Richard North, 26/01/2016  
 


I had not intended to do a detailed analysis of the Civitas report by Michael Burrage, purely on the basis that, if you have nothing good to say about a piece of work, it's sometimes better to say nothing at all.

The report itself is entitled, "Myth and Paradox of the Single Market", with the sub-title: "How the trade benefits of EU membership have been mis-sold”. It is the second report by Burrage in recent times, and both labour the single theme that the EU's Single Market is a bad deal for Britain.

When Burrage first introduced this, in May 2014, I did suggest that it was an irrelevant argument. Whatever merit it might have would be lost in opening up a completely unnecessary dispute on the detail of our trading position, one that we could not possibly win and one which would end up with us bogged down in a pointless slugging match with the other side.

At the time, I wrote that this is not the battlefield on which we should fight. No matter how well Burrage framed his arguments, I took the view that we cannot afford to get bogged down on the imponderables of whether participation in the Single Market is or is not beneficial.

In terms of the battle to come, we are ready to concede that the Single Market is vital to British interests – whether it is or isn't. Even if it isn't, pro temp we need to stay in it because there is no point in seeking an alternative until we are ready.

My criticism was well-meant and carefully phrased, and I have no wish to take on Civitas and criticise it further in public. But it has chosen to ignore my advice – which it is perfectly entitled to do. By the same token, though, I am entitled to express my views of the current work, which I have already slated on Twitter as "based on multiple false premises" and as a "thoroughly shoddy piece of work".

The problem is that the report has been picked up by Vote Leave as its poster child, leading to extended media coverage. Now Stuart Rose of BSE is contradicting the report, asserting that every Briton "benefits by £3,000 a year because the country is a member of the European Union". This puts the Single Market at the centre of the battle between Vote Leave and BSE, something which, as Pete discusses, we really don't want to happen. 

Turning to the Burrage paper - all 213 pages of it - its overall problem is that it doesn't really seem to know what it wants to discuss. On the one hand, it explores the supposed failings of internal market, in respect of the UK.

To do this, though, it compares free trade agreements concluded by the EU with those negotiated by Chile, Korea, Singapore and Switzerland, four independent countries which have none of the "heft" or "clout" or "negotiating leverage’ which the CBI and many businesses consider essential in trade negotiations.

Then, on the other hand, it tries to assess what have might have happened if the Single Market programme "had never been created", which it does by comparing the UK's growth in exports during the "common market" years of 1973-1992, with the export growth since 1992.

It is right there that the problems start. Mr Burrage is confusing the Single Market with external trade. He is writing a report, or so he tells us, about the Single Market, but the first part of his investigation is not actually about the Single Market at all. He is measuring the supposed effects of the allied but actually different issue of the EU's external trade policy.

By this measure, the paper itself (or much of it) is invalidated. You cannot – or should not be allowed to – tell your readers you are looking at one thing and then go on to look at something completely different, and then conclude that you have adequately explored your title issue.

Staying with this, we then find an extraordinary misstatement by Mr Burrage (repeated frequently in "eurosceptic" circles) that "the EU does not currently have [trade] agreements in force with the US, Canada, Australia, China, Japan or India".

By this means, we find that the investigation is limited entirely to an evaluation of Free Trade Agreements (FTAs), ignoring any other kind of arrangement. Yet the OECD lists eleven separate mechanisms for International Regulatory Cooperation (IRC) which have implications for trade, many of which are employed by the EU in pursuit of trade facilitation.

Taking in the wider range of agreements, we had already noted that the EU does indeed have trade agreements in force with the US, Canada, Australia, China, Japan or India – just that they are not FTAs.

Thus, even within its own terms, the paper's initial conclusions are invalidated. It is simply not possible to evaluate the effect of EU trade policy on the UK, when a whole range of trade relationships – and with major partners such as China and the US – is ignored.

Then, as to the second part of Mr Burrage's evaluation, one simply cannot look at something as complex as the UK's trading performance and compare trends in two dissimilar periods, in order to draw conclusions. Making such historical comparisons, where there are so many factors which affect trading performance, is absurd.

For instance, looking at UK trade performance in the round, we see this interesting observation:
In the decade from 1998-2008, the UK increased its exports of goods by 72%, to 468 billion USD. The rates of increase have been stronger in other developed countries like USA (95%), Germany (176%), France (100%) or Japan (100%). However all these developed economies have lost market share in goods exports to emerging and developing countries (Figure 6). A main contribution to this trend has been China whose goods exports have increased 682% since 1998, to 9.5% of world exports in 2009.
As a result, we have seen the UK undergo an extraordinary transformation. Its manufacturing exports have changed in composition with a shift towards higher technology manufactured goods. In 1990, exports of high and medium high technology manufacturers were around $100 billion but by 2008 they were valued at over $250 billion.

By 2009, it was being reported that the UK's share of high technology goods exports was higher than that of the EU25 average and for the world average, above Germany, Netherlands, and Sweden, but just below Finland and France.

The point which needs to be made is that the last two decades has seen an extraordinary transformation in the nature and extent of global trade, little short of revolutionary. And, to deal with this, the UK itself has undergone huge changes, not least in reorientating its export industries. Between 1998 and 2008, for instance, its exports of services nearly trebled.

What, in effect, the UK is doing is restructuring its export trade, changing from a goods-led business, to one which is more services orientated.

In that transformation, we are significantly ahead of many of our EU partners who, over term, have economies which are less flexible and more prone to economic shocks than is the UK.

For Burrage, on the basis of looking at a broad sweep of unrelated statistics, to come to the conclusions he does is completely unfounded. To sweep through the vast range of changes that have affected the UK trading position, and then to attribute specifics exclusively to participation in the Single Market is bizarre.

Then, in terms of scholarship, his conclusions lack anything that could be adequately related to such "findings" as he has made. From page 114 onwards, we see more polemic than serious academic work. Bluntly, Civitas should be ashamed of itself for publishing such lacklustre work. This is not of a standard that could or should form the basis of any debate, political or otherwise.

That it has then been adopted by Vote Leave Ltd to form an element of its strategy then says a great deal about an organisation that has consistently demonstrated its intellectual limitations. This has misled self-appointed CEO Matthew Elliott to declare that: "The unquestioning mantra that the single market has been good for British trade is wrong and should be challenged as this research makes crystal clear".

Sadly, the only thing this "research" makes "crystal clear" is the incompetence of its producer and the gullibility of those who are relying on it.






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