Scaremongering exposes the weaknesses of EU membership

The scaremongering about leaving the European Union is unrelenting – and it is wholly wrong.

Hardly a week goes by without Nick Clegg or Ed Miliband suggesting there will be three million unemployed or the United Kingdom will break up.

The approach is deceitful, distorting past research in an attempt to close down debate about the trade opportunities that could open up were the UK committed to global free trade rather than membership of an outdated customs union that has morphed into a political union.

This week Global Britain and the Democracy Movement have taken such politicians to task by issuing a detailed research paper, The Scaremongers, that you can download here.

It demonstrates that not only is the claim about three million jobs directly at risk from Brexit refuted by the original report’s authors, but that the EU is in structural economic decline and that this will continue relative to the rest of the world.

It shows how the greater commercial opportunities for the UK lie in becoming more globally focussed and it explains why, thanks to the success of the World Trade Organisation’s huge reduction in tariffs, a trade war between the EU and Britain is highly unlikely.

It is this threat of the EU introducing tariffs against British exports that allows politicians like Nick Clegg to use sleight of hand to suggest markets will be lost and jobs sacrificed.

What they consistently fail to mention is that were the same logic adopted and applied to EU exports to the UK – the EU’s largest market – then there would be nearly 6.5 million jobs put at risk on the continent.

At a time of high unemployment and political upheaval in the European Union, the initiation of a trade war with the UK by Brussels would be folly and counterproductive.

The Scaremongers points out that far more likely is the establishment of trade deals like those that exist between the EU and South Korea, Mexico and Australia that would not only protect employment in the EU but offer the benefit of improved economic trade that could deliver more, not fewer, jobs.

Indeed the report demonstrates that the UK’s trade is already shifting to the emerging markets, that we have nothing to fear from this re-orientation and are well placed to exploit our many advantages.

Not only is the rational case against a trade war impeccable there is also the fact that under WTO rules that the EU is fully signed up to, together with other separate treaties the EU has entered into, launching a trade war by hiking up tariffs against British exports would be illegal.

The guiding principle of the WTO is the Most Favoured Nation rule, which states that member nations cannot discriminate against each other through the imposition of tariffs. If the exports of one country are awarded a lower duty rate in relation to a particular product, then this must, typically, also apply to all others.

Countries can, of course, establish free trade or customs unions, such as the EU, and abolish all tariffs and regulatory barriers between themselves.What they cannot do is then impose arbitrarily higher tariff levels on those outside such arrangements that go beyond the levels that have been established by the WTO’s already ratified multilateral agreements.

Therefore, in the few areas left where high tariffs can theoretically be imposed, such as on cars and some types of agricultural products, the UK could not be put in a worse position than, say, America or South Africa.

While in extremis countries have raised trade barriers, such approaches by Western nations have become extremely rare, modest in scope and temporary. It is simply not realistic to believe that the EU would adopt a more punitive arrangement with the UK than it does with, say, Canada or Israel – countries that are of far less economic importance to EU exporters than Britain.

It is often argued by the pro-EU lobby that only by being part of a ‘big club’ that we can exert influence internationally; as an independent country we would count for little. This is a disingenuous line of argument for it assumes that, by subordinating ourselves to the judgment of the unelected European Commission, our national interest will always be best represented by the collective EU position.

Do we really benefit from having to be part of the Common Agricultural Policy, which discriminates against Commonwealth and Third World producers and means higher food prices for our consumers?

Outside the EU, Britain would represent itself on the WTO as well as the World Customs Organisation, a body that processes 98 per cent of world trade. There are numerous similar institutions including the Basel Committee on Banking Supervision, the UN Food and Agriculture Organisation and the National Plant Protection Organisation that draw up rules agreed by all the participating representatives that are then implemented.

The argument that the UK would lose international influence outside the EU is therefore yet another scare story. The opposite is the case: as an independent country we would have more influence and be better able to shape our own cross-border agreements and rules at their increasingly global source.

The apparent groupthink of a few business leaders representing big multi-national corporations or investment banks claiming ‘we can’t leave the single market’, based chiefly on tariff or influence criteria, simply does not pass critical inspection.

Firstly average WTO tariffs are now so small and 75 per cent of physical products are now completely tariff free. Secondly their views are more about protecting their vested interests.

Big companies tend to favour a high regulatory burden as it increases barriers to entry for smaller potential competitors. That may well help the profit margins of a large, bureaucratically-run business, but it does not help competition, broader prosperity or our capacity to export in the long term. It is a threat to employment.

Is it really credible that there would be a mass exodus of companies over an average WTO tariff of 1.09 per cent when currency fluctuations are far greater – as evidenced in the recent movement of the Euro by more than 7 per cent since November?

Should EU leaders choose to be vindictive for economically irrational reasons they will only shoot themselves in the foot, as EU exports to the UK are substantially greater than our exports to the single market.

The Scaremongers explains how the europhiles’ projections of fear simply do not make sense – it is a strategy that betrays the weakness of their own case for continued EU membership and why we should leave.