1 June 2020

The UK must stand firm and reject the EU’s ‘level playing field’


Logic, trade and the European Union have long made an uneasy trio. Take, for example, Michel Barnier’s insistence on this famed “level playing field” as a precondition for any post-Brexit trade deal.

If this is, as some seem to claim, a ‘battle’ rather than a negotiation towards a mutually agreeable outcome, the correct British response should be to take whatever advantage we can to win. Of course, trade isn’t really a battle, but getting that concept across in a world awash with stories about ‘trade wars’ is rather tricky – as is convincing people that the real winners from our exports are the foreigners who get to consume them, and vice versa for imports to this country.

To return to the matter in hand, here’s how the Times reports M. Barnier’s view of a possible EU-UK deal.

Concerns focus on the maintenance of a level playing field for British and European businesses on environmental, social and labour standards, security, governance and conditions on future access for European fishing fleet in British waters. Barnier said: “Brexit is lose-lose. Nobody has been able to show there’s any added value to Brexit — not so far. Not even [Nigel] Farage.

Leaving Nigel out of this, it’s trivially easy to show what the “added value” of Brexit is to the UK, namely not having to meet the EU’s standards on environmental, social and labour standards.

Think it through – why are Barnier and the EU so insistent that UK businesses meet these standards? Because they know that they are a cost. They make production more expensive, those that follow them therefore produce goods and services at higher prices. If Britain were to allow people to not meet these standards then goods and services produced here would be for sale cheaper there. This really is the only way to see their repeated insistence on the hallowed Level Playing Field.

To put it even more simply – the EU hobbles its own producers, so they demand we do the same here. Only if we agree to those strictures can we freely export our products to the single market – and don’t forget that what is bought, from whom and under what terms then shipped into the UK is something that will be decided by the UK alone.

With all that in mind, what should the UK’s response be?

Logically, we should stand firm, refuse to hobble our economy and gain the upper hand in that so-called trade ‘battle’. Or, to be a little more sophisticated, we must weigh the costs and benefits of the conditions the EU is demanding.

Insisting on protections for producers will make the UK poorer regardless of our trade outside these isles. Being able to export things to the EU without any trade barriers will make us richer. Note that’s not because we are able to export more easily, but because we can buy more foreign goods – the whole point of trade – at a lower cost. The question is, how do we balance those two factors?

Bear in mind that some 80% of the UK economy has nothing at all to do with trade, it’s entirely within our own national borders. Some 50% of trade is with the EU, of which roughly half is exports to them, which means UK exports to the EU make up about 5% of our economy. The benefits of better trading terms with the single market would have to be truly extraordinary to justify extra restrictions on the 80% of our economy that is purely domestic – and such terms, of course, are not on offer.

To put the logic in terms even a continental politician might be able to understand. Your argument, M. Barnier, is that without burdening the British economy with all those rules and constraints, then we would have a more competitive economy than your member states. Great, given the absence of recent World Cups, we’ll take a victory where we can. We’ll take the uneven playing field and the win, thank you. We’ll also all get richer as we do so, having freed up our domestic economy. Far from the ‘lose-lose’ he claims, that makes Brexit a ‘win-win’ for the UK.

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Tim Worstall works for the Continental Telegraph and the Adam Smith Institute.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.