Friday, April 19, 2024
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Memo to the FT – Remaining, not leaving, is what would wreck us


On Tuesday the Financial Times Europe Editor Tony Barber wrote a piece entitled ‘The EU is no protectionist racket.’

How the FT has fallen. But this is not new. One of my City friends, after 30 years of being a loyal subscriber, cancelled his subscription over Brexit. He wrote a long letter of explanation but of course they neither replied, nor took notice, in their globalist bubble as they are. I did likewise – sadly – with the Economist, having read it every week since I was a student.

For those of you not behind the FT paywall, the Barber article stirred up a lot of feelings from a lot of highly informed and educated people. One remarked: ‘The article is a shallow rendition of Project Fear, drizzled with pro-EU mythology. Unpalatable and well past its sell-by date, like a morbid French cheese reeking of ammonia and manure.’

Another said: ‘This is an exceptionally poorly written piece that starts with the conclusion and then desperately tried to find things vaguely along the line of argument.’

Barber’s line of argument in a nutshell was that since November 2016, the EU has turned into arguably the busiest of the world’s big economies in seeking new or upgraded free trade accord, so what on earth is the UK doing turning its back on this newly outward-looking customs union that has just done a trade deal with Mexico?

What he didn’t explain was the EU suddenly finding it could do a trade deal with Mexico when it was unable to for years before. Could it be anything to do with fear? Or worse, anything to do with spite and revenge? Anything to do with Trump? And just how ‘free’ is a trade deal that demands 55 per cent of parts to come from the EU or Mexico?

Barber of course also omitted to mention that the EU’s idea of ‘free trade’ is not the same as everyone else’s or that the EU pays lip service to low tariffs whilst using regulatory controls such as ‘traceability’ to block foreign products. The result of which is, simply, the removal of competition, less competitive products and higher consumer prices.

Yet he went on to assert: ‘It is not the EU, but the US under the Trump administration which is the western world’s most strident critic of global free trade.’

Really? Well, how about comparing tariffs on car imports: 30 per cent into the EU, 10 per cent into the USA. That’s basically why the German car makers export more than a million cars a year to the USA and why you hardly ever see an American car on the streets of Paris – full of their own little Peugeots and Citroens. I can see exactly why Trump thinks it is blatantly unfair trade.

Nor could Barber bring himself to leave ‘Project Fear’ alone. The implications for the post-Brexit UK are troubling, he wrote. No, it’s the implications for the UK of remaining in the EU that are troubling. The whole point of our leaving the EU is that its regulatory burdens are killing Europe’s economy, including ours, by protecting uncompetitive businesses, especially large ones, and killing the small and medium-sized businesses that cannot compete in this far from free market. You only have to look at youth unemployment numbers in Spain and Greece to see that the European economy is actually the thing that is incredibly troubling.

The economics analysis and forecast company Armstrong Economics wrote in October 2017 that ‘it is now too risky to do business in Europe for they are changing the rules retroactively’. This was after the EU ordered Amazon to pay $294m taxes in Luxembourg, saying it was given an unfair tax advantage in 2003. Thirteen years later, the EU retroactively changed its tax laws. Isn’t this troubling?

Barber’s standard reason for why we should stay in the customs union boils down to this: it gives the UK unfettered access to EU markets.

The notion of ‘unfettered’ access is, however, overrated. All we need is access with a minimal and simple tariff regime by the World Trade Organisation (WTO). This works all over the world.

Not only does the EU erect administrative hurdles which cost far more than the WTO tariffs (averaged to be 4.3 per cent by Business for Britain) but on top of that we pay 7 per cent just to be in the EU.

Business for Britain, which campaigns for exit, estimates that at worst tariffs would cost British exporters £7.4billion a year, but that the UK would save enough on EU membership fees to be able to compensate exporters for that – see here or here.

Indeed the WTO tariffs are less than the differentials between VAT rates in various countries in the EU.

And is it really logical to make a big fuss about WTO tariffs averaging 4.3 per cent when the difference between VAT in Hungary at 27 per cent and Luxembourg at 17 per cent is more than twice that figure?

So for the 3,768th time, Mr Barber, it’s not about tariffs, it’s about non-tariff barriers which the EU excels in imposing because it’s a French national pastime. Why do they want to stop the UK from keeping the City? Because they want to steal the business back. True free traders would allow it to continue with regulatory co-operation and mutual recognition.

The BOE, FCA and PRA are the best financial regulators in the word from a financial stability standpoint. The European Central Bank is actually trying to create financial instability rather than preserve it. It’s simply a protectionist trick.

I leave you with the words of Canada’s trade minister Chrystia Freeland, who said (paraphrased): ‘We are the nicest country, we tried so hard and after years of negotiating we still could not reach a deal.’ She ended up in tears.

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