Friday, 12 February 2016

Ruth Lea couldn't be more wrong if she tried

Writing in City AM comes a torrent of drivel from Ruth Lea. We'll skip the tedious pramble and get straight to the fisking. The preamble is the usual eurosceptic fluff about the balance of trade which roughly boils down to the kipperish mantra of "they need us more than we need them" and that we can turn our backs on as shrinking European market and trade with the world. Meh.

It's empty rhetoric in that European trade is too big to ignore even if it is declining, which it it isn't since its the share of global trade that is declining - but that's only because in recent years other economies are increasing their share in an expanding global market. That narrative is all about to go straight to hell in a handbasket anyway as we head into a global downturn so we may actually see a reversion to the norm. I can't say for sure, but then nor can Ruth Lea. The substance of what she says though is deeply wrong. 
Trade would continue under World Trade Organization rules if Britain left the EU; it would be the default position. In the absence of any trade agreement with the EU, we would then be subject to the EU’s Common External Tariff (CET) on goods – there are no tariffs on services, and EU exporters would be subject to any reciprocal tariffs we imposed. Granted, the average CET is now very low, but cars, for example, are subject to tariffs of nearly 10 per cent. A trade agreement would be in our commercial interests and, given their surplus, in the interests of our EU partners. It would surely be forthcoming. Moreover, there would be minimal disruption to our EU trade after Brexit and, therefore, a minimal short-term economic impact.
Not to put too fine a point on it, but this is total and unmitigated crap. This post explains at length precisely why. She couldn't be more wrong if she tried. This is the typical Tory myopia. They are way behind the curve in trade affairs.

They think only in terms of tariffs. Technical barriers to trade and mutual recognition agreements are completely alien to them. They have a total blind spot for them, refuse to acknowledge them and their significance, thus continue to get this whole argument badly wrong. Readers of this blog will know full well how serious this gaping flaw in eurosceptic thought is. More to the point, this WTO option nonsense is just not going to happen in the real world.

Looking ahead, Brexit would enable a major competitiveness boost to the British economy. First, we could repeal or amend those regulations associated with the Single Market which businesses find most irksome. Social and employment legislation and unhelpful financial regulations (on bankers’ bonuses, for example) spring to mind rather than those product regulations necessary for trade (which in any case tend to be agreed internationally).
For this reason, attempts to remain within the Single Market by reapplying for European Economic Area (EEA) membership on Brexit (the “Norwegian option”) strikes me as totally misplaced. For many businesses, the Single Market brings more costs than benefits. And a decade ago Gunter Verheugen (then EU commissioner for enterprise and industry) released data on compliance costs which implied that the costs of the Single Market could outweigh the benefits by a ratio of at least two-to-one.
The Single Market still tends to be perceived in the UK as a free trade area, with regulations added as a rather tiresome afterthought. But this is to profoundly misunderstand the Single Market, which was designed to be a harmonised (regulated) market from its inception. Regulation is in the Single Market’s DNA, and we would be better off without it.
I had to sit and stare at this for a while in utter incredulity. Does this woman have the first idea what she is talking about? Better off without regulation hey? What regulations? Car safety regulations? Electrical testing? Port inspections? Food safety? And what efficiencies are made by having two regulatory regimes to achieve the same ends? Put simply, this is a deliriously naive piece of libertarian fiction that has no place in adult political discourse. 

The reason I emboldened the words "a decade ago" is because that's how far out of touch with reality Lea is (at least). The fact the substance of compliance cost complaints are more to do with standards and not regulations would obviously escape the lady since she has an childlike understanding of regulation, but the crucial point is that they apply in or out of the EU, wherever you export to, since the EU regulation embodies global standards. The whole runtime of the WTO is presently devoted to regulatory harmonisation and the standardisation of regulations and standards. There isn't going to be a bonfire of regulations. Lea is off her rocker. 
Second, we could negotiate our own trade deals, on purely commercial grounds, with those countries with which the EU has yet to conclude any agreement, including the US, India, China, Japan, Australia and New Zealand. The necessary realignment of trade from the EU to the world’s more buoyant growth areas, already occurring, would be given a boost. Membership of the EU’s Customs Union precludes any such negotiations.
What on earth does she mean? This is pure gibberish. As Rob Sanderson notes, she states that the EU has no trade agreement with China, but this is only if you are looking at one that reduces tariffs and is registered with the WTO. There are other kinds of agreement, with China having 13 bilateral ones with the EU including an all important Mutual Recognition Agreement (for conformity of standards) signed in 2014.

