One way to assess the value of the Customs Union to the UK is to track the trajectory of our principal export sectors over time. Since 1998, the UK’s fastest growing major goods exports (globally) have been pharmaceuticals, transport equipment and motor vehicles — in that order. None owe their commercial success to the Customs Union. Pharmaceuticals are almost free of global tariffs and so are aerospace products, which contribute 92% to the UK’s transport equipment exports.

Meanwhile the UK’s motor vehicle exports to EU peaked in 2007; the UK’s outstanding growth in the vehicles sector is powered purely by global enthusiasm for British motors.

aerospace products

But any meaningful analysis of the impact of the Customs Union has to place UK sectors into proportion – which means ranking them according to two-way trade. Here, there are two easy winners. UK–EU trade in motor vehicles is easily the country’s biggest, worth £67.5 bn in 2017. Next comes trade in food products and agriculture, worth £39.8 bn.

As the leading sectors in UK–EU trade, these pair have three things in common: they enjoy the highest levels of protection of any manufacturing sector in terms of the EU’s external tariffs; they generate the UK’s biggest EU deficits (£28 bn and £19 bn, respectively), and they are both represented by industry bodies that want the UK to maintain seamless trade with the EU.

Motor mania

First, cars. Using a three-year average at the start and end of this period and adjusting for inflation, UK motor-vehicle exports to EU have managed only fractional growth in 20 years: just 0.4% per year since 1998, or 6.7% over the entire two decades. Unnervingly, that growth is concentrated in the first half of the 20-year period. Adjusting for inflation, the value of average exports for 2008‒2017 (£15.03 bn, in 2015 prices) was lower than 1998‒2007 (£15.92 bn). This means by some measures, motor vehicles exports to EU are falling. Zero tariffs; zero market barriers; zero growth.

BMW

But here’s the problem: since 1998, imports from the EU have motored along nicely, growing at 3.6% per year. The result is a gigantic £28 billion deficit just in motor vehicles and parts — almost sufficient to write off the UK’s entire surplus in its trade in services.

Meanwhile, in the non-frictionless, non-seamless, non-Customs Union world of non-EU trade, UK exports have leapt ahead by a staggering 7.9% per year. Virtually all of the UK’s growth in motor-vehicle exports since 1998 is attributable to selling premium models to countries outside the EU: principally China and the US, but also ultra-high-end luxury models to the Middle East. The result is that despite being worth just a third of EU exports in 1998, exports to non-EU countries zipped past EU exports in 2012 and are now worth substantially more — £25.3 bn to £19.6 bn in 2017.

And thanks to the iron laws of mathematics, this difference will now accelerate away.

So, for the UK’s most-valuable trading sector, the Customs Union has operated as a one-way street. EU-based car-makers have retained a vice-like grip on the UK’s most-valuable import market with an 83.8% share that has dropped only fractionally since 1998. But there’s no reciprocity. Instead, UK auto manufacturing has relied for growth on global markets, with the result that the EU’s share of UK exports has plummet from 73.5% in 1998 to 44.7% in 2017.

Incidentally, this is easily the fastest switch-around of any major UK export sector, in the sense of exports switching from EU to non-EU countries since 1998. What’s more, the prominence of North America and China as markets for the UK’s premium marques implies that the proportion of the UK’s global motor exports already conducted on WTO terms probably exceeds the 73% average for UK goods.

UK car worker

Thus, the net effect of the Customs Union since 1998 has not been to create a springboard for UK manufacturing into continental Europe. Instead, it has placed a springboard in continental Europe, for overseas car manufacturers to ramp up their exports into the UK. Net investment has drifted from the UK to elsewhere in EU, and the growth in the UK’s auto deficit from £8.1 bn in 1998 to £28 billion deficit in 2017 is the living, haemorrhaging proof of it.

In employment terms, that springboard has bounced, very roughly, the equivalent of 40,000 jobs straight into continental Europe (This calculation is approximate. The UK’s trade deficit with the EU has widened by £17.32 billion (in 2015 prices) from 1998 to 2017. In the US, NBC estimates that wages contribute 10-15% of the cost of the average motor vehicle, and the average salary of a UK car worker, according to Auto Express, is £39,000. Using the lower figure, gives a value equivalent of 44,410 jobs. ).

