We do not need to be a member of the EU to trade with its member states.
45% of our total trade is with the EU26, adjusting for exports via Rotterdam and Antwerp whose destination or ownership is outside the EU1. But our trade with the EU26 is far less than the 2 strongest European economies. 80% of Norway’s and 60% of Switzerland’s total exports are with the Euro area2. Yet they are not in the EU. Nor is the expanding export trade of China with the EU26 inhibited by not being in the EU and subject to its regulatory regime. The USA exports more to the EU than the UK without being governed by it.
The EU itself has free trade agreements with non-EU countries including Israel, Mexico, Switzerland, Turkey and Norway. With a positive trading balance with Britain of £28bn3 and over 6m EU jobs depending on it4 is it surely inconceivable that the EU would imperil such trade by refusing us a workable free trade agreement.
Can we be confident that our global trade will improve if we leave the EU?
The EU is a customs union not a free trade area. It distorts free trade by its tariffs on non EU imports and by the CAP. It also applies direct protectionism as with the quotas on sugar cane which are putting hundreds of jobs at risk at Tate & Lyle5. The most authoritative studies show that the liberalisation of trade by leaving the EU will increase UK GDP by 3% 6 or £45bn each year7. Whilst we cannot assume that all our trade would be entirely free the benefits would be substantial.
We joined the Common Market at a time of high world tariffs. Lower trade barriers were then a distinct benefit. But that is no longer so. GATT has reduced tariffs on industrial goods from over 20% to well under 5% and services are now included. Governments of great economic areas, including China, India and Brazil – once closed to our exports – have now embraced free trade as a generator of prosperity.
Leaving the EU will mean that we will again have our own voice in the WTO and be free to negotiate free trade deals.
The EU prohibits Britain entering into free trade agreements with other countries. Yet even so we had a 2011 surplus on overall current account with non-EU countries of £17bn8 against a deficit of £46bn with the EU27. Our trade with the rest of the world has grown by over 12% since 2000. Our most successful trade is with the USA (surplus £22bn) but Australasia (£9.8bn), Switzerland (£8.5bn), Singapore (£4.3bn), Brazil (£2.4bn), and South Africa (£2.1bn) contribute heavily. We are a great trading nation ranking 5th in the world9 with unique historic global reach. Such are the facts.
All this signifies a far better future for Britain as a trading nation out of the EU.
1 Ruth Lea and Brian Binley MP. Britain and Europe: a new relationship 2012 at p7.
2 Schroders, Thomson Datastream October 2011.
3 ONS Pink Book 2012 Chapter 9 p134
4 Ruth Lea Global Vision Perspective April 2008. Britain and Europe: a new relationship 2012 p9.
5 Professor Tim Congdon CBE How much does the European Union cost Britain? September 2012
6 Professor Patrick Minford and others Should Britain Leave the EU Institute of Economic Affairs 2005
7 Professor Tim Congdon CBE How much does the European Union cost Britain? September 2012
8 ONS Pink Book 2012 Chapter 9.1 Summary Current Transactions 2011.
9 IMF Balance of Payments Statistics Yearbook 2011.