EU Brexit would turn UK from 'bad tenants' to 'good neighbours'

What Eurosceptics want is to withdraw from the EU's political structures while retaining trade links, argues Daniel Hannan.

By Daniel Hannan MEP

07 Jan 2014

[pullquote]I have yet to meet a British Eurosceptic who wants to withdraw from the European market[/pullquote]. Such people may exist but, in all the years that I've campaigned against the current system, I've never come across them. What Eurosceptics want, rather, is to withdraw from the EU's political structures while retaining trade links – along the lines of what Switzerland does, though with some modifications. This point is worth stressing, because supporters of EU membership have taken to arguing against a proposition that no one is seriously suggesting, namely the idea that Britain, a maritime and mercantile nation, should cut all ties to her European allies.

Jonathan Faull took this line in his article in this magazine on 28 October and, in doing so, unwittingly made rather a good case for Brexit. He helpfully listed the various European states that are, one way or another, attached to the single market: Macedonia, Norway, Turkey, Switzerland, Andorra, Iceland and so on. Though each of these states has ties its own deal with Brussels, and though there are differences of detail, Mr Faull is quite right to say that all are broadly covered by the rules on the free movement of goods and services. So does he, or anyone else, seriously think that Britain wouldn't get at least the same trade access as, say, Liechtenstein or the Isle of Man?

The chief difference between the 28 EU states and the European non-members is that, with the exception of Turkey, these latter are in a free trade area rather than a customs union. In other words, while the EU negotiates international trade accords on behalf of all its members collectively, the other states do so individually. Though the European free trade area (EFTA) countries generally parallel the EU's commercial accords with third countries, they are free to go further when they believe that the EU is being too protectionist. Iceland and Switzerland, for example, have negotiated free trade agreements with China. The EFTA states expect to conclude a commercial treaty with India early next year, while the EU's own talks with that great and growing country have stalled.

Of course, if the majority of your trade is with other EU members, such deals don't matter so much. But Britain, uniquely among the 28, sells more to non-EU than to EU states, and the gap is widening by the month. I can see the appeal of a customs union when your economy is closely entwined with those of the other members. If I were, say, Belgian, I'd probably support the current economic arrangements. But the United Kingdom is in a different position. Our overseas investment is overwhelmingly outside the EU, our natural trade routes link us to more distant continents and our economic cycle is not aligned to that of the eurozone.

It is sometimes suggested that, if Britain withdrew from the EU's political structures, it would face economic sanctions from the other members. I don't believe it: trade barriers would be self-defeating. In 2013, the UK overtook France to become Germany's single biggest export destination. We run a structural trade deficit with the EU (though not with the rest of the world), buying more than we sell. On the day we left the customs union, we would become easily its largest market, larger than the second and third largest (the US and Japan) combined. Why would anyone want to restrict cross-channel trade?

Unless you believe that other EU states would act from sheer vindictiveness – which neither I nor Mr Faull does – all the figures he quotes about the benefits of the single market become irrelevant. (By the way, that hilarious statistic about three million British jobs depending on the European market has long since been disowned by its author: do keep up, chaps.) It's the other things that we want to withdraw from: common policies on justice and home affairs, agriculture and fisheries, foreign affairs and defence, immigration and asylum, social and employment law, environmental regulation. Or, rather, what we want to do is collaborate in these areas intergovernmentally and globally.

Incidentally, there is an overwhelming case for rationalising the cats-cradle of accords that the EU has signed with Greenland, Monaco, Serbia and so on.

It's possible to envisage a pan-continental tribunal arbitrating trade issues, in the way that the north American free trade agreement or the association of southeast Asian nations does, leaving the EU to pursue political integration within that nexus. Britain might then transition amicably from the EU to the wider market, possibly followed by one or two of the other more reluctant current members. The EU would lose a bad tenant and gain a good neighbour.