In World Economy News 24/03/2017
The trade benefits of belonging to the European Union have been “largely imaginary”, according to the social policy think-tank Civitas.
Its analysis argues that exports from non-EU countries to the single market have grown faster than the UK’s, since its creation in 1993.
That lends weight to the argument that no EU deal is better than a bad deal, the author argues.
Other economists say the UK has benefitted from EU membership.
Theresa May will start talks on the UK’s departure from the EU on 29 March.
The prime minister will officially notify the EU of the UK’s intention to leave by triggering “Article 50” and writing to European Council president Donald Tusk.
Civitas, whose research has previously been cited by pro-Brexit campaigners, said the UK’s export growth to the EU had been outstripped by many economies in the last 20 years.
Michael Burrage, the report’s author, said that before joining the single market in 1993, the UK’s exports to the EU grew at a faster rate than major economies such as the US, Canada, Australia, Switzerland, Norway, South Africa and Brazil.
But since joining, export growth from those countries to the EU has now overtaken that of the UK’s – a development he said was counterintuitive.
What is the single market?
This usually refers to the European Union’s single market and is perhaps the most ambitious type of trade co-operation.
That’s because as well as eliminating tariffs, quotas or taxes on trade, it also includes the free movement of goods, services, capital and people.
A single market strives to remove so-called “non-tariff barriers” – different rules on packaging, safety and standards. Many others are abolished and the same rules and regulations apply across the area.
There are EU-wide regulations covering a whole host of industries and products on everything from food standards and the use of chemicals to working hours and health and safety.
For goods, the single market was largely completed in 1992, but the market for services remains a work in progress a quarter of a century later.
Other economists disagree. Jonathan Portes, economics professor at King’s College London, said there was plenty of evidence to suggest that the single market had been good for the UK.
“A lot of industries are dependent on the EU not just for zero tariffs, but also for regulation,” he said, pointing in particular to the car and pharmaceuticals sectors.
After leaving, the two alternatives are either setting up the country’s own regulatory structure, which takes time and is complicated, or using the EU’s, in which case we end up using the same rules as previously but have no say in how they are made, he said.
“It won’t be the end of the world, but it won’t be pain-free either,” said Mr Portes.
‘Vastly exaggerated’
Over the past two decades, 14 economies – including Canada, India and the US – that trade under World Trade Organization (WTO) rules had increased their exports of goods to the 11 founding members of the single market faster than the UK, the study said.
“The evidence shows that the disadvantages of non-membership of the EU and single market have been vastly exaggerated and that the supposed benefits of membership, whether for exports of goods and services, for productivity, for worldwide trade, or for employment, are largely imaginary,” the study said.
“The government appears to have decided to leave the single market on the basis that we should return full control of UK laws to the UK, but trade data also offers strong support for the decision and provides comfort for those worried about relying on WTO rules if no deal emerges,” it added.
Mr Burrage said that UK exports have grown faster to 111 countries with which it trades under WTO rules than to the 14 other early members of the single market.
Source: BBC
