncle Tom Cobbleigh’s rules that the UK must impose tariffs upon imports in the event of Brexit.

Quite the contrary, the EU system currently insists that we impose tariffs, incredibly stupidly, upon the nice cheap things that we want to buy from foreigners if those nice cheap things happen to be made outside the trade block. Brexit would free us from having to tax what we ourselves desire.

The essential structure of the CEBR report is to look at the varied sectors of our economy and work out which are most entwined with economies across the Channel. Once you’ve added in those directly involved with exports to Europe, then apparently some 10 per cent of our economy is involved in such trade.

At which point we are warned that:

“The UK, in or out of the Single Market, will have to comply with market-relevant EU regulations if it wishes to trade with the EU. The important issues are the initial form of compliance and the influence that the UK can eventually negotiate.”

This is the horror that must be avoided. Except, of course, this is the whole damn point. Currently we must obey all EU regulations upon everything in 100 per cent of our economy. If we leave, then only that 10 per cent of our economy will have to obey those regulations.

Just as, obviously, our exports to India obey Indian regulations, to the US, American. The 90 per cent of our economy that is not related to the Continent can and, sensibly will, remain blissfully free from the ministrations of the eurocrats.

So Mr Dyson will not be able to send a vacuum cleaner with an impermissibly large motor to someone in Dijon. But someone in Dundee will be free to purchase one if that is what they want.

Mr Clegg and his pals are complaining that only the export industries will be subject to EU rules – but that is exactly the point the Brexiteers have been making for a decade, that 90 per cent of the economy will be blissfully free of such regulations.

Didn’t they notice what we were saying all that time? And when will they manage to find some outcome that we actually ought to worry about?

Tim Worstall is senior fellow at the Adam Smith Institute.