The situation is similar for other nations such as Australia and the US. An agreement on mutual recognition of standards is essential for modern trade, they can take many years to conclude and having a UK-EU one in place post-Brexit would be of paramount importance, yet in her piece Ruth Lea gives no indication that they even exist.
Third, we could agree a more pro-business immigration policy which does not discriminate between EU and non-EU nationals. The current policy of the “freedom of movement of people”, a pillar of the Single Market, clearly favours EU nationals.
Actually, yes, it favours "EU nationals" - or rather EEA citizens. These would be convergent states where we have a strategic interest in maintaining openness. The reason migrants travel to western Europe is because of the lack of jobs and opportunities in southern and eastern Europe. That is why we need to focus on developing the economies of these poorer states. 

The more growth we see in the poorer countries in Europe, the less migration see. Freedom of movement as means of economic development is hugely (mutually) beneficial and more effective than direct state aid. 

It is in everybody's interests to benefit from the cheap labour and dynamism of Eastern european workers. The liberalisation of Eastern Europe has vastly benefitted Poland, and the remittances are a major source of growth. Freedom of movement within Europe is one of the only good things about the EU. 

Of course, the subtext here that we have a "more pro-business immigration policy" suggests some kind of uniform points based system, where for reasons best known to Ruth Lea, the state is somehow the best placed authority to decide what skills industry needs. For someone who apparently wants to see less bureaucracy and professes to liberal tendencies, she has a peculiar way of showing it. 

That is assuming that "more pro-business immigration policy" is not just empty braindead rhetoric. That is also a distinct possibility. Why these Tories think their arguments are any less risible than run of the mill kipperism beats the hell out of me. It's the exact same drivel. 

What we see here is moral cowardice in that the eurosceptic aristocracy dare not confront the baying kipper mob who insist that leaving the EU and ending freedom of movement is the way to control immigration. It isn't, they know it, but refuse to say so. Their social standing depends on maintaining the orthodoxy. 
And finally, we would no longer be a major contributor to EU funds, a useful potential addition to the Treasury’s coffers. Our contribution for 2015-16 will be nearly £11bn, net of rebate and public sector receipts.
This is barking. There are multiple cooperation agreements and participatory programmes that we would very much remain members of, along with a number of value added services where there is simply nothing to be gained by running parallel operations - and then we have to replicate an agricultural subsidy system. Does she really believe leaving the EU creates some sort of spending bonanza for the Treasury? If she does, she's off her medication.

Moreover, we are going to need to spend much more on aid in order to remove physical barriers to trade with the rest of the world before we even start looking at the technical barriers. What use is a trade deal with a third world African state that hasn't dredged its shipping lanes for twenty years?

Put simply, unless the old bat has finally gone senile, she is issue illiterate. But then having been in the eurosceptic game as a talking head for sometime, it seems inconceivable that she is not aware of the issues we highlight here, so we can only conclude that this is a deliberate assertion of falsehoods for selfish political ends. 

Whichever way you want to look at it, nothing the noxious Ruth Lea says here is correct. What we have here is the last gasps of a pompous, vacuous, sneering dinosaur who cannot publicly admit she is wrong, therefore like Bannerman, simply reasserts her ignorance in the hope that nobody will notice. Astonishing that the priggish arrogance in her means she is willing to potentially destroy the entire cause. There is nothing of value Ruth Lea can add to this debate and she is not worth a nanosecond more of our time. 

Sadly, this is the exact sort of witless buffoonery that John Redwood and David Bannerman subscribe to. This will most likely form the intellectual foundation of the lead Leave campaign. That is why our chances of Leaving are slim. It simply isn't a credible case and it will be cut to pieces in the final debate. That is why we need more independent bloggers if we want to win. 

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