
The case for leaving the EU should be
ambitious and speak of the great opportunities independence affords us. We
should be getting the nation excited about the opportunities, sadly we are
getting bogged down in number crunching and NHS memes while the opposition
replies with increasingly hysterical fear mongering. This is not the great
debate we might have hoped for.
The Leave campaign should be conveying
the positive ideas of how we can make the world a better, more prosperous
place. For that, we must speak of how Britain can be a champion of trade,
intergovernmental cooperation and reform; gradually breaking away from the
protectionist EU model, and looking beyond the limited bilateral model of trade
and towards multilateralism.
A post-Brexit Britain must be open,
globalist and working to develop links with emerging economies and pioneering
the elimination of technical barriers to trade, otherwise known as “non-tariff
barriers” (NTBs). When we leave the EU, Britain can play an active part in
kickstarting the global trading system and reinvigorating global trade. We will
not be alone in doing so, but free to build coalitions and ad hoc alliances
(including with the EU as and when appropriate, for we will still be allies
with much common ground) to drive reform and spread prosperity.
We rely for our prosperity on
international trade, yet the improvements in global trade have stalled. Remain
campaigners are keen to point this out because they are advocates of
regionalism and are deniers of the clear direction of travel
– globalised trade facilitation through a global regulatory system
and multilateralism.
The debate on trade is often dominated
by tariffs but here there has been much progress in this area and the
focus on tariffs is an over simplification of the issue. Despite the technical
advances over the last twenty years the huge benefits from reducing
tariffs through GATT and WTO have been curbed by the growing scourge of NTBs.
Thus, while tariffs were estimated at
about 22% before the General
Agreement on Tariffs and Trade 1994 (GATT), recently the Atlantic
Council reported the
cost of NTBs to the US automotive trade was 25.5%. The World Bank
estimates NTB costs in
Africa average 40%. The average value for NTBs is estimated at
around 20%. This means they have wiped out all the gains from tariff
reductions.
There are however rays of hope for the
emerging global system though progress has slowed, it has not stopped. Of
vast significance is the Bali trade facilitation agreement under the aegis
of the WTO in December 2013 – which, in an exciting development, was ratified
by India just last month. The Agreements reaffirms the validity of the
non-discrimination principle of the GATT and seeks to reduce red-tape and
streamline customs procedures on a global scale. The
impact could be massive; when fully implemented it is
said that it could potentially increase global GDP by almost $1
trillion. The World Bank proposes even
higher figures. If all countries reduced supply chain barriers
halfway to global best practice, global GDP could increase by 4.7% or $2.6
trillion, potentially worth about $60 billion a year to the UK, which is far
more than the dubious figures being bandied around by some Leavers
regarding what we would save in EU membership fees.
World trade overall could increase by
14.5%, or $1.6 trillion, far outweighing the benefits from the elimination of
import tariffs. For example, an agreement on a global tyre specification for
passenger vehicles could save $40 billion a year. An ostensibly simple thing
like standardising nomenclature for existing pharmaceutical products could save
$20 billion. Adopting electronic documentation for the air cargo industry could
yield $12 billion in annual savings, and prevent 70-80% of paperwork-related
delays.
These savings, though, will not happen
spontaneously. We are talking here ofpotential, very exciting prospects, but
they will not be fulfilled automatically. It will take a huge amount of work
and, crucially, leadership. It is in leadership of this global model that the
EU fails due to its parochial nature and proclivity to load everything it
does with political implications. While the WTO agreement is a celebration
of multilateralism in world trade, the EU obsession with regional
trade agreements (such as TTIP) is diverting attention from policy
interventions which could give a far
higher rate of return.
By forging ad hoc alliances
and building a coalition of shared interests, the UK can put the global interest
back on the agenda. Breaking away from exclusionary and restrictive regional
trade agreements, it could instead give priority to multilateral trade
facilitation and thereby have a galvanising effect on world trade.
This is the positive agenda. In a world
that is increasingly global, EU Member States are surrendering their voice,
vote and right of reservation to the supranational empire of the EU, which
represents not their national interests but the “common position” of the EU-28.
With potentially $2.6 trillion at stake
from improved global trading; we need to break out of our European mindset and
look out to the world and all the fantastic possibilities and opportunities
that a globalist outlook offers us. The “world” is where we need to be – and it
is where the world needs us to be.