MARTIN WOLF. The Brexit delusion of taking back control (Financial Times 27.3.2019)

From Beijing, where I now am, the UK looks small. It also looks as if it has fallen into the hands of lunatics engaged in an astonishing act of national self-harm. 

But this, Brexiters will say, is an illusion. The UK is going to “take back control”. The slogan was brilliant. But it was the biggest delusion of all.

Control is different from sovereignty. As I argued during the referendum campaign, the UK was already sovereign: it could, if it wished, vote to leave the EU. It did so, but promptly discovered that, while it was sovereign, it was not very powerful. Yet control is about power.

In the post-referendum negotiations with the EU it has turned out, as informed people knew it would, that the EU was more powerful than the UK. This was so for a simple reason: it could impose far heavier penalties on the UK than the UK could on the EU. Britain sends 47 per cent of its exports of goods to the EU, while the rest of the EU sends 15 per cent of its exports to the UK. For the EU, the UK market is important. For the UK, the EU’s is vital.

Welcome to the harsh world of international relations. We have been frequently reminded that the UK is the fifth (soon to be sixth) largest economy. That is true, but misleading. The world contains three economic superpowers: the US, the EU (without the UK) and China. These generated about 60 per cent of global output last year. The UK’s contribution was 3 per cent. It is large for a minnow, but still a minnow.

So what might “control” mean for a small island country about to separate itself from its neighbours and closest economic partners? In some areas, it will be able to exercise control. But these are where it has always been able to do so.

Britain sends 47 per cent of its exports of goods to the EU, while the rest of the EU sends 15 per cent of its exports to the UK.  Financial Times

The UK’s net contribution to the EU was just 1.1 per cent of total public spending in the latest financial year. The EU has no significant influence over the UK’s spending on (or policies towards) health, education, housing, pensions, welfare, infrastructure, culture or, for that matter, defence and aid.

In one rather intimate domestic area the UK does risk losing control: its own survival. The futures of Northern Ireland and Scotland within the UK have both been destabilised by Brexit.

“In one rather intimate domestic area the UK does risk losing control: its own survival.”

So where might Britain gain the control it now lacks? Obvious examples are those economic regulations that have fallen within the ambit of the EU’s competition policy, rules on state aid and the bloc’s single market. It is correct that if the UK left the EU completely, it could abandon an active competition policy and waste large amounts of money in propping up failed companies. Why it should view either as attractive is a ­mystery.

The UK has largely unbridled control over its domestic affairs, for good or (too often) for ill. But it is an open, trading nation and, given its size and limited resources, has no future as anything else. It is a modest power in a big world: 2019 is not 1860. It depends on the behaviour of other sovereign countries.

The EU has significantly increased the influence of Britain in a host of negotiations, notably over trade and climate. That will be gone. So, too, will influence over the EU’s policies towards the UK, as the withdrawal negotiations have already shown.

But, we are told, the country can open up markets all over the world, to compensate for the loss of favourable access to the market of 450m people on its doorstep. Unfortunately, that would not be true even if the rest of the world were to be obliging, because the EU markets are so crucial for the UK.

The world contains three economic superpowers: the US, the EU (without the UK) and China.  Financial Times

Moreover, the rest of the world is not going to be obliging. The US is in the process of demolishing the World Trade Organization, on which Britain will rely. In any bilateral bargaining with the US, the latter is going to impose very hard terms, the most distasteful of which are likely to relate to food standards and health.

China is going to insist on the UK’s acceptance of its terms — as, by the way, is protectionist India. The old Commonwealth of Australia, Canada and New Zealand may be friendly, but these 65m people are neither here nor there for the UK, economically.

“Australia, Canada and New Zealand may be friendly, but these 65m people are neither here nor there for the UK, economically.”

In brief, outside the EU, the UK will not have greater control over its global environment. It will be on its own, and at the mercy of others, some far more potent than it is.

Nor is this all. Trade agreements are increasingly about regulatory standards, because these are ever more important domestically in all significant countries. If the UK wishes to trade freely with the EU, it will have to adopt EU standards, as it has done as a member. But the same will apply to trade with other countries, notably in the case of the US.

China is going to insist on the UK’s acceptance of its terms — as, by the way, is protectionist India.  Financial Times

But what is to be done when, as over data protection or food, standards clash? This is not so important for manufacturing, which can produce to different standards. But it does matter for services, data handling and food, where how things are done is crucial. In the end, the UK will often have to align itself with the standards of one of the blocs — usually, I predict, the EU’s.

There is something far bigger still. Since 2016, the challenges to liberal and democratic values have become far clearer. As Sigmar Gabriel, former German foreign minister, argues in a column for Project Syndicate, this is a dangerous and disheartening environment for the EU. But so, too, for the UK.

Quite simply, the saga we are seeing unfold is a true tragedy. The UK has chosen a solitary path. But the EU should also reconsider. After all, as Mr Gabriel notes, even in Germany the view of immigration has changed somewhat.

It is not too late to halt an act of such folly. The UK will not gain control in any important respect by leaving the EU. On the contrary, it is more likely to lose it. In this increasingly hostile world, we Europeans need to stick together. It is time for sensible people to try to think again. martin.wolf@ft.com

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2 Responses to MARTIN WOLF. The Brexit delusion of taking back control (Financial Times 27.3.2019)

  1. John Doyle says:

    Very interesting. The UK exports to Europe are simple to replace? would they ban UK imports to spite their face? or would there be agreement to leave most of them in place? What does Mr Wolf reckon?
    Certainly the laws regarding food safety are complex and the US won’t have it all their own way. The US is having a sea of its own self inflicted troubles, courtesy the Trump maladministration. Trump lacks a backbone. He bends whichever way the wind blows and uses his bully tactics where he can. So we can safely say theres no guessing how the USA will react to Brexit. Probably it will use the UK as an offshore satellite in which case it won’t be trying to trash it.
    Britain has a lot of opportunities if it has the smarts to know them as Singapore has done. The present lot of politicians look incapable, but that malaise is world wide.
    It’s also likely it will all be small beer, like the Y2K kerfuffle in 1999.
    The parties need desperately to overturn neoliberalism with its grinding Austerity, the driver of Brexit, still doing evil.
    The EU must know it is in danger as well. Neoliberalism has destroyed the promise the idea of union held initially. It has to reform or break apart. It’s a certainty.

  2. Stuart lawrence says:

    The brexiteers use singapore as a example but singapore is part of ASEAN and has been for years and years one of the most important trading blocs similar to the EU. SIngapore has benefited being part of ASEAN and now APEC just as UK has or was part of the EU.

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