Peter Hargreaves’ trade fantasies

by David Hannay | 18.03.2016

Regular listeners to the BBC’s invaluable Today programme are, quite rightly, hearing a lot about Brexit. And, quite rightly too, they are hearing from both sides of the debate. So on 18 March there was an interview with Peter Hargreaves, a prominent financier who favours Britain leaving the EU.

Most of the interview was taken up with Hargreaves’s preferences for Britain’s alternative trading relationships in a post-Brexit scenario. He thought it would be perfectly straightforward to retain our trade access to the EU. “Just pick up the telephone to Angela Merkel and it will be fixed.” As to our trade outside the EU, Hargreaves said we should negotiate a free trade deal with the Commonwealth which would be easy because “we all speak English”. The first of these assertions rests on the flimsiest of foundations and the second is simply unfounded.

How can anyone be “quite sure” that we would be able to preserve our access to the Single Market, where by far the largest proportion of our exports go? Have those who make these assertions spoken to the representatives of the 27 other member states? If Hargreaves took the trouble to speak to leaders of these other countries he would find out that they are focused on their own national interest in a post-Brexit scenario. Their priority will be to discourage anti-EU parties in their own countries. They therefore will not want Britain to leave without suffering negative consequences.

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    Meanwhile Hargreaves’s Commonwealth option is pure fantasy. The Commonwealth does not negotiate as a trade bloc and is never likely to do so. Moreover, Britain already has a free trade relationship with the majority of Commonwealth countries – all those in the African, Caribbean and Pacific regions – which we would sever if we left the EU and then have to negotiate all over again.

    The largest developed country in the Commonwealth, Canada, already has a free trade agreement with the EU which again we would relinquish if we left. And the EU has plans for free trade negotiations with India, Australia and New Zealand. Britain is more likely to improve its access to those markets if it remains part of the European Union, since negotiators in all three countries may prioritise negotiations with the EU over the far smaller UK.

    All of which goes to show that the Brexit debate is shot through with wishful thinking. Unless this changes, we risk waking up on 24 June in cloud cuckoo land.

    David Hannay is a former UK ambassador to the EU and UN. He was involved in Britain’s accession negotiations to the European Economic Community and was Britain’s Permanent Representative in Brussels when the UK helped to draft the Single European Act, which provided the foundation for the Single Market.

    Edited by Sebastian Mallaby

    A phrase suggesting each of the 27 EU countries would have a veto on a future trade deal with Britain was removed on March 19. The choice of the legal base for any post-Brexit trade arrangements and thus of whether such arrangements will, at least theoretically, require unanimity or be capable of being taken by “qualified majority voting” cannot be determined with any certainty at this stage and will depend on the content of those arrangements. What is certain is that that choice will be made by the 27 other member states and not by the UK.