The lethal aspect to this trend, however, is the way it is now edging into the UK’s premium sector – the power-house of the UK’s non-EU export growth since 1998. Jaguar‒Land Rover has now inaugurated production of its I-Pace and E-Pace models at Magna-Steyr in Graz, Austria, while BMW produces its second-generation Countryman models at VDL Nedcar in the Netherlands. Tellingly, the UK job losses announced by Jaguar-Land Rover in January 2019 followed the opening of a new £1 bn factory at Nitra, Slovakia, an investment decision that predates the UK’s 2016 referendum, and was part-induced by €125 million of EU-approved Slovak state aid.

Thus, for the UK’s biggest traded sector, the theoretical benefits of the UK’s membership of the Customs Union have failed to translate into measurable benefit. The protection of a 9–10% external tariff has not stimulated demand for UK-made vehicles and parts among EU customers over the past 20 years. Nor yet have the supposed obstacles of trading on WTO terms held back British motors from tripling sales (in real terms) since 1998.

The only observable impact of Customs Union membership has been to preserve the UK as a highly lucrative captive market for EU producers, with an 83% share of motoring imports.

Food for thought

Trade isn’t just exports, though. The equally vital role of trade is to secure for UK consumers the best quality goods at the lowest price. And if there’s one sector where this matters more than any other, it’s the UK’s second-biggest EU trade sector: food and agriculture.

At 0.7% of GDP, the UK’s agricultural sector is easily the smallest per head of any major economy in Europe. The UK is, perforce, a massive importer of food and agriculture products — currently to the tune of £42.9 billion per year. And so, even for non-free-traders, this is one area of trade where the interests of UK consumers easily outstrip the interests of UK producers.

aerospace products

Consequently, the UK’s strategic interest should be uncomplicated: to enable UK citizens to buy the cheapest and the best-quality food available on global markets. Yet this is precisely what the Customs Union prevents. By imposing ultra-high tariffs on non-EU food and quotas on imports, the EU forces UK consumers to purchase food from EU producers, who just happen to be the highest-cost food-producers on the planet.

But here’s the kicker: thanks to the Customs Union, the UK’s forced dependency on high-cost food is actually rising (Tab 8, Food, in UK’s Top 10 Sectors). Back in 1998, the EU supplied 67.8% of food products imported into the UK; this has now risen to 76.3%. The balance moderates slightly if you include agricultural produce (e.g. cereal) but agricultural produce is just 23% of the food that the UK imports. Add that to the mix and the UK’s reliance on EU for imports of all food-stuffs is still increasing, and stands at a 69.9%, totalling £30 billion in 2017.

Does this matter? Recent analysis from the Institute for Fiscal Studies by Peter Levell downplays the effect which the removal of tariffs would have on consumer prices, asserting the net effect on average households of the removal of all tariffs would be just 0.7% – 1.2%. The excellent analysis misses three factors, however: the effect of competition, the role of regulation, and the qualitative impact of changed spending habits – especially on less-well-off households.

First, the opening up of a protected or captive market to global prices would instantly stimulate competition, and competition would then become the dominant price-setting factor, not the old tariff differential. If overseas food producers bit straight into EU producers’ market share, EU producers would have to do reduce prices and become more efficient to retain market share (or gain fresh subsidies). There’s no telling how far price reduction would go but the dynamic of fresh competition for market share is the factor that would drive price reduction, not the original tariff advantage.

Second, some tariffs are particularly high, and their removal would disproportionately impact some households’ quality of life. As the IFS itself has itself pointed out, the least-well-off 20% of UK consumers spend more than 20% of their income on food. Imagine, then, the consequence of eliminating the effective 60% EU tariff on beef. Argentinian and Brazilian producers would charge into the UK market, and prices would quickly drop. But the effect would be qualitative. Families – and individuals, more to the point – would change spending habits and start eating high-quality beef, while paying less for the novelty. On them, the effect of tariff-free food would be immense.

