Drivel means drivel

Leave means Leave took out a full page advertisement in the Evening Standard. London4Europe Committee member and former HM Treasury senior civil servant Michael Romberg provides some counter-arguments to their claims.

The advertisement in two columns on 18 September 2018, compared trading under WTO rules with the Chequers Plan. There is no point in analysing their criticisms of Chequers. But let’s run through their claims about WTO Brexit, where they offer the same sort of rhetorical flourishes as Global Britain Brexiters like Liam Fox. WTO would eventually be similar to a Canada Free Trade Agreement because we should assume that if the UK left amicably without an FTA then the UK and the EU would work towards one. (No-deal would be an angry tossing of a brick through the window as we left.) Even if the particular advertisement is some time back, we can be sure the arguments will be made again.

The text from their advertisement is in italics below:

17.4 million people voted for the UK to leave all of the European Union. They did so knowing that Britain can stand on its own two feet in the world – and create new deals and new opportunities with the growing economies of the World Trade Organisation.

• 44% of our exports go to the EU. Why would new trade make up for the loss of EU trade from new trade barriers that would be created even if we had an FTA?
• About 10% of our trade is with third countries where the EU already has a trade deal; there are more EU deals on the way. Why would the UK be able to sign a better trade deal than the EU has already? We have not negotiated a trade deal for 40 years.
• Why would the UK be able to sign trade deals when the EU can’t? For example, India is not keen on trade deals anyway. What they wanted in return was more visas. The UK blocked the EU from agreeing to that. Is that going to change post Brexit? Which bit of “America First” do Leave means Leave not understand?
• The reality is that trade deals are an exercise in power – the bigger your economy the more power you have in negotiations. The EU is about 22% of global GDP, the UK about 3% (2018 – market prices – IMF forecasts)

Freeing the UK from EU law would give us the freedom to trade around the world and determine our own destiny.

• We are free to trade around the world now.
• Several EU member states export more than we do. Germany exports 4½ times as much to China as we do (2016). Germany exports just under 4 times as much to India as we do (2016). So it’s not being in the EU that holds us back. Sure, an undervalued Euro helps, but no-one buys a Mercedes because “it’s so cheap”. An example of a German company working in China can be read here.
• No country determines its own destiny. All countries have to co-operate. Pooling sovereignty through the EU gives us more of what we want (environmental and worker protection) because we know we will not be undercut by other EU countries.

We would be able to determine who comes into the UK in a fair and managed way, adding value to the economy and boosting productivity and wages.

• Non-EU migration is wholly under the UK’s control now. Non-EU net migration has always been bigger than EU net migration.
• The values of our fellow EU citizens are similar to British values. All European countries have a long heritage of shared values. They are people like us.
• There are more controls available on EU freedom of movement than the UK uses. For example EU citizens may be removed after three months if not self-sufficient, studying, employed or with a reasonable prospect of finding work.
• EU citizens contribute more to the Exchequer than they take out, and more than UK citizens. (Migration Advisory Committee Report – 2018 – Page 71)
• The effect of immigration on wages is concentrated at the bottom end of the income distribution, is small (about eight pence an hour) and dwarfed by other effects such as the £1.34 rise in the minimum wage in the same period.

By removing the expensive taxes that the EU puts on goods coming into Britain, we could significantly reduce the cost of living for us all.  

• Most EU tariffs are small (below 5%) – you can see a chart here and make little difference to trade or prices.
• Some tariffs are high, eg 37% on dairy products. Such a tariff markedly reduces imports. Were that tariff to be removed there would be immediate effects on UK dairy farmers.
• Economists for Brexit argued for the immediate and unilateral abolition of UK tariffs; they noted that would mean the end of UK manufacturing.
• It is not clear who bears the cost of tariffs: that will be shared between consumers and suppliers. So abolishing tariffs will only partly reduce prices, it will also increase exporters’ profits.

There are over 160 countries in the World Trade Organisation and only 28 countries in the European Union. It’s obvious where the greater opportunities lie.

• Being in the EU does not stop us trading with the rest of the world – just as it does not stop those EU countries with better export performances than we have.
• A key determinant of trade is how close countries are to each other – economists call this gravity. Another is how rich, a third is how similar the economies are. All these point naturally to higher trade with European economies than with the rest of the world.
• Many countries are fast-growing because they are poor. It’s like a baby: it grows faster than a teenager because it is so small.

It’s time to deliver what we voted for.

• No-one knows what people voted for. Leave had no plan. We need a People’s Vote on the terms of Brexit with the option to Remain once we finally know what Brexit means.

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