Trade wars: Leaked memo shows EU is
costing UK billions


A secret government memo has been leaked to The Telegraph reportedly showing that a “trade war” between EU countries is damaging the British economy.

The damning Whitehall assessment – seen by the Telegraph – has found that France and other EU countries are hampering new “free-trade” deals because they want to protect their farmers from the extra competition.

[…] the memorandum suggests that Britain is losing out on £2.5 billion a year in potential trade as a result of the ongoing delays to a proposed deal between the EU and Latin America.

There is nothing surprising about this and itwill merely be the tip of the iceberg. Other EU states, France being the prime example, are far more economically parochial than Britain and this was inevitably going to have an adverse effect because their objections and instinctive protectionism disrupts trade within the EU, scuppers trade deals and pulls the plug on trade agreement negotiations; often meaning years of hard work go to waste.

There is so much to argue about, so many competing interests and incompatible economic cultures that we lose out when we could be forging our own unbundled deals. We should not be suffering the consequences of France’s petulance. We should not be competing to get a share of the EU’s time to voice our concerns and pursue our emerging interests.

Spain has long been trying to advance an EU-Mercoser agreement that would harmonise trade with Spanish speaking nations in South America. It makes particular sense for Spain and if it was able to pursue an agreement independently it would have concluded it years ago. The EU has limited time for each issue and a lot “on its plate”; thus Spain must wait its turn, bringing long delays to a deal that could open up huge markets creating a beneficial trade triangle that would boost its flagging economy. If the EU was really just the trade bloc it is so often portrayed as by Remain politicians, the whole of Europe would be richer for it.

The secret Whitehall briefing found that one key initiative for a sweeping new “free-trade agreement” between Europe and five South American countries has run into trouble amid opposition from other EU countries.

The private memorandum was prepared for ministers ahead of the EU’s latest round of trade talks with Latin America. It said that 14 member states – half of the EU’s 28 members – are trying to limit the agreement because they fear their farmers will suffer from the increased competition.

This agreement could potentially generate £2.5 billion a year for Britain and yet it will be watered down to the point that its benefits will be greatly diluted or the whole deal will be scuppered. It’s the same story with TTIP and the situation is not going to improve any time soon; in-fact the Whitehall assessment is that opposition to free trade deals is increasing across Europe.

It is hugely detrimental for a country such as ours, a global trading nation, the fifth largest economy in the world, not to have control of its trade policy. We cannot take the initiative in trade and independently pursue agreements; we have to lobby Brussels and try and make arrangements via the EU. Then, as discussed in the leaked memo, the interests of 27 other states come into play and the whole process becomes bogged down. This is a sclerotic way of doing business.

Moreover, we need the adaptability to pursue a variety of methods of increasing prosperity through trade. The EU is obsessed with vast, complex trade agreements, often laced with political motivations, that take years to negotiate and often collapse.

Meanwhile the greatest growth in international trade is being achieved through innovative, flexible agreements such as the Partial Scope Agreements – and their equivalents which deal with technical barriers to trade – plus “unbundled” sector- and product-specific agreements, cast on a regional or global basis, without geographical anchorage. This is the new way of conducting trade; the EU does it the old-fashioned way.

This approach can bring rapid benefits to our economy and a tangible boost to GDP before the negotiators of comprehensive agreements have even decided upon a seating arrangement. This is how we boost our emerging industries without having to wait in the EU queue.

An even more exciting prospect is the vast potential of prioritising multilateral trade facilitation. For all the talk about tariffs in the referendum debate, trade is now more about removing technical barriers to trade, and the harmonisation of regulation and systems. A global marketplace is emerging with a vast network of global bodies facilitating trade and economic integration.

Under this system every participating nation has a voice and is able to set the agenda and have its proposals heard, unless they are in the EU. EU Member States are not decision makers, do not have a veto and cannot push their agenda independently. Trade is an exclusive power of the EU and they are bound by the common position. For a leading world economy and a global technological and scientific leader with a wealth of expertise to offer this is simply unacceptable.

The EU is an archaic and lumbering bloc that stifles innovation, suffocates good ideas and renders Britain about as agile as an elephant expecting triplets. In a globalised world this is a severe weakness. Voting to remain on trade grounds is short sighted; globalised regulation means the EU no longer makes its own rules and is rapidly losing its grip on the Single Market.

The real engine of global trade is now the WTO Trade Facilitation Agreement. Whenever Britain wishes to pursue an issue it must lodge its concern with the EU for the EU to negotiate on its behalf. It doesn’t matter if it’s to do with a unique industry or trading relationship replicated by no other EU state; every time we must go via the EU because that’s what it means to be in a political union and subject to a supranational government. There is nothing practical about this whatsoever; it is purely ideological.

The benefits of “pooling” sovereignty in the EU for trade are vastly overrated. The delays that come with competing interests neutralises any perceived benefit of our combined market size. The inherent inflexibility of being constrained by a single, rigid political bloc that demands one common position in every situation is detrimental to Britain. Just as Spain is prevented from advancing its trade according to its historical and cultural connections; so are we.

We must not miss the chance to take back control of our trade policy so that we can pursue our own agreements and fully engage with the global trading system. Missed opportunities are costing our economy and stifling growth. We can increase prosperity at home and abroad by regaining the freedom to choose and the ability to act.

Read More:

The UK will not have to renegotiate its existing trade deals

Britain needs to leave the EU and embrace the modern era of globalisation

The global trading system needs a jump start; Britain should lead the way

We need to take back control of our trade policy


Ben is the Conservatives for Liberty Web Editor.  He blogs at The Sceptic Isle. Follow him on Twitter: @TheScepticIsle

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The views expressed in this article are that of the author and do not necessarily reflect the views of Conservatives for Liberty