Third, creating an open market in UK food stuffs wouldn’t simply be a matter of removing tariffs, but of reforming regulation to ensure it becomes non-discriminatory. And for consumers to benefit, a post-Brexit UK would also need to ensure compliance among trade partners. Analysts need only contemplate the effect – on consumers and UK car production – of the 2015 demise of the Land Rover Defender, when Jaguar Land Rover decided to comply with EU emissions regulations which other European car makers chose to flout. Without re-regulation, and compliance among trade partner, UK markets – especially food markets – will not become genuinely open, and value won’t flow to consumers.

In summary, a practical test of the utility of the Customs Union has to rest principally on the experience of motor vehicles, and food/agriculture. They are the UK’s two largest two-way sector trade with the EU and it’s where protective EU tariffs have the greatest trade-distorting impact.

In both cases, the trade data for 1998–2007 show the effect of the Customs Union is to retain or grow the UK as an essentially captive market, without reciprocal benefit to UK producers (in the case of cars) or UK consumers (in the case of food). And even from UK food producers’ perspective, exports of food products to markets outside the EU have grown faster than inside it (3.5% to 2.7%) despite the high tariffs and regulatory burdens common in trade in food. The rise in salmon sales to Korea following implementation of the 2011 FTA implies that the UK has much to gain from negotiating access to Asian markets – not just for fish, but also cheese and beverages.

I invite you to step through the experience of all the UK’s biggest trades by downloading the spreadsheet The UK’s Top 10 Sectors. The story described above repeats to a greater or lesser extent in each. The UK’s record inside the Customs Union is so unrelentingly poor that it begs a bigger question: do other countries fare any better? Is the UK’s experience just uniquely, inexplicably bad?

To answer that question, in a final instalment I will compare UK performance against other EU countries, non-EU exporters, the US’s and the Eurozone’s own growth rate.

The post The curious effect of the EU Customs Union on the UK’s cars and carbs appeared first on BrexitCentral.

The Society of Motor Manufacturers and Traders (SMMT) has swung into full ‘Project Fear’ mode with its latest claims that ‘UK Automotive (is) on red alert as ‘no deal’ threat sees manufacturing and investment plummet’ and ‘Brexit uncertainty has already done enormous damage to output, investment and jobs’. Not for the first time, the SMMT has gone completely OTT.

Let’s deal first with the actual data. UK car sales and production did fall sharply in 2018. But it is misleading, to say the least, to attribute to this to the ‘no deal’ threat. As the SMMT itself acknowledges, the global auto sector is reeling from multiple shocks, including the diesel scandals and a sharp decline in demand from China. Indeed, when commenting earlier on the UK sales figures, the SMMT barely mentioned Brexit at all.

Some further context: 2016 marked a cyclical peak for the UK car industry, with sales flattered by cheap finance deals, the launch of new models and the last of the pent-up demand from the recession. A correction was overdue, regardless of Brexit. And while the UK was the weakest of the major European markets in 2018, sales data from the European trade association ACEA show that the decline of 6.8% here was matched in both Norway and Sweden.

What about the reported collapse in ‘investment’, down almost half on 2017 to ‘just £588.6 million’? To be fair, there is plenty of evidence from other sectors of the economy that Brexit uncertainty has made companies more cautious, and it would be no surprise if this has impacted the auto sector too. But these statistics still need a major health warning. They are not hard numbers for actual spending.

Instead, they are ‘SMMT calculations based on new, publicly announced investment decisions in 2018 covering genuine commitments to fresh spend on new product, tooling, equipment or facilities’. Even taken at face value, these numbers are likely to be highly volatile from year to year.

A lot has also been made of the shutdowns planned for April as a precaution against ‘no deal disruption. Again, a sense of perspective is badly needed. Jaguar Land Rover (JLR), for example, is planning to extend its usual seasonal shutdown by just one week. To put this in context, JLR closed its main Solihull plant for two weeks in October last year, due largely to the slump in demand from China. It also extended the usual break over the Christmas and New Year holiday period by one week.

