The EU Debate: Exporting Trade or Importing Loss?

The EU Debate is a giant political battlefield. There are so many aspects to the pros and cons of the EU, that it can be difficult to sort the facts into any logical order. One of the main deciding factors, however, is that of trade.

Videos, images and transcripts of Liberal Democrat leader Nick Clegg and UKIP leader Nigel Farage fighting both sides of the debate have been bombarding us for weeks, but the discussion is far from over.

Exports from Britain to EU countries currently support around 4.2m UK jobs, as well as being worth a total of £211bn to our economy, as shown by a report from the Centre for Economic and Business Research published 31st March 2014. Despite the fact that we are a country that imports more than it exports, the demand for British goods and services has been steadily increasing – income from exports to the EU is now worth approximately £3,500 per head of the population. To leave the EU seems a large financial and employment risk in an already unstable financial and political climate.

Yet, leaving the EU might not be so damaging for trade as it may initially appear. Since the Eurozone crisis, the EU is not the economic hub it once was roughly 40 years ago. There are other countries, such as Iceland, Norway and Switzerland, who are not a part of the EU but still maintain trade through the European Economic Area (EEA) or the European Free Trade Association (EFTA). Yet, businesses from EEA countries still must complete customs and VAT forms when shipping in and out of the EU. While no problem for large companies, this can be a challenge for small businesses.  The UK could also leave the single market altogether and choose to recreate free-trade relationships through bilateral agreements. It is unlikely, however, that the EU would grant Britain full access to the single market. Norway and Switzerland were granted these trade privileges in the hope of enticing them from being non-EU members into full members. No one has ever gone the other way.

Food could be cheaper without the EU – WTO rules dictate that countries can slash import barriers providing they do not favour some countries over others. The UK would also regain control over fishing rights. But, British exports could incur some massive import taxes. The tax on dairy products would be 55% (the infamous British cheddar would tax at €167 per 100kg), clothing prices would push up 12% and car equipment would rise 4%. Important car components could also be held up by customs before they even reach the EU. Although, only a small percent of the cars made in the UK by Jaguar Land Rover and Mini BMW are exported to the EU market. Not to mention, that being ‘designed and made in Britain’ is a selling point for many of these cars.

Leaving the EU would be a massive gamble on the part of the UK. It may work – the economy could improve, trade could rise and the UK could find freedoms it had only dreamt of – or it could be an epic disaster. One thing is for sure; if the UK leaves the EU then it will be almost impossible to rejoin.

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