Tuesday, 11 October 2016

Still Remoaning

I wish some of those anxious to remain within the EU Single Market would explain carefully how we are going to lose exports if we leave.

First of all, since we are already within the Single Market the EU 27 will need to take an active decision to raise tariffs against our goods rather than just let things go on as they are. They must do this in the context of full public awareness in their own countries that the UK has a large trade deficit with them and that the damage suffered by the EU if reciprocal tariffs are applied will inevitably be greater than the damage inflicted.

The only possible justification for such behaviour is that the political ideals of the EU are more important than the jobs of EU citizens. For all the sabre rattling coming out of Brussels and other EU capitals this will still be a 'courageous policy' (as Sir Humphrey Appleby would put it) to take before their own electorates in the next polls.

Secondly, the depreciation of the pound sterling since June 23rd is already greater than the average tariff that would be justified under WTO rules, hence the overall result, even after a tariff war, would be cheaper UK goods in EU markets.

Once again, consumers have to be pretty determined to punish the withdrawing member if they are willing to boycott cheaper products.

Anyway, what does it say about the merits of belonging to an organisation that it must punish a member who leaves in order to encourage the others to remain?

Thirdly, while the UK prices of imported EU produce will rise as a result of sterling's depreciation, there is no obvious reason for the UK to initiate tariffs against other countries. Once again, as an EU member the UK already has numerous trade agreements with third countries. The EU will have sovereignty over neither party to future bilateral trade arrangements and it will be a remarkably impressive, not to mention vindictive, achievement if it is able to force them to impose tariffs on each other.

If President Obama had not already told us that the UK was going to the back of the queue, one might be forgiven for suggesting the revival of the North Atlantic Free Trade Area scheme.