Nonetheless, all of this has been used as evidence that a ‘no deal’ Brexit in particular represents an existential threat to the UK automotive industry. Unfortunately, the sector has form here. The car makers warned in 2000 that they would leave the UK if we did not adopt the euro. Indeed, Nissan was still threatening to do so in 2004.

Of course, leaving the EU is potentially a bigger shock than remaining outside the single currency. Nonetheless, the comparison is valid. Membership of the euro would also reduce barriers to trade with the EU (by reducing currency risk and transactions costs, and increasing price transparency). However, it would only do so at the cost of losing control over key aspects of the economy (independence on interest rates and exchange rate flexibility) and potentially being on the hook for large budget payments to other members (the Greek bailouts). Car makers might only care about the former, but politicians also need to think about the latter. At the very least, the fact that the auto industry has cried wolf before makes it perfectly reasonable to ask whether it is doing so again.

To be clear, I understand why many businesses, including car makers, are worried about Brexit and especially the extreme ‘no deal’ scenarios: the potential for new tariff and non-tariff barriers, including border delays that might disrupt complex just-in-time supply chains. They could do without the hassle and additional costs. But there are two key points here.

First, there are still many ways in which these new barriers could be minimised. Both sides would have a strong vested interest in keeping border delays to a minimum, and tariffs may not be as big an issue as many assume either.

For example, the worst case assumes that, outside the EU’s Customs Union, manufacturers would have to pay the (actually quite low) tariffs on components every time these cross the new UK-EU border. As it happens, the number of times that this happens is usually exaggerated. But in any event, this ignores the many trade facilitation arrangements that already apply to parts imported from outside the EU, such as inward processing relief, which should also protect UK-EU supply chains from cumulative duties.

Tariffs on the finished cars themselves could be more of a problem, though this may also depend on the proportion of inputs coming from the EU. But if we are talking about worst case scenarios, these usually include another large fall in the value of sterling which could maintain the competitiveness of UK exports. Indeed, research by Deloitte has suggested that a ‘hard Brexit’ could do far more damage to the German car industry than our own.

The second key point is that even if there is some additional disruption in the short term, a ‘no deal’ Brexit could simply be an alternative stepping stone to a free trade agreement that addresses all the auto sector’s concerns. In other words, even a disorderly exit, while clearly far from ideal, need not have any lasting impact on investment or jobs.

To sum up, I’m not going to tell the SMMT how to make a car. But I do think it’s right to question what the industry is assuming about how Brexit might play out, and to view their darkest warnings with a healthy dose of scepticism.

The post Don’t believe all the car industry’s prophecies of Brexit doom appeared first on BrexitCentral.

So the EU and the 27 have rubber stamped the deal and as our Prime Minister embarks on her nationwide tour to try and convince the public to lobby their MPs to back it, what does it means for us as a medium-sized business?

With 130 employees, exports to more than 140 countries to date in nearly a century of trading and multi-million pound investment plans, our future – and that of our people and their families – hinges on this deal and the outcome in Parliament on Tuesday 11th December.

And we think it is a con. The deceit behind the establishment’s efforts is plain to see. Our nation will not have taken back control and, as many have already said, this deal will leave us in a worse situation than had we actually remained in the EU.

Neither of these options – agreeing to Mrs May’s deal or officially remaining in the EU – is viable.

Mrs May wants us to lobby our MPs, and we should. We should tell them to vote against this terrible deal and to push for a totally clean break – the time has come for a ‘no deal’ Brexit.

And here is why – staying in or agreeing to Mrs May’s deal would:

  • Leave a business like ours under the control of EU regulation. Our business would be exactly as we were pre-referendum. We voted to Leave to be out of this trap. This deal damages our business, our staff and their families and many other UK companies.
  • Leave us unable to sign trade deals with the rest of the growing world where the UK makes a surplus in our trade on goods. Not only will this be damaging to our business, it will damage all of us.
  • Prevent us from being able to negotiate a future trading arrangement with the EU that is favourable to us. Already the French and Spanish are using the agreement to the Irish backstop to their advantage. This backstop is a threat to our United Kingdom and it allows others with different political agendas to use it as leverage against our country.

