Many eurosceptics say we are a special case. We are bigger than Norway and Switzerland, and richer than Turkey. We are, therefore, in a position to cut a better deal with the EU than any of them. Size is important. But the problem with this argument is that the EU is much bigger than us. Its economy would be five times our size. So we wouldn’t be in an equal bargaining position.
Eurosceptics are also fond of pointing out that we have a big current account deficit with the EU. It exported £291 billion to us in 2014 while we exported £229 billion to it. The other countries would, therefore, be the bigger losers if our trading relationship broke down. So if we hang tough in our negotiations, we’ll get a good deal.
There are several problems with this argument. One is that it assumes the only good thing about trade is exports. But imports are beneficial too. If EU exports to the UK were artificially restricted, our consumers would be harmed. They would have to pay more when they shop and would have less choice.
An even bigger problem with the argument is that it totally ignores proportionality. Britain’s exports to the EU represent 13% of our GDP. The rest of the EU’s exports to Britain represent just 3% of its GDP. Neither side would win from a trade war. But we would be hit proportionately much harder. We need them more than they need us.
If we tried to play hard ball, the EU might call our bluff. Imagine a trade war in which exports on both sides dropped by a quarter. It could take the hit. We would be left reeling.
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What’s more, negotiations could easily be conducted in an atmosphere of ill will. Immediately after voting to leave the EU, the British people are unlikely to feel all warm and cuddly about their erstwhile partners. Our government would be under pressure to take a tough line. Meanwhile, our former partners would be feeling irritated, almost jilted. Some might urge an equally tough line to put us in our place. Although it would be in both sides’ interests to conclude an agreement, bitterness could cloud the talks and result in a poor outcome for everybody.
Contrast this with the atmosphere of talks between the EU and Norway, Switzerland and Turkey. In none of these cases was the country pulling out of the EU. Admittedly, in Norway’s case, the people had voted not to join and, in Switzerland’s case, the government had decided to pull its application. But that’s different from voting to quit. The talks were conducted in a business-like fashion. Meanwhile, in Turkey’s case, the negotiations were seen as a prelude to joining the EU. So despite our greater size, we might get a worse deal.
Often the same people who say we can negotiate a great deal with the EU from the outside say it is hopeless to try to reform the EU from inside. This is odd. We are more likely to maximise our negotiating strength while we are in the club than after we have just snubbed our former allies.
This is an excerpt from “The In/Out Question: Why Britain should stay in the EU and fight to make it better” by Hugo Dixon.
Factchecking by Sam Ashworth-Hayes