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EU Referendum: why is Vote Leave trying to lose?

2016-05-02 06:57:45

Although described by one commentator as "the most craven, pathetic campaign I have ever seen", maybe there's something I've missed. Perhaps, buried away in the secret recesses of the Vote Leave playbook is a secret document penned by unknown geniuses which affirms that basing your campaign on a lie is a wining strategy.

If there is this document, though, it must be one of a kind. Nowhere else in the histories of free-fought election and referendum campaigns can I recall the core theme being based on an open and clearly demonstrable lie, with a promise that is so obviously undeliverable.

I refer to, of course, the claim that we send 350 million a week to the EU, with the absurd proposition (now at the head of the Vote Leave Twitter account) that we should give this amount to the NHS.

The latest in the long list of those pointing put the fatuity of this proposition is Times columnist David Smith. Under the heading, "there's no pot of gold at the end of Brexit rainbow", he tells us to expunge that 350 million figure from our minds, "because it is wrong".

Smith also tells us to ignore any politician who says we send 350m a week to the EU, and to tear up any leaflet that makes that claim. But he also urges us to reject what he calls the crude accountancy approach to Britain's contribution to the EU budget.

The effect on our public finances, or for that matter the balance of payments, he says, will be dwarfed by the wider effects of a decision to leave the EU. The analogy is not perfect, but it is a bit like deciding whether or not to buy an expensive car on the basis of the cost of replacing the wiper blades. There is a lot more to it than that.

In fact, that's not a bad way of putting it. There is a whole new world of opportunity out there, with huge gains to be made from full participation in the global order, and Vote Leave is dickering about the windscreen wipers.

To counter, we had Dominic Cummings, the escapee from the secure facility, aver that we would save so much money from scrapping EU laws that we could have enough to meet all the commitments Vote Leave has so generously set out.

But even at its most expansive, the Vote Leave "vision" betrays only its narrow perspective and its extreme poverty of ambition. It is basically a negative "little England" agenda, achieved (if at all) by saving money from not doing some things on a domestic stage. It owes nothing to the more positive idea of making the world a better place.

The point here is a simple one. We rely for our prosperity on international trade, yet the improvements in global trade have stalled. Despite the technical advances in containerisation and shipping, and the expansion of air freight, the huge benefits from reducing tariffs through GATT and WTO have been wiped out by the growing scourge of non-tariff barriers.

Thus, while pre-GATT tariffs were estimated at about 22 percent, recently the Atlantic Council reported the cost of non-tariff barriers (NTBs) to the US automotive trade was 25.5 percent.

For sure, a single, global figure for NTBs is almost impossible to compute and there is no agreed methodology for calculating such a figure. Furthermore, a single value is probably not relevant as there are huge regional and sectoral differences. 

The range varies considerably, from a few percent to as high as 45 percent, growing to 73 percent in some sectors. The World Bank estimates NTB costs in Africa average 40 percent. Nevertheless, what is known as the "ad valorem tariff equivalent" (AVE) - the average value - for NTBs is variously estimated at around 20 percent. It has wiped out all the gains from tariff reductions. 

Enter the Bali trade facilitation agreement under the aegis of the WTO in December 2013. As we reported at the time, and has been remarked upon since, the impact could be huge. When fully implemented, it was said that it could increase global GDP by almost $1 trillion.

That is probably an under-estimate. The World Bank offers even higher figures. If all countries reduced supply chain barriers halfway to global best practice, global GDP could increase by 4.7 percent or $2.6 trillion, potentially worth about $60 billion a year to the UK, far outstripping the illusory value of any savings from leaving the EU

Furthermore, world trade overall would increase by 14.5 percent, or $1.6 trillion, this figure itself far outweighing the benefits from the elimination of all import tariffs.

In terms of detail, we have seen reports that agreement on a global tyre specification for passenger vehicles could save $40 billion a year. An ostensibly simple thing like standardising nomenclature for existing pharmaceutical products could save $20 billion. Adopting electronic documentation for the air cargo industry could yield $12 billion in annual savings, and prevent 70-80 percent of paperwork-related delays.

These savings, though, will not happen spontaneously. Nor will they happen without a great deal of work and leadership. And it is there, in that latter category, that the EU is not delivering.

While the WTO agreement is a celebration of multilateralism in world trade, the EU obsession with regional trade agreements (such as TTIP) is diverting attention from policy interventions which could give a far higher rate of return.

As it stands, the two megalithic trading blocs of the US and the EU are at loggerheads over TTIP, each seeking to gain advantages for themselves, to the detriment of the rest of the global community. Attempting then to group disparate products in a single "big bang" trade deal simple creates new tensions which could be resolved by "unbundling".

And it is here that an independent Britain could have a remarkable effect. By forging ad hoc alliances, it could balance the US and EU and put the global interest back on the agenda. Breaking away from self-centred and restrictive regional trade agreements, it could instead give priority to multilateral trade facilitation. Far from being weaker, its skilful exercise of leverage could make it far stronger. Its intervention could have a galvanising effect on world trade.

This is the positive agenda. By contrast, Vote Leave's petty, narrow focus on undeliverable savings simply shrieks of the "little England" pre-occupation, for which euroscepticism is rightly condemned.  Combine that with its persistence in attempting to sell a lie drags the entire "leave" campaign down. As Smith says, it is an insult to voters' intelligence.

In a world that is increasingly global, writes Lost Leonardo, EU Member States are surrendering their voice, vote and right of reservation to the supranational EU, which represents not their national interests but the "common position" of the EU-28.

With potentially $2.6 trillion at stake from improved global trading, the "world" is where we need to be - and it is where the world needs us to be. To ignore this, and instead to promote the lie, makes you wonder whether Vote Leave is trying to lose the referendum.