For the above we have the privilege of paying a £39 billion price.

Let us remember just what our membership of the EU has meant for us. Firstly, the payment of circa £10 billion (nett) a year in membership fees and the surrender of our sovereignty by allowing the European Court of Justice (ECJ) to reign supreme.

Membership has resulted in the demise of our manufacturing heartlands as multi-national companies exploit the system in their favour. Many jobs have been exported to other member states where labour is cheaper and regulations differ. Some businesses have even received EU backing to export British jobs overseas.

The never-ending burden of bad EU Directives and Regulations has held back business, and stifled competition and innovation. Meanwhile the free movement of people has helped to hold back productivity due to some employers taking advantage, making it less affordable and attractive for business to invest and boost output.

The uneven playing field that exists means that we are not able to trade fairly in the EU because of individual hurdles that are erected to keep us out and of course, the unfair competition that we face due to not everyone playing by the same rules.

Crucially, membership has led to the loss of our world-renowned British Standards (BS) and their replacement by Euro norms, despite them being probably the best in the world. REIDsteel has 150 structures in the Caribbean, all designed to British Standards. Every single one stood up to the category 5 hurricane that saw Chinese and American buildings blown away last year. The forced use of Euro norms increases costs by an average of 20%, making us less competitive in the real world.

So, unforgivably, Prime Minister May’s deal betrays what the people of this country voted for and locks us back into almost everything that the EU stands for; it is a capitulation.

Furthermore, if our politicians allow themselves to be bribed, coerced and pushed into agreeing the deal as it stands (even with the backstop removed) the insignificant gains of the arrangement will undoubtedly ebb away and we will be left like a sitting duck.

As Mrs May once said, no deal is better than a bad deal. The elite and the ultra-Remain camp promote catastrophe at the very thought of no deal, but this is absolute nonsense.

There will undoubtedly be some short-term disruption but it is worth remembering that Operation Stack at Dover has been in force more than 211 times without any reported catastrophes to the just-in-time delivery chain.

In any case, ‘no deal’ actually means a deal on World Trade Organisation (WTO) terms which is infinitely better than what the Prime Minister and her Government are trying to sell us.

Those who prophesy the end of days in a no-deal scenario either don’t know what they are talking about or are deliberately spreading fear and lies to frustrate Brexit or bring it about in name only.

Most of the rest of the world can and does trade on WTO terms and countries like China, Australia and America seem to manage just fine; it is complete nonsense to suggest we can’t do the same.

We can and we should have a clean Brexit. So let’s get on with it. Write to our MPs and tell them to start believing in our country by supporting the rejection of this terrible deal and backing a clean and proper break.

Only then can we ever have a good meaningful relationship with our partners in Europe and across the world.

A no-deal outcome will be just fine: we will go on to prosper outside the EU’s protectionist bloc that has never protected our country and its people.

Without this we will never take back control.

The post I export to 140 countries and say we should reject Theresa May’s deal and embrace a WTO Brexit appeared first on BrexitCentral.

My biggest beef with the European Union has always been the way it stifles consumer-friendly innovation in the interests of incumbent businesses and organisations. Today’s victory for Sir James Dyson at the European General Court lays bare an especially shocking example.

Dyson’s case, which has taken five years in the courts, reveals just how corrupt and crony-capitalist the European Union has become. It is no surprise that Sir James was and is a big supporter of Britain leaving the EU. Essentially, the rules have been bent to allow German manufacturers to deceive customers about the performance of their vacuum cleaners, in a manner uncannily similar to – but even worse than — the way mostly German car manufacturers deceived customers about the emissions from diesel vehicles.

