17 Apr 2016

Missing the point about trade as an EU member state


The letter above demonstrates the need to explain the difference between trade agreements and deals.

On Friday morning, former Labour chancellor, Alistair Darling, sat in a BBC radio studio on the Today programme (about 01:50 in) and had an exchange with Nick Robinson about trade which included the following:
AD: But what I'm saying is, yes there are uncertainties in life but if for example we vote to leave and we then have to renegotiate to get some sort of trade deal with the rest of the European Union everybody knows that is going to take some considerable time. And actually...

NR: It could be better. It could allow us to do more trade than we're currently able to do with India and with China and with growing markets...

AD: There is nothing in the world to stop us selling more goods to India and China today if we wanted to...

NR: Except we can't negotiate our own trade deal with them, we have to do it through the EU...

Darling was completely wrong. He was being deliberately misleading, because deals to sell goods are not the same thing as trade agreements. Sales deals have to stick within the terms of whatever negotiated trade agreement or terms are in place. The EU, not Britain or any member state, negotiates the terms of trade agreements with non EU countries. Darling knows that and was evading acknowledgement of a massive trade limitation of EU membership.

That said, Nick Robinson wasn't correct either. Britain does not negotiate agreements through the EU. Only the EU negotiates agreements, not its member states. Britain can only make sales deals, and these must abide with any terms the EU has agreed.

This is a point too many people do not understand. The EU decides what import and export terms, quotas and tariffs member states must accept and apply. Britain is not in control of its trade.

The EU common negotiating position often waters down and sometimes excludes things that member states want the trade agreement to include, which is detrimental to those member states.This means trade agreements can be negotiated which may, for example, see British requests for the agreement to make it easier and cheaper to sell some of our manufactured goods ignored, because the EU sets the aside in order to meet the wishes of other member states who are pushing for the agreement to include favourable terms for, say, agriculture that the third country won't accept if manufacturing is also included.

If Britain wanted to guarantee its manufacturing goods were part of a trade agreement with another country, it could only do so by negotiating trade agreements on a bilateral basis - and that can only happen if Britain is not a member of the EU. Similarly, if Britain felt it would benefit its citizens to import items without any tariff in order to make them cheaper, it could only make such an agreement if it wasn't a member of the EU.

Britain's trade links outside the EU are still governed by the EU. So if the EU cannot agree terms with a third country, Britain can't go off an make its own bilateral agreement with that country. In the same way, if the EU cannot or will not agree better terms for an existing agreement, Britain may be stuck with tariffs and non tariff barriers to imports and exports that we may be able to get rid of as an independent country.

The Remain side argues that under EU trade agreements Germany sells far more than we do, as if it were evidence that the EU's trade agreements are effective and beneficial. But just because an agreement's terms make it possible for Germany to sell lots of automotive products, it doesn't follow that the agreement includes terms that make it possible to Britain to sell the same countries huge volumes of technology, or pharmaceuticals.

EU membership denies us flexibility and agility in the globalised world. It is a powerful reason for us to leave the EU.