established 1828M
any EU officials would like to
present the Brexit negotiations
as a case of one nervous mem-
ber, weak at the knees, appearing before a
menacing and united panel of 27. But that
ignores the political and ideological rifts
which are already apparent in the EU. Brit-
ain’s departure not only necessitates the
creation of a new relationship between us
and them; it fundamentally shifts the bal-
ance in EU politics. As Angela Merkel has
been worrying aloud in recent weeks, the
northern European countries which have
always tended to take a liberal position
on economics and trade are going to have
a harder job fighting off the protectionist
instincts of the south.
Far from the UK turning its back on
the outside world, the growing likelihood
is that it is the EU which will retreat into
its economic shell while Britain’s economy
becomes even more open.
Europe’s wonderful diversity became the
EU’s biggest problem as it tried to establish
a common position for nations that see the
world differently. For years, Britain would
side with the Scandinavians, Polish, Irish and
Dutch to promote an open Europe, keen to
cut new trade deals. The French would lead
a protectionist bloc terrified about Chinese
shoemakers or Australian sugar farmers. The
world is changing. The EU stops its member
states changing with it.
Britain’s influence tilted the EU in favour
of free trade. With our departure, the south-
ern countries will find it easier to push
through initiatives to prop up uncompetitive
industries. Merkel realises this, which is why
she is trying to bolster support for free-
market economics within the EU. Meetings
have been held with leaders of other north-
ern European states. Ann Linde, Sweden’s
EU minister, has spoken of having to
become ‘mildly aggressive’ in the battle for
open trade now that it is losing its ‘closest
ally’ in the EU.
For Theresa May and her negotiating
team, the battle for the soul of the new EU
presents both a threat and an opportunity.
It’s a threat because if the protectionist bloc
has its way it will become more difficult for
any country — Britain included — to do
a trade deal with the EU. But there is an
opportunity, too, in exploiting the ideologi-
cal divisions.
For the moment, the EU’s negotiating
team tries to avoid the issue of trade by refus-
ing even to address it until the terms of Brit-
ain’s withdrawal — by which it means the
size of our bill — have been agreed. This isan unreasonable and unsustainable position
to hold. There are a great number of com-
mercial interests across the EU that require
the uncertainty of Britain’s trading relations
to be resolved as soon as possible. During
the referendum campaign, the Remain side
kept parroting its statistic that three million
jobs in Britain were ‘dependent’ on trade
with the EU — without once admitting that
there are rather more citizens of EU coun-
tries who have jobs similarly ‘dependent’ on
trade with Britain.
In Germany there are 1.3 million jobs
connected with exports to Britain. Our tally
in the other direction is 800,000. The French
depend on us for 600,000 jobs, whereas we
depend on them for 500,000. In Italy the
figures are 400,000 and 300,000. Every sin-gle one of the other 27 EU states is in the
same position: more jobs are connected with
exports to Britain than Britain has jobs con-
nected with exports in the other direction.
There is every reason, then, to be confi-
dent that economic interests will eventually
win out over the political posturing. Trade
agreements may be hard to forge in the first
place, but when free trade is already estab-
lished — as it is between Britain and the rest
of the EU — there will be huge resistance if
anyone does anything to thwart it.
Negotiations tend to succeed, it is often
noted, when everyone can go away claim-
ing victory. Some see this as meaning that
Britain will end up paying a very large bill
that would suit the likes of France, Italy and
Spain. But for Germany, Scandinavia and
the Baltic states, with their more free-market
instincts, a free-trade agreement with Britain
would be a victory. They know that Britain
will be busy doing trade deals with countries
outside the EU — and almost certainly con-
cluding them much faster than with the slow-
moving EU. Even if talks between Britain
and the EU were to break down and both
sides fall back on the safety net of the World
Trade Organisation rules, there is the pros-
pect of deals with the likes of the US, India,
China and Japan.
The EU reacted in horror to the election
of Donald Trump, seeing it as the triumph
of anger, insularity and protectionism. But
the response surely should be to move in the
other direction: to lower trade barriers, cut
tariffs and quotas and face the outside world
with a sense of optimism, courage and confi-
dence. It may now take longer for Mrs Mer-
kel to persuade her EU counterparts of the
case for embracing the world. But encourag-
ing them to cut a free-trade deal with Britain
would be a good place to start.Parting on good terms
Th ere will be huge resist an ce if
anyone does anything to thwart free
trade between Britain and the EU