In today’s decision – a very rare case in which the EU courts have had to back down — the EU’s General Court said it would uphold Dyson’s claim and that “tests of a vacuum cleaner’s energy efficiency carried out with an empty receptacle do not reflect conditions as close as possible to actual conditions of use”. Yes, you read that right: until now, in Europe only, vacuum cleaners were tested without dust, the better to suit German manufacturers.

The case concerns labels on vacuum cleaners stating how much energy they use. The Energy Label for corded vacuum cleaners is mandated by the EU’s Ecodesign and Energy Labelling regulations. The purpose is to encourage energy efficiency in such products and the job of the Energy Label is to make sure that consumers get clear information about product performance. Dyson was the first manufacturer to support limits on the power consumption of motors in vacuums. Why wouldn’t it be: its Cyclone product is very efficient?

The Energy Label was introduced throughout the EU in September 2014 and updated in September 2017. It covers overall energy rating, rated A to G, with A being best and G being worst; annual energy usage: in kWh; the amount of dust in air emitted from the machine’s exhaust (A to G); the noise level in decibels; how much dust the machine picks up from carpets (A to G); and how much dust the machine picks up from hard floors and crevices (A to G).

All very reasonable, until you find that the European Commission stipulated that under these regulations, vacuum cleaners are tested empty and with no dust. This flies in the face of the methods developed by the International Electrotechnical Commission (IEC), an international standards organization, which have been adopted by consumer test bodies and manufacturers worldwide. It is out of line with the way other appliances, such as washing machines, ovens and dishwashers are tested “loaded”, not empty.

Why would the EC have made this strange decision? Because the big German manufacturers make vacuum cleaners with bags. Sir James Dyson invented ones without bags. And the bag ones gradually become clogged with dust so they have to use more power or lose suction. The decision to test them empty plainly benefits the bag-cleaners. Behind the scenes the German manufacturers lobbied for this outcome.

The result of this is that you can buy a bag cleaner with an A rating, take it home and find that most of the time it performs like a G-rated cleaner.

So in 2013 Dyson challenged the labelling rules in the EU General Court, arguing that, to reflect real-life experience, the performance of a vacuum cleaner should be tested in real-world conditions, and that might actually include – God forbid – encountering dust. In November 2015, the EU General Court dismissed Dyson’s claims saying that dust-loaded testing is not reliable or “reproducible” and therefore could not be adopted, despite the fact that the international standard does use dust. Nonsense: in its labs and in houses, Dyson tests its own machines using real dust, fluff grit and debris including dog biscuits and Cheerio cereals – of both the European and the American kind.

Dyson appealed to the European Court of Justice in January 2016 and on 11 May 2017 it won. The court said that to reach the conclusion it had, the General Court “distorted the facts”, “ignored their own law”, “had ignored Dyson’s evidence” and had “failed to comply with its duty to give reasons”. The ECJ said that the test must adopt, where technically possible, “a method of calculation which makes it possible to measure the energy performance of vacuum cleaners in conditions as close as possible to actual conditions of use”. The case was passed back to the General Court, which was given time to reconsider its verdict at leisure. Today, after eighteen months of cogitation (what do judges do all day?), and with nowhere to go, the court capitulated.

Dyson has this to say about the case: “the EU label flagrantly discriminated against a specific technology – Dyson’s patented cyclone. This benefited traditional, predominantly German, manufacturers who lobbied senior Commission officials. Some manufacturers have actively exploited the regulation by using low motor power when in the test state, but then using technology to increase motor power automatically when the machine fills with dust – thus appearing more efficient. This defeat software allows them to circumvent the spirit of the regulation, which the European Court considers to be acceptable because it complies with the letter of the law.”

How much more shocking does the crony-capitalist corruption at the heart of Brussels have to get before people rebel against this sort of thing? They did already? Ah yes, Brexit, true Brexit, cannot come soon enough.

The post Dyson’s five-year legal battle reveals the crony capitalist corruption at the heart of the EU appeared first on BrexitCentral.

