Peter Bye

Opinions about Brexit can be divided into two broad groups: those that I will call ideology-based and those that are evidence-based. The dominant opinion in the first group is the question of sovereignty. It was a significant factor in the 2016 referendum and continues to motivate many of those favouring Brexit. It can be countered by arguments such as pointing out how much sovereignty the UK has while in the EU. But if sovereignty is what people hold to be important, that is their view; it cannot be challenged by evidence.

The second group centres on questions about the economic consequences of leaving the EU, and the likelihood of getting trade agreements with other countries to compensate for any loss of UK-EU trade. These questions do require evidence to support opinions. We have a reasonably accurate view of the current state of the UK economy and can model its evolution, based on a variety of different scenarios, such as ‘no deal’ or a ‘Norway-like’ arrangement. The models are complicated and not completely precise but we can attach a probability to each scenario. Similar approaches can be used to evaluate possible trade agreements. The alternative of not modelling is not a realistic option; we’re left in the dark.

Unfortunately, the debate has become increasingly poisonous, with much abuse being thrown about, and little or no respect for logic or evidence. The government commissioned scenario planning from the civil service, and the Bank of England also prepared a variety of scenarios. So have others, including business associations such as the CBI. The scenarios consistently show that the UK economy would be, in varying degrees, worse off than it would be if the UK remained in the EU. The responses from those favouring Brexit have been to dismiss the results of the models, citing bias and/or incompetence of those doing the modelling.

Here’s a flavour of the level of discussion. On the 20th November, Lord Lilley, a former deputy leader of the Conservative Party and cabinet minister, was interviewed on the BBC Radio 4 Today programme[1]. The interviewer was John Humphrys, who had Chris Morris of the BBC Reality Check (a fact-checking service) to provide information. The interview descended into a squabble, with the BBC being accused of bias. Reports of the interview vary widely, with extreme positions being expressed[2].

I’d like to take a closer look at trade and consider how the debate – or rather lack of it – reflects realities. My views are personal and reflect my own experience.

We are told that leaving the EU will enable the UK to negotiate free trade deals with other countries. One suggestion is that, on leaving the EU, we can trade under WTO rules, as do other countries trading with the EU. This disregards the fact that the EU already has around 60 agreements with other countries, including Japan, with more in the pipeline[3]. As a member of the EU, the UK benefits from those agreements. Just 24 countries trade with the EU using WTO rules[4].

How long will it take for the UK to negotiate its own trade agreements? Although I do not have any experience in trade negotiations, I have worked in an international standards committee. The level of detail required in standards definitions is considerable and has to be clear, precise and correct; vagueness and omissions will cause problems down the road. Trade agreements also depend on detail and are further complicated by the kind of political manoeuvring absent from standards work, where consensus is easier to obtain. It’s hardly surprising that trade agreements take time to negotiate and implement. The World Economic Forum contains some information on the time required to negotiate such agreements [5].

Membership of the EU enables frictionless trade within it. The proximity of the rest of the EU to the UK, coupled with the absence of impediments to movement across borders, have resulted in networks of relationships built on this infrastructure; just-in-time manufacturing is one example. Such complex trading patterns built on open borders are hard to reverse because they are like trade within one country.

However, the UK and other EU members can and do trade outside EU, in some cases under the rules established by trade agreements between the EU and other countries. But it’s important to remember that trade agreements and getting business deals are not the same thing. Exporting requires having something that people want, and establishing the contacts and relationships to make it possible to sell. Trade conditions may in some cases make it harder to sell; an example would be high tariffs on imports. But a lot can be done: the USA, for example, takes roughly GBP 100 billion in UK exports; about 19% of UK total[6]. And this is while the UK is in the EU.

Being in the EU is not a disadvantage to trading outside it. My wife and I have personal experience in doing just that, as SMEs. We found the EU to be a help when working inside its borders and not to be any kind of obstacle to working outside. We described our experiences in an earlier piece on Blogactiv[7].

Notes and sources

[1] A recording of the interview can be found at https://inews.co.uk/news/politics/peter-lilley-brexit-bbc-reality-check-chris-morris-clash-video/

[2] See, for example, the reports published in the Conservative Woman (first link below), The Guardian (second link):and The New European (third link)

https://www.conservativewoman.co.uk/ambush-bbcs-brexit-negativity-plumbs-new-depths-in-attack-on-peter-lilley/

https://www.theguardian.com/politics/2018/nov/20/pms-defeatist-brexit-deal-based-on-lack-of-understanding

https://www.theneweuropean.co.uk/top-stories/peter-lilley-interview-on-bbc-radio-4-today-programme-1-5786752

[3] For more information, see http:/ /ec.europa.eu/trade/policy/countries-and-regions/negotiations-and-agreements/

[4] See https://www.bbc.co.uk/news/uk-politics-41859691 for a list of countries using WTO rules.to trade with the EU.

[5]:See https://www.weforum.org/agenda/2016/07/how-long-do-trade-deals-take-after-brexit/

[6] Source: ONS for 2016. See https://visual.ons.gov.uk/uk-trade-partners/

[7] See https://peterbye.blogactiv.eu/2015/07/27/eu-membership-a-personal-view/

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