Responding to claims by the Britain Stronger in Europe (BSE) campaign that UK trade would fall by £250 billion if we Vote Leave, Vote Leave Chief Executive Matthew Elliott said:
“BSE can’t even be consistent or honest in their campaign to do down the British economy. Their underlying belief appears to be that Britain – the world’s fifth largest economy and a nation with a great history of trading across the globe – would be an economic backwater if it wasn’t for Brussels taking control of our trade deals. That’s absurd. After we Vote Leave we will take back control of the powers we’ve surrendered to EU bureaucrats and stop sending Brussels £350 million a week. That would boost our economy and allow us to spend our money on our priorities.”
Lord Darling and BSE can’t make up their minds about how many billions they say will be lost if we Vote Leave. They have already used different figures to make the same claim, while leading figures in their campaign have admitted trade would not be affected.
BSE claims today that ‘for the first time’, it is showing the volume of trade ‘at risk if we leave’ the EU. This is wrong.
On 3 January 2016, BSE claimed that ‘new research shows over £235bn of trade at risk if Britain leaves the EU’.
Prominent BSE campaigner Anna Soubry has said that exports to the EU will ‘go down to almost absolutely zero if we come out of the EU’. In 2015, the UK exported £223.3 billion of goods and services to the EU.
Lord Darling previously claimed that the amount of trade that would be lost would be £92 billion.
The Prime Minister, David Cameron, who is leading the IN campaign, has admitted trade would not be affected: ‘If we were outside the EU altogether, we’d still be trading with all these European countries, of course we would … Of course the trading would go on … There’s a lot of scaremongering on all sides of this debate. Of course the trading would go on’.
The Head of the IN campaign, Lord Rose, has also admitted that ‘nothing is going to happen if we come out of Europe… It’s not going to be a step change or somebody’s going to turn the lights out and we’re all suddenly going to find that we can’t go to France, it’s going to be a gentle process’.
BSE’s figures do not add up.
BSE states that in 2014, trade with EU was £520 billion. They claim that ‘UK trade with the EU is 76% higher than it would have been in the absence of EU membership and we had traded without an agreement’. Nonetheless, BSE’s figures do not show a 76% fall in trade. Their methodology and sources are unclear.
A 76% fall in trade with the EU would result in trade falling to £124.8 billion, a reduction of £395.2 billion. Yet BSE claims that trade with the EU would fall by £224 billion.
BSE have not quantified a 76% fall in exports either. In 2014, the UK exported £228.9 billion to the EU. A £224 billion reduction would amount to a 97.8% fall in exports, not a 76% fall.
It is entirely unclear how BSE calculated the £224 billion figure. BSE also claims that their research shows that the EU has been negotiating trade deals since 1974. However, the earliest trade deal cited in their table is one in which negotiations started in 1985.
Countries outside the EU trade with it to a greater extent than the UK does. It is ridiculous to suggest that trade with the EU might fall by 43%.
The OECD has noted that: ‘the EU absorbs around 45% of Swiss exports of financial services, despite the absence of passporting rights for its banks’. In 2014, exports to the EU of financial services, insurance and pensions represent 33% of the UK’s exports in those sectors. Nonetheless, BSE suggests that 43% of the UK’s trade with the EU could disappear if we Vote Leave. This is ridiculous.
BSE has already admitted third country free trade agreements could continue if we Vote Leave.
The Executive Director of the IN campaign, Will Straw has accepted that free trade agreements with third countries could continue after we Vote Leave, stating: ‘either eventuality could come to pass’.
After we Vote Leave, we would be free to immediately start negotiations with third countries to strike free trade deals. There are 1,720 civil servants in Whitehall who specialise in trade policy who could be deployed during this period to ensure a smooth transition. These deals could come into force after the treaties cease to apply to the UK.
If the UK makes clear it wants existing agreements to be maintained on current terms, there is little reason to think any third country with which the EU currently has a free trade agreement would disagree. The UK is, after all, the fifth largest economy in the world. There is no reason why third countries would want to cut off access to the UK market.
As the Prime Minister of New Zealand, John Key, has said: ‘we would want to preserve both our existing position with Great Britain and continue to grow that relationship. We would need to find a way through that. The reality is there are a number of mechanisms where that would be possible’.
Lord Darling claims that leaving the EU ‘would mean introducing tariffs and barriers to our trade’, but IN campaigners have already admitted this is inaccurate.
The Prime Minister, David Cameron, has admitted: ‘If we were outside the EU altogether, we’d still be trading with all these European countries, of course we would … Of course the trading would go on … There’s a lot of scaremongering on all sides of this debate. Of course the trading would go on’.
The UK’s former Ambassador to the EU and leading supporter of the BSE campaign, Lord Kerr, has admitted: ‘there is no doubt that the UK could secure a free trade agreement with the EU. That is not an issue‘.
Even the pro-EU CBI has said: ‘the UK is highly likely to secure a Free Trade Agreement with the EU, and such an agreement would be likely to be negotiated at an extremely high level of ambition relative to other FTAs [free trade agreements]’.
The pro-EU Centre for European Reform has accepted that, ‘given the importance of the UK market to the eurozone, the UK would probably have little difficulty in negotiating an FTA‘.
The Foreign Secretary, Philip Hammond, has admitted that a free trade agreement in goods ‘would be relatively simple to negotiate‘.
BSE seem to accept that it could take less than two years to strike a free trade deal with the EU. This is a reasonable assumption.
BSE admits that the EU has struck free trade deals in less than two years. In the table in their press release, BSE claims that the EU and Mexico struck a free trade deal in 1.83 years (though it is unclear how it came to this figure).
Trade deals take on average two years to complete. Oxford Economics states that ‘an analysis of regional trade deals conducted over the past 20 years found an average duration of 28 months‘.
The US-Australia free trade agreement was concluded in less than two years. Formal negotiations for a free trade agreement began in Canberra on 18 March 2003. The agreement came into effect on 1 January 2005. The US Government states that: ‘as a result of the U.S.-Australia Free Trade Agreement, tariffs that averaged 4.3 percent were eliminated on more than 99% of the tariff lines for U.S. manufactured goods exports to Australia’.
The US-Canada free trade agreement was negotiated in less than two years. According to the Government of Canada, ‘In 1987, both countries agreed to the Canada-United States Free Trade Agreement (CUSFTA). Negotiations toward a free trade agreement with the U.S. began in 1986. The two nations agreed to a historic agreement that placed Canada and the United States at the forefront of trade liberalization. Key elements of the agreement included the elimination of tariffs, the reduction of many non-tariff barriers, and it was among the first trade agreements to address trade in services. It also included a dispute settlement mechanism for the fair and expeditious resolution of trade disputes’.