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Can we solve the trade problem while keeping the spirit of Brexit in place?

Submitted by on 30 Sep 2016 – 17:00

Pondering over the UK’s trade problem and the essence of the Leave camp, The Rt Hon John Redwood MP, the former cabinet minister, argues that Britain need not belong to the single market in order to trade with the continent. He also notes that the aim of Britain’s electorate was not to trigger renegotiation with the EU, but to end up with some version of membership which the UK can live with.

The electorate of Britain voted to leave the European Union. They did so because they liked the idea that ‘we take back control of our law making, our borders and our money.’ The Brexit campaign was very clear. The aim was not to trigger renegotiation with the EU, but to end up with some version of membership which the UK can live with. Amidst criticisms of the campaign literature published during the EU referendum campaign, the government was equally clear. It stated in its official communiqué to every voter that voting to leave meant we would leave the EU. The government promised to execute the wishes of the people.

There was no stipulation that more than a simple majority was needed, and no provision for a second referendum. Indeed, the Prime Minister unequivocally ruled that out, in support of both campaign teams. But now some people want to slow down the exit process, or turn it into some new arrangement which ties us into parts of EU law making, requiring us to continue making some financial contributions, and allow freedom of movement between the UK and the EU. None of it is in the spirit of Brexit. All these concerns were strongly debated before the plebiscite, and Leave made clear its wish to leave with no EEA or single market membership.

It’s rather surprising that some still continue to think that we need to belong to the single market in order to trade with the continent. Try telling that to China or the USA or India, who trade with the EU on a daily basis, without belonging to the so called single market. I recall only too well, all the meetings I had to attend when I was Britain’s single market minister. Far from the single market being some priceless creation that speeds trade and generates prosperity, my work told me that it was a “large power grab” by the EU. Using the excuse that it would help trade if more central control was exercised over a wide range of matters, the EU brought forward a complex and voluminous legislative programme that included the environment, health and safety, employment law, transport, energy, communications, competition and much else besides.

In many cases, it was difficult to see the relevance of the measure to more trade. In some cases, the draft laws were hostile to enterprise. Most of it went through qualified majority votes, so as Britain’s business minister I had to build alliances to  prevent or water down the most damaging proposals. At its best, it created common standards and specifications to make the task of some exporters to the EU a bit easier. At its worst, it locked the EU into product designs and technologies that were not optimal but mandatory.

To the extent that it helps exporters to the EU, and that all EU countries have to ask for the same specification of certain goods and products, this is a benefit that applies equally to non members of the EU and single market as well as to members. To the extent that it limits competition, innovation and choice, it slows down the EU, relative to the rest of the world. The UK’s growth rate has been slower in the EU than it was after the war before we entered the EU. There was neither any increase in Britain’s growth rate when the so called single market in goods was created in 1992, nor was there any acceleration in growth since the advent of many more service sector regulations and directives in the century.

The UK should get on with the task of leaving the EU, by repealing the 1972 Act and notifying the EU that the UK is leaving under Article 50, using our constitutional procedures.  I doubt the other member states will want to impose high tariffs and other barriers in the way of their trade with us. However, they will be limited to the general 3.5% average tariff of the WTO as members of that body. The UK should tell them we are not seeking to place tariff and other impediments on their trade with us, unless they do so, on our exports.

The UK is in a strong position, as we import much more than we sell them. We are in a strong position because we make big net contributions, which we need to cancel and spend at home. The sooner we end the uncertainty, the better. The sooner we start spending the £10bn a year we send them and not get back the better for our public services and economic output, the sooner we take control of our borders, the sooner we can limit numbers to reduce pressures on housing, public facilities and transport. The sooner we can also reduce the downwards pressure on low end wages. There will be a boost to our GDP. Meanwhile after complaining, Germany will want to continue selling us her cars tariff-free and France will want to continue selling us wine and cheese tariff-free in order to persist trading with us in a sensible manner.