The latest entry in John Redwood’s Diary reveals why the EU is an obstacle to real free trade:
It is one of the ironies of life in the EU that an apparently good idea, more free trade with the USA, ends up with both left of centre and right of centre critics combining to condemn the way the EU has been doing it.
Don’t get me wrong. I think free trade creates more jobs and greater prosperity. Successive rounds of tariff reductions by GATT and the World Trade Organisation has helped power world growth and expanded exports and imports greatly in recent decades. My first criticism of the EU and TTIP is the eternal delays they have created. The idea of closer trade links was first seriously explored in 1990 at the time of the Transatlantic Declaration. 1995 saw the establishment of the Transatlantic Business Dialogue, which too wished to pursue freer trade rules bilaterally. If the UK had been free to negotiate our own trade deals instead of having to do it through the EU, I am sure we would have had a good trade deal with the USA years ago. Now some 25 years later we are still a long way off an EU/US Trade Agreement.
The EU concedes that it has been overtaken by the WTO. Half of all trade between the EU and the US is already tariff free, and the rest faces an average tariff of under 3%. It is good news the EU says it would be happy to surrender its 10% external tariff on cars. Why doesn’t it just do so? The US only charges 2.5% on cars imported from the UK or the rest of Europe, just one quarter of the high tax the EU imposes. The EU should just get on with it and remove the tariff. There are higher tariffs on some shoes and clothes that could also be cut to help consumers.
Because there are few tariffs left, the negotiations have become complex and are to do with rules and regulations more than with customs duties. The two sides are looking at ways of harmonising or co-ordinating difficult matters like Intellectual property, competition law, safety regulation of food and chemicals, public procurement and banking regulation. They are being drawn into areas of government which may limit the USA or the EU right to make their own decisions, in a way which will be all too familiar to UK voters who have considerable experience of the supranational EU intervening in our affairs.
Many on the left in the UK are alarmed by TTIP. I think they are wrong to conclude that the NHS will be damaged by it through offering rights to US health companies to compete in our monopoly health care in the public sector as this is expressly ruled out. However, they are right to ask how much power will the Agreement transfer from Parliament and government to this international agreement and the courts.? How will it affect employee rights, public procurement and other important domestic sensitivities?
The EU is busily trying to impede some areas of possible agreement. The French have already vetoed any possible agreement on audio visual industries. The EU is making heavy weather of negotiations on freer trade in agricultural produce, as the EU will not allow genetically modified product, has different views to the US on hormone treated beef and various pesticides. Some in the UK agree with the EU position on these matters. None of us wish to see risks taken with our health, and understand the caution of some EU regulators. It just means more delay and difficulty in ever reaching an Agreement which might mean something.
The TTIP for me is not an argument to stay with the EU, but another reason why I think the EU lets us down. It gives free trade a bad name with the left, by ensnaring the talks in difficult territory on health and safety, employee standards and public procurement. It means eternal delays in getting progress on tariffs and market access, areas with more positive pay offs for consumers. It means the UK cannot get on with it and shape an Agreement which we like and which suits us.
Thank heavens for the WTO. It has done most of the job for us in getting tariffs down. It’s a pity the EU cannot also do the same, and cannot find a way to further and hurry free trade that does not upset so many of us. The EU’s negotiation of the TTIP just looks like another clumsy EU power grab, allied to anti American rhetoric on sensitive topics which does not help anyone. The danger of that is the wrong kind of TTIP could strengthen the extraterritorial reach of the US legal system, the opposite aim to the claims by the EU.
Click here to read this piece in John Redwood’s Diary.