Leave Means Leave believes the EU’s Single Market is not all it is cracked-up to be:
The Single Market’s external customs tariff has impoverished developing nations by shutting them out from free trade with the UK and most of Europe.
By seeking to regulate away competitive advantage between nations and businesses the Single Market is becoming progressively economically stagnant.
The cost of being inside the Single Market (the EU membership fees and imposition of its laws) far outweighs the financial benefits of zero tariffs.
You do not have to be inside the Single Market to have access to it. Average tariffs for those outside it are only 1.09%, far less of a deterrent to trade than currency fluctuations or domestic taxes.
Having access to the Single Market – like the USA, China and Japan have – is preferable to being inside the single market where the UK has to pay a membership fee and is subject to the rule of a foreign court (the European Court of Justice), and must accept free movement of Labour.
VITAL TRADE FACTS
Leave Means Leave believes the UK’s trade will benefit from being outside the Single Market:
Trade is critical to the UK economy with UK exports of £669bn in 2015 – but it has the largest current account deficit in the G7, approaching 6% of GDP. Globally, the UK runs a substantial surplus in services and a substantial deficit in goods. Understanding the reason for this is critical to designing the right trade strategy post BREXIT.
The UK’s goods trade deficit with the EU was £89bn in 2015. The UK recorded a £10bn goods surplus with the America’s (largely the US). Leave Means Leave asks why should the UK have a goods surplus with the US, where there is no preferential trade deal, and a massive goods deficit with the Single Market where there is? Further, the UK service surplus with the US is approximately 50% higher than all 27 nations of the EU combined, again without any preferential deal.
The UK runs a trade surplus with the rest of the world and a very large deficit with the EU. This is a paradox – the UK underperforms in the regulatory regime it is tied into, but out-performs in the rest of the world where it is not. The reverse would be the expected outcome.
The EU is a declining bloc. Its GDP growth has lagged every other region in the world for a generation and the rate of decline is accelerating. It is highly regulated and resistant to reform. This has caused business to vote with its feet away from the declining EU to faster growth markets. In 1999 61% of UK trade was with the EU, now is 43%. By 2025 Global Britain estimates the EU will account for under 35% trade.
We believe structurally low EU economic growth and the nature of the Single Market, which favours trade in goods over the UK’s strategic advantage in services, has caused the UK to perform, from a trading perspective, so poorly with the EU and so much better with the rest of the world. These critical observations greatly undermine the case for remaining in the Single Market or EEA.
Global tariffs continue to fall. Average tariffs into the EU are now just above 1%. While they remain high in a few sectors, agricultural products being the prime example, the benefit from being within the single market from the global tariff regime is minimal.
Further it is a fallacy that one needs to be in the Single Market to trade with it. US, China, Japan and Australia all enjoy access so long as they meet the single market regulatory standards – just as the UK can trade with China so long as Chinese standards are met for its local market.
Not only does the Single Market give advantages to trade in goods over services, it also discriminates between raw materials and processing, forcing poor developing countries to export their commodities rather than develop their own manufacturing. This results in Germany – without growing a single coffee bean – making more profits from processing coffee beans than the whole of Africa does from exporting them.
Understanding the dynamics of the UK’s current trading position is critical in designing the right post BREXIT trade policy. It is clear from the UK’s performance from within the single market that something is badly amiss.
The key lesson is the UK does well with the world and very badly with the place the UK it is currently tied to and remaining in the Single Market will not improve this deficit. On the contrary, it may make matters worse as we are required to incorporate continuing EU single market related regulation into our domestic law without any say in its framing. This cannot constitute ‘leaving’ the EU.
If the UK remains tied to the EU single market regulatory regime it will continue to pull our political and economic focus towards the world’s least successful economic zone while tying us down with needless and expensive regulation.
Remaining in the Single Market, while being outside the EU, may well be worse than the current arrangements, unsatisfactory as they are. The UK would swap a current marginal influence on Single Market regulation (12% vote in the council of ministers) for no say in regulatory framework at all. The remain in the Single Market option is the no vote, low growth, regulatory burden, sovereignty illusion option locking in perpetual deficits – which is why No Deal is Better than a Bad Deal
our red lines
Six redlines that would ensure Leave means Leave
The European Court of Justice shall have no jurisdiction in the UK.
Control of migration into the UK will return to our own parliament with EU treated the same as non-EU nations.
There shall be no fee paid by the UK to the EU for access to the ‘single market’ in goods.
The UK will leave the Common Agriculture and Common Fisheries policies (CAP & CFP) and devolve responsibility for agriculture and fisheries to the four nations of the UK.
The UK contribution to the European Development Fund should end when the UK leaves the EU (not 2020).
The UK shall be free to negotiate in advance bilateral trade deals for introduction on the day of Brexit.
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