The news that Boeing has just opened a £40 million manufacturing facility in Sheffield to make parts for their latest 737 and 767 aircraft, which are assembled in the United States, serves to remind us that our world-class aerospace business is global and to torpedo the claims of Airbus – and some car manufacturers – that Brexit will threaten jobs in the UK because it will cause havoc to the just-in-time manufacturing process. Boeing’s plans call for the production of 52 aircraft a month with thousands of parts being shipped every month to Portland, Oregon, so timely delivery will be just as critical to Boeing as it is to Airbus.

So, the question arises: if Boeing can operate a slick production process using parts made in Britain, shipped six times the distance to their assembly line compared to shipping Airbus parts from Bristol or North Wales to Hamburg or Toulouse (and BAE ship 15% of every single F35 Joint Strike Fighter to the Lockheed Martin plant in Dallas), what is Airbus’s problem? The answer lies not in economics but in politics.

As is increasingly clear, despite protestations to the contrary, elements of the EU really do want to punish the UK for having had the insolence to Leave and to deter other countries from following our lead. France seems to be the most determined to press for punishment, partly to try to seize the City of London’s business and partly to promote President Macron as the new EU leader as Angela Merkel’s grip weakens.

Recently there were reports, subsequently denied, that President Macron intended to require UK visitors to France to obtain visas whilst those Brits with homes in France would immediately upon Brexit become illegal visitors. Apparently, the word ‘not’ was omitted in translation and the proposed new law designed to prevent such action. However, Dominic Raab subsequently spoke about the possibility of France ‘deliberately’ delaying lorries entering the port of Calais.

Earlier this year, the EU announced the creation of a fund to develop new defence equipment, a programme from which the UK, home to Europe’s largest defence contractor and with the largest defence budget in Europe, was to be excluded. Furthermore, the UK is to be ejected from key parts of the EU satellite navigation programme, Galileo, despite having contributed £1.2 billion and constituting, through Airbus subsidiary Surrey Satellites, a key portion of the technology. Any reasonable person would ask where was the commercial, let alone defence, interest in excluding such a major European player. Again, the answer lies not in economics but in politics: the UK has to be punished even if it means damaging the defence interests of the continent.

As we approach the sombre commemorations of the centenary of the 1918 armistice which ended The Great War, it is worth pausing to reflect on the role of some of those nations who, in the famous words of Margaret Thatcher, ‘we either rescued or defeated’.  The British people have voted freely but decisively to Leave the EU, yet face punitive measures by some on the continent for whose liberation in two world wars this country and its Empire shed 1,300,000 lives. Whilst falling over themselves to secure favourable trade deals with the rest of the world, the EU’s leaders have adopted the reverse policy with their closest neighbour, refusing to discuss trade arrangements before sorting out an artificial problem of their creation by weaponising the Irish border, a clear solution to which has been proposed by the ERG and others.

In another example of the pathetic approach in Brussels, I understand that the EU’s aviation safety agency, EASA, is debarred from discussing with our CAA how we manage air travel post Brexit.  Given the UK’s prominence in air transport, with Heathrow being the most important transatlantic gateway airport in Europe, why is EASA not engaged in constructive debate? Iceland, Norway and Switzerland are members of EASA even though they are not EU members, so why remove the UK? Again, the answer lies in politics, not economics. They want to cause inconvenience, if not chaos, to rub home to the others the cost of recovering national sovereignty.

All this illustrates the fundamental naivety exhibited by the UK at the outset of the negotiations, namely that if we conceded and acted in a friendly fashion the EU would respond in similar vein, leading many Leave voters to question the motives of those in charge. We never acknowledged the determination of the Commission to protect The Project (to create the United States of Europe) and we failed to recognise the strength of the cards in our hands.

So we threw away the security card, offering unconditional support to the 27, only to be rewarded by exclusion from EU defence programmes. The Prime Minister offered to pay a staggering £39 billion of our money in return for – nothing. Well, if she thinks British taxpayers will tolerate that, I fear she is mistaken. I can no longer withhold my vote in Parliament, but I can withhold my taxes unless I see a fair trade deal is secured.

The post In so many areas the EU’s negotiating stance is sadly defined by the politics of punishment, rather than economics appeared first on BrexitCentral.




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