Brexit: Dinner or a packet of crisps?

Jon Danzig |

Sometimes someone says something that will be remembered forever and quoted in history books as the phrase that summed it all up.

That moment came when Britain’s former international trade chief compared Brexit to giving up a three-course meal for a packet of crisps.

Sir Martin Donnelly, until last year the top civil servant in Liam Fox’s Department of International Trade, warned that Britain faced a direct threat to its status as a leading service economy if it did not agree to close alignment with EU Single Market rules.

Sir Martin told BBC Radio 4’s Today programme that the UK risked being shut out entirely from its biggest market.

“You’re giving up a three-course meal, the depth and intensity of our trade relationship across the European Union and partners now, for the promise of a packet of crisps in the future, if we manage to do trade deals in the future outside the EU which aren’t going to compensate for what we’re giving up,” he said.

The arithmetic just doesn’t add up, he said.

He added that the EU was “the only functioning market for services in the world” and key to Britain’s prosperity as an advanced service economy.

“We risk losing that level playing field or being shut out entirely and we have got to look at how this really works in practice,” he said.

“The challenge if we choose not to stay in the single market, is can we negotiate equal access in all those areas of services without agreeing to obey the same rules as everybody else?

“I’m afraid I think that’s not a negotiation, that is something for a fairy godmother. It’s not going to happen.”

Sir Martin, a former Treasury adviser, said his advice could not be written off as pessimism from a Europhile mandarin, as ministers have attempted to do in the past.

“We really have to focus on the realities of Brexit and the choices we’ve got ahead of us. If we leave the customs union and the single market, we are taking away the access that we’ve got to 60% of our trade, nearly half with the EU and the other 12% through EU preferential trade deals.”

In his speech , which overshadowed the Brexit speech of International Trade Secretary, Liam Fox, Sir Martin said:

“Given the negative consequences of leaving, and the lack of any significant offsetting advantages, I believe it is likely the UK will seek to return to full membership of the EU single market in due course.

“But significant damage to employment, the structure of the economy and the competitiveness of UK firms can be expected in the meantime.”

On the Today programme, Foreign Secretary Boris Johnson responded that he strongly dissented with the comments of “my old friend, Sir Martin Donnelly… with some talk of packets of crisps and three-course meals.”

Mr Johnson commented, “If you look at the real growth opportunities in this country they are not in the European Union. Growth markets in the world are outside the EU and we should go for growth.”

He added, “I’ve known Martin for many years and he’s a very, very good man..

“He’s an excellent man but I don’t agree for a moment with what he says. Actually our trade with the EU has been declining rapidly over the last ten years as a share of our total trade. It’s gone from about 55% to well under about 44% in ten years.

“If you look at where the growth is since 2010 the growth rate in our exports to the EU has been about 10% and growth to America is 40%, growth with Saudi Arabia 40%, growth with Japan 60%, growth with Korea up 100%.”

But Boris Johnson was attempting to bamboozle his audience with numbers, as the growth rates he quoted hide the reality.

In 2016, UK exports to the EU were £236 billion (43% of all UK exports). UK imports from the EU were £318 billion (54% of all UK imports).

There may be bigger growth of trade with other countries, but nothing comes anywhere near to the value of our trade with the EU.

Whereas 43% of our exports go to the EU, only 19% goes to the USA (our second largest export market next to the EU). There is no way that our sales to the USA could reach anywhere close to 43%.

Mr Johnson referred to the UK’s growing export market to Saudi Arabia – but most of that growth relates to the sale of weapons of war.

Saudi Arabia is the UK’s largest weapons client and has bought more than £3bn of British arms in the past two years.

Last year campaigners lost a high-profile court case calling for UK arms sales to Saudi Arabia to be stopped over humanitarian concerns.

The Campaign Against Arms Trade (CAAT) tried to stop the UK government from granting weapons-export licences to Saudi Arabia because of widespread concerns over the civilian death toll of its two-year bombing campaign in Yemen.

Frankly, it’s quite appalling that the Foreign Secretary has heralded Britain’s growing exports of weapons to Saudi Arabia as anything to be proud about.

UK’s exports to Japan in 2016 were worth £11.6bn, a 10% increase from the year before. But that’s additional trade with Japan that the UK has achieved whilst an EU member; it does not have to be either/or, it can be both.

Mr Johnson also referred to 100% growth in the UK’s exports with South Korea, which indeed did grow from just over £3bn in 2010 to just over £6bn in 2016.

But how can £6 billion of our exports to South Korea compare to our £236 billion of exports to the EU?

And what Mr Johnson failed to mention is that our exports to South Korea only shot up after the EU had sealed a trade agreement with that country, which has been in effect since 2011.

From March next year, Britain will no longer benefit from that EU trade agreement with South Korea, along with EU trade deals with almost 60 other countries across the world.

Once outside the EU and its Single Market or Customs Union, the UK will have to negotiate all those trade agreements again from scratch.

Trade experts say that will take many, many years to achieve, and it’s unlikely that Britain’s new trade agreements with those countries will be anywhere near as good, let alone better, than the agreements we already have now through the EU.

What Mr Johnson also failed to point out is that the EU does not stop us trading with countries across the world.

In the EU, we have the best of both worlds: trade with our closest and most important international export and import market, and trade with countries across the world.

Mr Johnson and Tory Brexit ministers have referred to EU trade agreements as something that are imposed on us.

But as an EU member, the UK fully participates in the negotiating and agreeing of EU trade deals. And as the EU is the world’s biggest exporter and importer, it can negotiate the best deals.

The way Boris Johnson talks, it seems he thinks he is very clever and his audiences are very stupid. But it’s becoming clearer by the day that it’s completely the other way round.



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