|
|
PRESERVING TRADE, PRESERVING JOBS? (The original Eurorealist article) |
|
|
|
In the recent
Guildhall debate on survival outside the EU, arch-Europropagandist Sir Martin
Sorrell asked why we would “cut off our
trade”? He also raised the prospect of having 10% duty on our motor exports
to the EU if we left.
The chances
are he’s wrong on both counts. For a start, the ‘EU27’ sell us far more
vehicles than we sell them, and would get hit worse by any punitive measures.
European economies are in such a state that a trade war would be disastrous to
them.
Sorrell might also be the species of
Europhile that doesn’t read treaties. If he picked up the Treaty of Lisbon, he
might note:
TEU
Article 21, para 2 states: “The Union shall define and pursue common
policies and actions, and shall work for a high degree of cooperation in all
fields of international relations, encourage the integration of all countries
into the world economy, including through the progressive abolition of
restrictions on international trade.”;
TFEU
Article 206 also lays down: “...the Union shall contribute …to the
harmonious development of world trade, the progressive abolition of
restrictions on international trade and on Foreign Direct Investment [FDI], and
the lowering of customs and other barriers.”
For neighbouring countries (i.e. us
after we’d left!), he would also find that the Treaty legally commits the EU to
the freest possible trade, free movement of capital and peaceful co-operation.1
All of the
‘EU28’ are members of the World Trade
Organisation (WTO), where the EU has group representation. It is a
principle of the WTO that once trade is liberalised, it stays liberalised, or
compensation becomes payable.2
The WTO
allows regional unions (such as the EU) as a means of easing trade between
members, but not to raise barriers to the trade. In
fact, they must avoid creating adverse effects (tariff or non-tariff barriers)
to other WTO members (i.e. us), and to do so would result in legal action.3
Under WTO GATT/GATS
principles, once goods/services are allowed into a market, discrimination on
grounds of nationality is banned. (Referred to as ‘most favoured nation’ or
‘MFN’).4
This is a
working generalisation and there is some small print (for instance, it is legal
to temporarily ban imports on public health grounds). MFN rules may sometimes
allow temporary exemptions, but the WTO is vigilant over possible abuse.
The situation
is very different to 1975, as world trade barriers have since been slashed,
removing one ‘argument’ for being in the EEC/EU.
To those who fear
that the EU would try to make it difficult for Britain to stop us leaving, the
evidence actually points to the opposite. The European Commission policy was expressed
in “Trade, Growth and World Affairs: Trade Policy as a Core Component of the
EU’s 2020 Strategy”, (COM(2010)612).5
This confirms
the intention to dismantle barriers and promote balanced free trade as far as
reasonably possible. It is committed to work via the WTO, and is not against
‘bilateral’ agreements – so it would not deter EFTA countries like Norway from
trading with us.
The
WTO noted in 2011 that, apart from the EFTA countries (Switzerland, Norway,
Iceland, Liechtenstein), the EU had extended free trade agreements to Albania,
Algeria, Bosnia and Herzegovina, CARIFORUM states, Chile, Croatia (now in the
EU), Egypt, Faroe Islands, Former Yugoslav Republic of Macedonia (FYROM),
Israel, Jordan, Lebanon, Mexico, Montenegro, Morocco, Palestinian Authority,
Serbia, South Africa, Tunisia, and certain overseas countries and territories.6
This also
bodes well for extending trade with us in areas not yet covered by the somewhat
hyped ‘Single Market’. Although Norway,
Iceland, Liechtenstein
pay a subscription to join in the EU’s wider EEA arrangements, countries like
Mexico and Israel do not pay to freely trade with the EU. It could strongly be argued
that, having paid for 40 years to set up the ‘Single Market’, nor should
Britain be charged for a free trade relationship and it would be against WTO
rules if the EU tried.
There is also
nothing to stop us working with the EU (and others) in wider trade agreements if and when needs coincide. So any free
trade deals in the pipeline, such as possibly with the USA, need not be lost if
we left the EU in the near future.
As for our
trade deals already cut by the EU, international treaty law points towards them
remaining in place by default if we left, although some working arrangements
would need to be regularised.7
This short
article is necessarily a simplification of a complex topic, and the late Ron
Dorman of CAEF would warn about the dangers of ‘free trade’ possibly straying
into essential areas of public services like the NHS.8
The purpose
of the article, however, is essentially to provide assurances on maintaining
existing trade and jobs that could be crucial to winning a referendum on leaving the EU. Only if self-government is
restored, could the UK then
negotiate any international agreements in the national interest.
This
article features in the Dec 2013 issue of EuroRealist. It is based on an
article in the Autumn 2013 issue of the ‘Resistance’ newsletter, which stressed
that it was a discussion paper on an unfamiliar topic: “This is a provisional understanding based on
detailed investigation. It is not to the best of our knowledge legally
tested, but given as a straw man for others to disprove.”
References
1
Lisbon Treaty TFEU Art.206; TFEU Art 63, TEU Art 8
2 “Understanding on the Interpretation
of Article XXIV of the General Agreement on Tariffs and Trade 1994”, p33/p34.
Also The General Agreement on Trade in Services (GATS), part IV; “Introduction
to The General Agreement on Trade in Services, WTO, 31 January 2013”.
A
dispute settlement procedure concentrates on compliance, but can make the
parties discuss and agree compensation; if that fails, the injured party can
request permission to invoke trade sanctions.
NB
The WTO is merely concerned with trade, but wider international law applies,
and for an account of the principles of reparation (restitution, compensation,
satisfaction) see a paper: "Restitution and Compensation, Reconstructing
the Relationship in Investment Treaty Law“
http://www.whi-berlin.eu/tl_files/documents/whi-paper0211.pdf
3 Reaffirmation
on p33, “Understanding on the Interpretation of Article XXIV of the General
Agreement on Tariffs and Trade 1994”.
4 http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm6_e.htm.,
http://www.wto.org/english/tratop_e/serv_e/serv_e.htm,
Some permitted/temporary
exceptions - The General Agreement on Tariffs and Trade, 1947, various Arts
XII-XXI
5 Trade Policy As
a Core Component of the EU’s 2020 Strategy, 2010 (COM(2010)612). NB This backs
Lisbon TFEU Art206, which commits the EU to work for the progressive abolition of
restrictions on international trade and on foreign direct investment, and
lowering of customs and other trade barriers
6 WTO document WT/TPR/S/284 (http://www.wto.org/english/tratop_e/tpr_e/s284_e.pdf),
TRADE
POLICY REVIEW, Report by the Secretariat, EUROPEAN UNION 28.5.2013, lists
33 EU Preferential Trade Agreements as at December 2012
((26 countries/groups had previously been listed in
document WT/TPR/S/248/Rev.1,
Page 13, “TRADE POLICY REVIEW, Report by the Secretariat, EUROPEAN UNION,
Revision”, dated 1.8.11 (S248R1-03.pdf, www.wto.org,
seen 23.5.13)).
7 The Vienna
Convention on the Law of Treaties, 1969, Art 70
8 www.caef.org.uk; http://www.caef.org.uk/d61wto.html, http://www.caef.org.uk/d98benn.html,
http://www.caef.org.uk/d112howepa.html;
http://www.caef.org.uk/d43edtrl.html
(although the WTO advises that there
is no GATS obligation to privatise Government services).
For more
information,
visit the website www.wto.org,
especially “Understanding the WTO”, http://www.wto.org/english/thewto_e/whatis_e/tif_e/understanding_e.pdf.
This page compiled: 25 October 2013; revised: 25 May 2014