Thursday, 27 August 2015

We want a global single market


Annoyingly I have to write more on the subject of the single market. Seems the message is not getting through. There is the legal entity of what constitutes the European single market or the EEA, and then there is what a single market means in reality.

As we have previously outlined, border tariffs are far less significant than they were in 1975. The real barriers to trade are technical in nature - and these can be removed by producing and shipping to a common standard. In that respect the main effort in removing technical barriers to trade happens not between nations or blocs but between regulatory agencies.

If a nation then agrees to those regulations and standards it then has latitude to draw up a Mutual Recognition Agreement (MRA) with another bloc or nations. They are much more valuable to producers and exporters than a free trade agreement removing marginal tariffs. That then in essence, and in practice, makes them part of a single market. Australia has an MRA with the EU thus in the literal sense it is as much a part of the single market as we are when it comes to goods and services. But they are signing up to global rules, not EU rules.

It is very much the practice of yesteryear to seek comprehensive trade deals. They take a long time and replicate a great deal of effort. Far more trade is facilitated by European automotive regulators talking to far eastern regulators and agreeing to industry and sector specific conventions, and all governments then have to do is recognise it in law. That is largely what the EU does in negotiating something like TTIP.

This is how we are building a global single market in goods as diverse as dry freight, automobiles, food and electronic goods.

Where EU membership falls down is that it has the EU bloc ringfenced. By its insistence on broadly comprehensive trade deals, it is more exclusive than inclusive. It has made some successes in creating agreements between it and other nations, and we would want to maintain EU single market access to use those agreements by proxy, but membership of the EU means we are not at liberty to open up our own trade avenues or initiate talks between regulatory agencies. Thus any new or emerging markets we have must wait in line to be addressed by the EU machine.

Instead of individual industries being able to come together at the global level, we must wait for the EU to open up talks for deep and comprehensive trade deals that often include cultural and social reforms - which take a decade to agree if they can be brought to fruition at all. Good luck trying to get Algeria to agree to a programme of social reforms recognising full equality for gays etcs.

The EU places its own cultural imperialism above facilitating global trade, not just in the EU but also through its neighbourhood policy. That is why the rest of the world is overtaking us in terms of opening up new markets. There is always a catch with the EU and it is still wedded to the idea of all encompassing agreements including reforms of non exporting sectors. In this it has lost global agility - and thus is less of a priority for global exporters. It's cheaper and faster to open up new markets. It's really no accident you hear the words sclerotic and stagnating in reference to the EU.

The question for us is whether we wish to remain part of this insular little club or whether we recognise the world has moved on and that markets are far quicker to reach regulatory agreement than governments.

The challenge in this respect is that the global regulatory agencies are made up of governments, NGOs, trade guilds and unions and corporates. While government is involved the missing component is democracy.

It is said that the EU puts democracy into this process but in practice we seldom ever manage to block anything we don't like. What pooling sovereignty means is delay and compromise - and because it is done by proxy, such matters have dropped out of our national conversation. It has lengthened the chain of accountability so much happens without our influence.

It is my view that independence will always be the best option for Britain in that we can can set about creating a benchmark for interfacing with the EU single market so that anyone may join it, thus reducing the EU to an actor within a global single market rather than the master of it.

As much as that's good for trade, it allows the EU to consolidate what it has attempted while loosening ties with non-Euro states so they can get what's bets for themselves. It also ends the EU as a regional cultural hegemon which I think is best for global security.

There is a common misconception that because there is a legal entity establishing an EU/EEA single market that it is THE single market, assuming that the EU necessarily makes the rules and that we need to be in the EU in order to influence the rules. We don't. From Basel2, Codex, UNECE and UNEF, more or less all the rules of market governance are made at the very top table and the EU is but one government that codifies such agreements into law. We don't don't need the EU to do this on our behalf, nor do we get the best for ourselves when it negotiates on our behalf.

Of course we would continue to make compromises both at the global level and the EU level in order to reap benefits viewed to be in the common good, but ultimately, we would be the ones deciding what that common good was.

The bottom line is that the world has moved on from the EU, and it's ambitions of spreading it's social democrat ideas through sheer political might cannot succeed. Ultimately humans are most peaceful when there is abundance. Nobody ever went to war over a surplus. Consequently if we want to export "our" values, we'll get there faster with trade by increasing the wealth of other nations. Since those values are then organic and authentic rather than imposed, they will be lasting and unbreakable. "Reform or else" is the modus operandi of the EU. It's great on paper but in practice it's a disaster and will never manifest in reality.

The future is intergovernmentalism, not surpranationalism and if we want a one world market, the EU is an inhibitor to it, not a driver. It's time to break the deadlock and leave.

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