A Return to Confidence and Optimism

Daniel Hannan MEP highlights the barriers the European Union poses to the UK’s trading freedoms, and asks whether we have lost confidence in our global vision.

The central fact of our age is the rise of what we still think of as the ‘developing world’. Over the past decade, countries such as China, India and Ethiopia have doubled the size of their economies; but the eurozone, incredibly, is the same size now as it was in 2006.

The world-view of many Europeans is still defined by those Mercator maps we had on the walls of our geography classrooms. In presenting the globe two-dimensionally, they gave Europe both an artificial size (its latitude makes it look larger) and an artificial centrality (the mid-point of the map is not, in fact, the equator).

Whatever their geographical accuracy, those maps told a political and economic truth. For half a millennium, Europe was indeed the centre of the world. But just as the eighteenth century saw a gravitational shift from the Mediterranean to the Atlantic, so our age is witnessing a shift from the Atlantic to the Pacific. As recently as 1980, according to the IMF, the 28 states that now make up the EU accounted for 30 per cent of world GDP; in 2015, that figure was 17 per cent and falling.

Developing economies should, of course, grow faster than developed ones, just as sunflowers should grow faster than oak trees; but it’s worth noting that the eurozone is also being outperformed by Canada, the United States, New Zealand – and, indeed, everywhere else. I recently made a jocular remark to the effect that every continent was growing except Antarctica and Europe. A Spanish friend sent me a list of statistics showing that the chief economic activity in Antarctica, cruise ships, is in fact booming. Britain, he pointed out, is trapped in the world’s only stagnant trade bloc.

Ours is a merchant and maritime nation with few natural resources. Our prosperity depends on buying and selling. Yet, as long as we are in the EU, we can’t sign a bilateral free trade agreement with the parts of the world that are growing. The EU won’t talk to China. It shelved its talks with India after nine years of stalling. Its negotiations with Australia are blocked because of a dispute involving Italian tomato-growers.

I don’t know whether the Italian tomato-growers are right or wrong. But I do know that, outside the EU, Britain would have reached a bilateral trade deal with Australia decades ago – or, rather, would never have applied the Common External Tariff in the first place, and would still be buying Australia’s agricultural surpluses to the benefit of both nations.

The purpose of trade is to swap on the back of differences – to purchase from abroad what you do not produce yourself. I’m not sure it ever made sense for Britain to abandon a genuinely diverse global market system – one that brought together agrarian, commodity-based, manufacturing and service-oriented economies – in exchange for membership of a more homogeneous bloc of advanced Western European states. But whether or not it made sense in the 1970s, it plainly makes no sense today.

Back then, freight costs were high, refrigeration expensive, and travel rare. Regional trade blocs looked like the future. But in an age of Skype and cheap flights, distance has never mattered less. Why should Britain allow an accident of geography to trump ties of language and law, habit and history, culture and kinship? Why should we have our trade artificially redirected from Ludhiana, India, to Ljubljana, Slovenia?

Indian companies are largely English-speaking, use British accountancy systems and operate under the same common law model. Britain is the third-largest investor in India, and many UK companies that have established themselves there, such as JCB, understandably want to leave the EU. India, conversely, is the third-largest investor in the UK, owning more here than in the other 27 EU states put together. Yet, to repeat, we cannot sign a free trade deal, because of opposition from textile and farming interests on the Continent.

I’ve noticed in the debates I’ve had so far that British Remain campaigners like to stress that Britain wisely stayed out of both the euro and the Schengen Zone. But they rarely consider the logical implication of what they are saying.

By refusing to join the two initiatives that Jean-Claude Juncker calls the EU’s ‘greatest achievements’, Britain has insulated itself against the worst of the financial and migration crises. It is now clear that, for the rest of the EU, the priority is to keep the euro and Schengen in place as ends in themselves – or, to be precise, as the pillars on which political integration rests. While the rest of the world forges ahead, the EU will remain introverted – obsessed with preserving its antiquated structures.

Because Britain kept its borders and its currency, it is lucky enough to have a choice. Should it make the euro and migration problems its own? Or should it strike a different deal with the EU, one which retains the benefits of free trade, intergovernmental collaboration and military alliance – but which removes the UK from Brussels’ political structures, thus leaving the eurozone states the freedom to pursue their own vision?

As recently as 2006, the EU was taking 55 per cent of British exports. Last year, that figure had fallen to 45 per cent. Where will it be in 2030 – or 2050? How low must it go before we stop hearing the bizarre argument that we should merge our political institutions with those of nearby states so as to have a minority voice in the setting of standards over a declining portion of our commerce?

There are 193 states in the world; 165 of them are not in the European Union. Are we truly unable to manage our own affairs in the same way that, say, New Zealand or Switzerland do? Have we lost our global vision, our confidence in our own democracy? Are we truly so diminished?