Douglas Carswell

16 JUN 2015

The free trade case for Out

In 2006, 65 percent of UK exports went to the European Union. Last year, that figure had plummeted to 46 percent, according to ONS data.

Europe grows less important with each new set of trade statistics not merely because of the Euro crisis. Something more profound is happening to world trade.

Back in the 1990s, international trade meant developed countries buying and selling things from other developed nations - with a little bit of import and export with the less developed nations on the side. As late as 1990, trade between less developed nations was minuscule, accounting for a few percentage points of total global commerce.

This has changed dramatically in little more than a decade. Today, over a third of all global trade is between developing / emerging economies. It's happening without the old advanced Western countries involvement at all.

International trade in 2014, according to Liam Halligan, was worth $18,500 Billion. Of that, $6,000 Billion was trade between the developing world.

Africa's most important trade partners are no longer European or North American, but Asian. As late as 2000, Chinese trade with the whole of South America was worth less than $10 Billion. By 2013, it was worth $280 Billion. In 2009, China overtook America as Brazil's premier trading partner.

Of course the EU is becoming less important for the UK.  Our trade deficit would be in an even worse state it that were not the case.

Rather than sitting comfortably inside the world's only declining trade block, Britain needs to look to do deals with the parts of the world that are growing. Trade between the old industrialised states has been virtually stagnant for since 2007.

Being in the EU means we are stuck behind a common external tariff.  Worse, every British business is subject to a burdensome regulatory framework.  And we can't make trade arrangements with the parts of the plaent where the growth is.

"Being part of the EU means we have clout" insist the Brussels lobby. "It allows us to negotiate favourable terms".

On the contrary. Being part of the EU means not having trade deals at all. Outside the EU, Switzerland now has a trade agreement with China. When might we?  Due to various vested interests in Brussels, Britain does not even have free trade with India – despite the fact that Jaguar Land rover, a highly successful UK based business, is owned by an Indian parent company!

The idea that we need diplomatic clout to trade with the world is based on a misunderstanding as to why trade happens. Trade occurs when someone in one country wants to buy from someone in another. It's a question of mutual advantage between buyer and seller, not how many diplomats you have sitting at the top table.

For trade to happen, officialdom needs to get out of the way. That requires mutual standard recognition so that if it is legal to produce and sell product X in one country, it's legal to buy it in another.

When UK trade ministers (who despite all the first class air travel are famously bad at boosting trade) talk about negotiating favourable trade deals, what they really have in mind is more regulation. Their idea of a trade deal is to make it impossible to produce and sell product X in any country unless it conforms to a uniform regulatory standard. Big vested corporate interests tend to encourage this kind of arrangement, since they get to decide those single regulatory standards.

If Britain left the EU, we could, under Article 50, offer the EU genuine free trade. If it was legal to buy and sell a product or service in Colchester, it would be legal to buy and sell it in Cologne or Copenhagen too – and vice versa.

Of course, the EU might reject such a trade deal, insisting that if we wanted to sell to the EU we would have to comply with Single Market rules. But we have to do that already today.

If we only had to comply with Single Market rules when selling to the Single Market, we would be free from much of the harmful EU regulation when seeking to sell to the world. Given that almost 60 percent of our exports are now to the rest of the world, it makes little sense to bound 100 percent by every Single Market regulation.

If the EU rejected real free trade, and insisted that when selling to the Single Market we had to comply with Single Market rules, fine. There would be nothing to stop us going on to negotiate genuine free trade with the parts of the world that are prospering.

Given that the EU accounts for a rapidly diminishing share of our total exports, the case for being free to trade with the world beyond Europe grows every day.

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