The UK’s economic interests no longer coincide with those of the EU, and certainly not with Wallonia
We can always trust the establishment-leaning parts of our broadcast media to put a grim interpretation on international events as they impact on the UK. No sooner had the EU-Canadian trade deal known as CETA failed to obtain the required approval of Wallonia, a small region of Belgium, than it was being trumpeted as a blow to the Prime Minister and the UK’s own hopes of obtaining our own agreement.
The doubters and second-guessers could not be more wrong. What the EU’s difficulty in adopting CETA shows is that the British people were right in their resolve to take the UK out of the failing European Union.
Typically the broadcast reporting of what are legally defined definitions has been sloppy. Sky News reported that the trade agreement “is supposed to allow Canada access to EU markets and vice versa” but this is untrue. This fallacy about “access” is all too common. Canada already has access to all EU markets and vice versa under World Trade Organisation rules. So does any other country, as will the UK.
The CETA deal is about preferential access and that is quite a big difference, for it involves the abolition of (mainly) EU Custom Union tariffs. It is preferential access that the UK is also seeking to achieve, but will the price be worth it and will it be against the British people voting to “take back control’ of their own country?
The record of the EU in achieving trade deals is very poor. Both Switzerland and Chile for example have more deals worth more in value than the EU. The reason the EU is so antediluvian has been shown to the world. It is near impossible to obtain the agreement of member states to sign up to trade deals that lift every boat no matter the size of the vessel.
Some member states or their regions would rather subscribe to backward-looking protectionism than embrace open-hearted trade.
The CETA deal may yet be saved by typical last-minute trade-offs cooked-up in Brussels, but even so the criticism stands. The EU is built upon external protectionism where its pernicious Customs Union tariff walls give small regions such as Wallonia an incentive to block competitive imports that could benefit customers in the rest of the EU.
I have no doubt the UK outside the EU could have crafted a superior deal with Canada that included financial services. Indeed, we could have an entirely 100% free trade deal with a country that we have always been very close to through common blood and toil.
The difficulty over the CETA negotiation, which has already taken seven years and may now fail, tells us the EU and its internal market no longer in the UK’s strategic interest. Canada’s trade with the EU is more important to it than trade with Canada is to the EU – the opposite is the case for EU-UK trade. But if the EU cannot cut a deal with as willing a partner as Canada then the EU’s prospects of achieving the same with other key economies such as the USA, China and India, to name a few, is remote.
The export of goods and services between the UK and the EU dwarves the trade between Canada and the EU. Canada is the twelfth most important trading partner of the EU, accounting for only 1.7% of the EU’s external trade, while the UK is the EU’s largest market, accounting for around eight times the Canadian amount. The £281bn EU-UK trade delivers an £110bn EU surplus against the UK.
Thus the EU has far more at stake in securing a deal with the UK than Canada and the EU have together in securing a deal between themselves. For the EU-UK negotiations this could become the crucial factor even for small protectionist EU regions who have more reason to see advantages in maintaining preferential access to the UK market.
Further, the idea that this somehow puts the Prime Minister and Leave supporters on the back foot is too pessimistic a view. For a start, the UK, as an existing member of the EU, is in complete compliance with existing EU laws and regulations in the Acquis Communautaire and so does not have to match up to technical requirements for goods and services going to the EU.
But even if the remainers are right, and a deal with the EU cannot be secured due to the self-interest and self-harming of affronted European politicians, the UK is in the stronger position – and this is what EU exporters fear. We will be free to secure our own trade deals with a kaleidoscope of growing economies while the EU will continue to stagnate.
UK trade with the EU has dropped from 63% of goods and services in 1999 to 43% today and is expected to be at 35% by 2025. The EU has been the world’s economic growth deadweight for a generation now, holding everyone back while trumpeting a fallacious success.
The UK should not need to wait on the word of Wallonia, and after we leave the there will be no such restraint. Theresa May and Liam Fox are already informally teeing-up agreements with India and at least 26 other nations that have expressed an interest in bilateral deal with us.
The UK’s economic interests no longer coincide with those of the EU, and certainly not with Wallonia. That being the case, we should make it clear to our friends in the EU that we are willing to negotiate a deal in the two years that follow from the triggering of Article 50, but they must understand that for us no deal will be better than a bad deal. The government should be willing to forgo preferential access to their internal market if the price is too high or the talks take too long. Liam Fox should clear his diary and get over to Canada to reassure its people that the UK wants its own deal – one that will further cement our common bond. Our future is in trading with our eyes on international horizons, open to the whole world and not held back by protectionist remainers in Britain or Wallonian politicians and their like in the EU.