Friday, 15 January 2016

Brexit: Why is nobody talking about non-tariff barriers?

One thing that gets right up my nose is when europhiles produce surveys of economists and their worthless opinions on Brexit. Almost uniformly they fail to make the distinction between hard and soft Brexit and the differences between the EU and the single market - and so many of them have an entirely two dimensional idea of what actually constitutes a single market.

As much as a free trade area is a region of zero tariffs, it is much, much more than that. It's about common practices, harmonised regulation, mutual recognition of standards and qualifications. Looking at WTO tariffs we see that they are becoming so small as to be virtually inconsequential, with the trend moving toward their total disappearance eventually. The global conversation has moved on.

The real barrier to trade is navigating the complexities of foreign regulatory codes and requirements along with the physical barriers and technical difficulties in moving goods form one place or another. This can come in the form of paperwork and inspections through to problems with infrastructure and logistics. That is why we need cross-border regulation. Without it, trade cannot happen - and that is why would wish to retain as much convergence as possible - even in the unlikely even that we left the single market as well as the EU.

In this, tariffs are an entirely secondary concern which can be sorted out by the accountants and bureaucrats and "economists" - but harmonising procedures and standards goes far further. It can mean an agreement on the format of forms through to removal or standardisation of goods inspection, through to the the mechanisation and modernisation of ports. This is where the big opportunities are for Britain if it leaves the EU.

Trade facilitation is the big theme of the WTO - and squeezing every last efficiency out of supply chains requires that they hold frequent multilateral talks. And this is how we will arrive at a global single market. It's a work in progress but that is the direction of travel.

In order to bring Africa and the Far East into the fold, it will require masses of investment. It will require airports, ports, new roads and training to ensure standards are implemented. It's actually worth watching a couple of Top Gear Specials just to have a close look at the roads in Botswana and Burma. It's instructive as to why they cannot climb out of poverty.

And as much as infrastructure is a factor, so is time. Delays on the docks and airports and delays in traffic can wipe out the value of a container load of goods. A lorry load of perishable goods sat in gridlocked traffic for eight hours ensures spoilage - thus there is no point even risking growing the crop. This is a major problem that is holding back African development.

In this, managing roads and building regulatory systems, Britain has expertise like no other. That is what we bring to the table. Through having our own aid and trade policy we can be opening up new markets and new trading destinations - and our exclusive rights from doing so independently gives us unprecedented leverage at the top tables.

Of course, this is going to require a lot of investment and if anybody thinks we're going to be cutting down on foreign aid spending any time soon they are in a world of their own. But by spending it directly we have more of a chance of enhancing our own economy while lifting Africa out of poverty, thus eradicating the need for the sort of subsistence aid the EU believes in.

Clearly there are tangible benefits to taking action independently and coordinating efforts with the WTO, and having our own voice in establishing the common standards and inspection systems. Again - something we are global leaders in. Red tape is one thing we do well.

But we never hear anything like this from "economists". When they speak of Brexit, they roll out the tired old canards of tariffs, scarcely mentioning that continued EEA membership means no European level tariffs. Moreover, there is a natural harmonisation of trade within Europe by way of having similar, if not identical infrastructure - and similar systems of inspection. Brexit does not mean an end to the the single market in that the core of it consists of physical and tangible systems that no government has any interest in meddling with.

Tariffs or no, we still have the most commonality with Europe in terms of systems - and that's as much to do with the infrastructure all being owned by the same companies. We're seeing corporates like Amazon becoming freight forwarders, acquiring their own aircraft and container ships - and having a stake in the ports they use. The existence of a political entity that inherits global standards and translates them into EU has very little bearing on a modern westernised logistics system.

We might even go as far as saying that the EU is wholly redundant to the harmonisation in trade in that the multinationals are in part the authors of their own regulation and comply with systems before they come into law. There is a financial incentive in seeking common practices and in this, the EU, and the global regulatory bodies are behind the curve.

As usual, we see the same old arguments trotted out that sound identical to the ones we heard in 1975 and all through the nineties, completely oblivious of the tectonic shifts that have happened in the last ten years alone. And this is only in terms of trade in physical goods. There are then the intangibles to consider.

What we are looking at is a massive surge in international trade in services, money transfer and intellectual property. This goes way beyond one corner of Europe. Digital services and money transfers are no longer clustered in Europe and it is the world first true global market place that extends into nearly every home. In this we need a global system of governance and single set of rules, where everybody has a say in how they are made. The very last thing we need is an EU breaking away from the global norms and establishing their own internal systems.

On this I could write volumes and type my fingers to the bone because the domain is so vast. And that's really the point. When you look at the true nature of what constitutes a single market, and how global governance influences it, and then contrast it with the waffling of economists, offering their two dimensional Euro-parochialism on the matter of tariffs alone, you can see that these people are really not worth our time. Their opinions not really worthy of consideration.

And actually, this goes for both sides. This much has been said as much to our dismal eurosceptic Tory bunch as it has been said to the europhile business mandarins of the CBI. Almost uniformly we find such people close themselves off and instead speak from their comfort zone, trading thirty year old arguments that have little or no bearing on the real issues we will need to weigh up on leaving the EU.

I have yet to see a single economist weigh in on the debate who has even the first comprehension of non tariff barriers because it falls outside the domain of petty accountancy. As to our media, fuhgeddaboudit! If we want a grown up debate and serious debate about the issues then the self-declared economists and "experts" must be wholly ignored. They trade on their brand prestige and their fancy titles, but what we're really looking at are heavily partisan political activists peddling their wares, masquerading as economists.

In truth, there are only two types of europhile. The deceivers and the ignorant. Though we are increasingly finding that the two qualities are not mutually exclusive. It's all so much bigger than their petty Euro-obsessions and their blinkered bean-counting. It hasn't progressed any further from the debate we had in 1975 and it is wholly irrelevant to the world as we find it today. It's pathetic.

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