What Does Britain Have to Offer?
Now comes the time to ask a really important question – what does Britain really have to offer the EU? The “Vote Leave” campaigners like to say that leaving the common market is not going to be a problem, because UK will be able to negotiate free trade deals on its own terms, both with the EU and the US.
However, there has to be a mutual incentive to strike such a deal. So the question is – what are the reasons EU would allow the UK unrestricted access to its markets?
If Germany left the EU, Europeans would still buy German cars, pharmaceuticals, chemicals and more – because it’s hard to match their quality. If France left, they would still drink French wine, eat French cheese, drive a Renault or fly an Airbus. Even Italians export more than the Brits do, and if they left, there would be no shortage of demand for Fiats – or Ferraris, Lamborghinis and Maseratis – as for the various luxury goods and products of their robust agriculture sector.
Demand for oil and gas forces EU to trade with the devils – in Moscow, Riyadh, Doha or Tehran. If Europe had an alternative to buy these resources at good prices from more civilized countries, it would certainly do so – but it can’t, so it must buy from them.
Britain’s position looks quite weak in comparison. The single largest element in their export menu are cars, constituting nearly 10% of the total. However, today there are hardly any British manufacturers left in the market. Apart from maybe McLaren, all major brands are foreign based or owned. Bentley, Rolls Royce, Mini – are all German, Jaguar and Land Rover belong to Indian Tata and even smaller Lotus was bought by Malaysian Proton, while Aston Martin is owned by an Italian investment fund. On top of that, UK is an assembly location for Japanese Toyota, Honda or Nissan, whose cars add handsomely to the export figures.
It won’t be the British investors and executives who will decide on the future of manufacturing after Brexit.
And what incentive do the EU countries have to allow assembly lines producing for their own markets, to be located outside of the union? If Volkswagen and Fiat can manufacture their cars in Poland, why wouldn’t the Japanese carmakers do so eventually?
Car and vehicle parts amounted to over 52 billion dollars out of 472 billion in total UK exports in 2014, nearly half of which ended in EU countries – and that’s only one industry. Why would European companies be encouraged to buy British gas turbines, chemicals or iron products, if they can get German or French ones, within the common market? Why would they allow the money to flow outside of the EU, if they can keep it inside? Trade reality shows that it happens only if there’s no other choice (like in the case of scarce mined resources).
This is not to say that European countries would stop buying from the UK overnight, but they would have little incentive to maintain strong ties – and develop new ones. Britain’s competitive advantages are weak to sustain demand if the country is outside of the common trade area.
In reality, of course, Britain would not be locked out of the EU markets completely – after all, there are relationships the union has with countries like Norway or Switzerland – but, again, to be able to trade with the EU they do have to adhere to standards set by Brussels, so we’re back to square one. There’s no way to dodge these rules – and being outside there’s no way you can shape them either.
Let’s also not forget about the benefits the UK enjoyed by opening its market to millions of foreign workers from within the EU, which brought much needed expertise, at a lower price, filling positions locals didn’t want to take. It’s another example of how Britain is actually a hostage to incredible freedoms that the European Union has granted to its members – and yet it fails to acknowledge that.