Some cracking stuff by a guy called Barney Lane over on Quora. Here he explains Trade
For an institution that’s supposed to promote free trade, the EU’s record is appalling. Despite existing for nearly 70 years, it has failed to secure a free trade agreement with any of the world’s largest countries. Just contemplate that for one moment. The EU has existed for 7 decades. How many of the world’s top economies does it enjoy free trade with? None.
No free trade deal with the USA.
No free trade deal with Japan.
No free trade deal with China.
And let me ask you again, how long has it had to get one in place? Answer: nearly 70 years.
The EU’s record on trade is quite outrageously terrible. The inherently conflicting interests that exist within such a large, diverse bloc have paralysed it. When 7 years of talks can be vetoed by Wallonia (a small part of Belgium), do you see how hard it is to agree a deal that pisses nobody off? Small countries like Switzerland, Chile and Singapore have all done better at securing good trade deals, than the EU. They have fewer special interests to appease.
It gets worse. 40% of the EU’s trade deals don’t even include services. Again, for small countries like Switzerland, Chile and Singapore, over 90% of their trade deals include services.
Now, if you’re primarily a manufacturing exporter, if your largest export market is France and if most of your trade is inside the EU, you might not care about any of the above.
But that’s opposite to what the UK is. Most of our exports are outside the EU. Relatively speaking, we are a services exporter (the world’s second largest). Our largest national export market is the USA, a country with whom the EU has failed to secure a trade deal with, even after nearly 70 years.
Compare that with Singapore. It has existed since 1965, yet in 2002 it signed a free trade deal with Japan and in 2003, it signed one with the USA. Singapore is a member of ASEAN, which in 2010 signed a free trade agreement with China. And (unlike the EU) the vast majority of Singapore’s trade deals include services.
Now, some people glibly predict the UK’s post-EU trade deals won’t be “as good” as the ones it currently enjoys by virtue of its EU membership because the EU is this great hulking behemoth, while the UK is barely an amoeba. Really?
There are several problems with this argument. One is, aside from questions of scope, free trade is basically free trade. Free trade deals are reciprocal. Access to one market in exchange for access to another. It’s not good or bad. The only question is what’s included and we’ve already seen the EU is quite bad at getting broadly based free trade agreements. Worse than several much smaller countries.
Another problem with the argument is that it assumes you get some kind of leverage because of your size. Nonsense. If that were the case, the USA would have free trade deals with every country in the world, on extremely exploitative terms. But we know that’s not the case.
The US obviously found it worth getting out of bed to deal with Singapore; a pipsqueak of a nation. Yet do we hear horror stories about an impoverished Singapore being horribly bullied around by big bad USA? We do not. The time-consuming part of negotiating trade deals is agreeing carve-outs, or departures from true free trade. If you believe in free trade, a simple, quickie deal is generally better than a big complicated one. It has fewer exceptions.
No. Arguing that free trade deals can only be good if you’re big, is to misunderstand the nature of free trade. Free trade isn’t about leverage or outmuscling an opponent, it’s all and only about mutual advantage.
Mutual advantage is something the UK offers in spades. It’s a huge market for imported manufactured goods and raw materials and is second in the world only to the USA in its finance, insurance and professional services. Its technology hubs in London and the M4-corridor, and scientific research hubs centred around its world-leading universities, are the strongest in Europe. In these areas, we outclass China, India, Japan and the EU-27 put together. We have win-win potential made in heaven. Yet today, we’re not even allowed to talk about it because our trade relations are determined on our behalf, by the EU!
Now, as we’ve seen:
it’s not all about size but even if it were, the UK is no minnow
it’s all and only about mutual advantage
The UK has ready-made potential for hand-in-glove relationships with some of the world’s largest and fastest growing economies; those exact same economies with which the EU has failed to agree terms, even after seven decades.
For those reasons, I am quite confident in predicting that within years of departing the EU, the UK will have substantially better trade agreements than the EU ever succeeded in negotiating on our behalf, in its entire history.
I mentioned above that the UK’s largest national export market is the USA. Now, guess what the EU27’s largest national export market is. Go on, what do you think it is? USA?
Nope, it’s the UK. In a nutshell you see how — trade-wise — the UK’s and the EU’s interests are simply not aligned. Our largest market is not even in the EU, but the EU’s largest market, is us! This is the single fact that explains why the UK wants to leave the EU, but the EU wants the UK to change its mind. As a supporter of free trade, I’m happy that the EU has unfettered access to its most important national market. However, I’m not over the moon that the EU wants to stop us having unfettered access to our most important national market.
Quite why some people still seem to think the UK is better off inside the EU leaves me baffled.