With comical inevitability, the Government’s go-to tactic for selling its Withdrawal Agreement has been to resurrect Project Fear. We have been bombarded with doom-laden predictions of exactly the kind that failed to convince during the referendum. The Government’s latest forecasts tell us the UK will lose £150 billion in a so-called “no deal” (really a World Trade Organisation deal) scenario compared with staying in the EU. Not to be outdone, the Bank of England predicted an eight per cent reduction in GDP in 2019 alone, with unemployment reaching 7.5 per cent and mass emigration.
You would be forgiven for taking such analysis with a pinch of salt. The Treasury has a track record of remarkably inaccurate predictions. It said a Leave vote would see the economy contract by 0.1 – 2.1 per cent in the following 18 months. In reality, 2.8 per cent growth put the forecasts out by up to £100 billion.
Any model is only as good as its assumptions. The Government’s assumptions are that Brexit will cause a large, permanent increase in UK-EU trade barriers and it has taken negligible notice of any benefits from improving regulations at home. It is highly pessimistic on trade with the EU and utterly despondent as to any opportunities elsewhere. In other words, the Treasury assumes that the UK will be less open post-Brexit, contrary to what the vast majority of Brexiteers have said they want.
This ensures an unjustified bias against an exit on WTO terms. We are repeatedly told that a trade deal is a prerequisite for trading with another country, yet WTO rules provide a perfectly satisfactory framework. The IMF has shown that, between 1993 and 2015, 15 of the 22 largest exporters to the EU – which trade under WTO rules – increased exports by 135 per cent.
The seven with bilateral arrangements increased exports by 107 per cent. UK exports to the 111 countries with which it trades under WTO rules grew three times faster than its EU trade.
Similarly, the supposed “cliff edge” of WTO terms – with products subjected to a prohibitive array of new tests disallowing them from the EU’s market – ignores both the UK and the EU being members of the WTO and bound by its rules. The WTO’s trade facilitation agreement mandates “risk management” strategies for customs procedures “in a manner as to avoid arbitrary or unjustifiable discrimination or a disguised restriction on international trade.”
The agreement on so-called sanitary and phytosanitary measures, meanwhile, ensures WTO members can apply regulations and inspections “only to the extent necessary to protect human, animal or plant life or health, [when they are] based on scientific principles and [are] not maintained without sufficient scientific evidence.” In short, if there is no risk from UK products today, there is no risk the day after Brexit, since the quality of the products will not change overnight.
We should not, however, suppose that these agreements mean we must maintain full regulatory alignment to continue trading. They do not. This is important because UK regulatory autonomy is one of the key opportunities of Brexit. Recently in Washington, I met politicians of all parties enthusiastic for a UK-US deal. But they confirmed that it would not be possible unless the UK controls its own tariffs or regulatory environment.
The visit also offered a glimpse of the opportunities across the US to boost investment and co-operation in fields including agri-tech if the UK retakes control. Instead, the proposed deal ties us to the EU’s extreme aversion to innovation, one example of which came in July; the ECJ ruled that precise gene-editing techniques for crops should be subject to the same almost prohibitive regulatory hurdles as genetic modification.
Scientists from over 70 European research institutes objected to the ban which, as Dutch plant scientist René Smulders said, is “like using a typewriter while the computer has already been invented”.
For Brexit to succeed, we cannot remain slavishly bound in the EU’s onerous regulatory regime. If we are to flourish, we must do so independently, free to co-operate with allies right across the world in building a more prosperous future.
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