The Spectator

Parting on good terms

There will be huge resistance if anyone does anything to thwart free trade between Britain and the EU

Parting on good terms
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Many EU officials would like to present the Brexit negotiations as a case of one nervous member, weak at the knees, appearing before a menacing and united panel of 27. But that ignores the political and ideological rifts which are already apparent in the EU. Britain’s departure not only necessitates the creation of a new relationship between us and them; it fundamentally shifts the balance in EU politics. As Angela Merkel has been worrying aloud in recent weeks, the northern European countries which have always tended to take a liberal position on economics and trade are going to have a harder job fighting off the protectionist instincts of the south.

Far from the UK turning its back on the outside world, the growing likelihood is that it is the EU which will retreat into its economic shell while Britain’s economy becomes even more open.

Europe’s wonderful diversity became the EU’s biggest problem as it tried to establish a common position for nations that see the world differently. For years, Britain would side with the Scandinavians, Polish, Irish and Dutch to promote an open Europe, keen to cut new trade deals. The French would lead a protectionist bloc terrified about Chinese shoemakers or Australian sugar farmers. The world is changing. The EU stops its member states changing with it.

Britain’s influence tilted the EU in favour of free trade. With our departure, the southern countries will find it easier to push through initiatives to prop up uncompetitive industries. Merkel realises this, which is why she is trying to bolster support for free-market economics within the EU. Meetings have been held with leaders of other northern European states. Ann Linde, Sweden’s EU minister, has spoken of having to become ‘mildly aggressive’ in the battle for open trade now that it is losing its ‘closest ally’ in the EU.

For Theresa May and her negotiating team, the battle for the soul of the new EU presents both a threat and an opportunity. It’s a threat because if the protectionist bloc has its way it will become more difficult for any country — Britain included — to do a trade deal with the EU. But there is an opportunity, too, in exploiting the ideological divisions.

For the moment, the EU’s negotiating team tries to avoid the issue of trade by refusing even to address it until the terms of Britain’s withdrawal — by which it means the size of our bill — have been agreed. This is an unreasonable and unsustainable position to hold. There are a great number of commercial interests across the EU that require the uncertainty of Britain’s trading relations to be resolved as soon as possible. During the referendum campaign, the Remain side kept parroting its statistic that three million jobs in Britain were ‘dependent’ on trade with the EU — without once admitting that there are rather more citizens of EU countries who have jobs similarly ‘dependent’ on trade with Britain.

In Germany there are 1.3 million jobs connected with exports to Britain. Our tally in the other direction is 800,000. The French depend on us for 600,000 jobs, whereas we depend on them for 500,000. In Italy the figures are 400,000 and 300,000. Every single one of the other 27 EU states is in the same position: more jobs are connected with exports to Britain than Britain has jobs connected with exports in the other direction.

There is every reason, then, to be confident that economic interests will eventually win out over the political posturing. Trade agreements may be hard to forge in the first place, but when free trade is already established — as it is between Britain and the rest of the EU — there will be huge resistance if anyone does anything to thwart it.

Negotiations tend to succeed, it is often noted, when everyone can go away claiming victory. Some see this as meaning that Britain will end up paying a very large bill that would suit the likes of France, Italy and Spain. But for Germany, Scandinavia and the Baltic states, with their more free-market instincts, a free-trade agreement with Britain would be a victory. They know that Britain will be busy doing trade deals with countries outside the EU — and almost certainly concluding them much faster than with the slow-moving EU. Even if talks between Britain and the EU were to break down and both sides fall back on the safety net of the World Trade Organisation rules, there is the prospect of deals with the likes of the US, India, China and Japan.

The EU reacted in horror to the election of Donald Trump, seeing it as the triumph of anger, insularity and protectionism. But the response surely should be to move in the other direction: to lower trade barriers, cut tariffs and quotas and face the outside world with a sense of optimism, courage and confidence. It may now take longer for Mrs Merkel to persuade her EU counterparts of the case for embracing the world. But encouraging them to cut a free-trade deal with Britain would be a good place to start.