By Susan Hall AM
10 December 2019
- The most ridiculous claim about a US-UK trade deal is that it will increase prices
- Consumers in the EU pay an effective tax of 17% on food due to the customs union
- We should not forget the significant environmental costs of some EU regulations
Donald Trump’s recent visit to the UK set off the usual howls of outrage, with Jeremy Corbyn trotting out his fatuous conspiracy theories about ‘selling off the NHS’ – when asked for evidence, of course, he can only point to the finer details of the processes by which the NHS commissions drugs.
Among the bizarre allegations being thrown around by both Labour and the anti-Brexit camp in general is that a UK-US trade deal would mean higher prices for British consumers. It’s a claim that ignores the very point of free trade deals, which are designed to lower costs and barriers between countries to facilitate mutual benefits.
In reality, the UK’s adherence to draconian EU rules has forced up costs for British consumers in myriad ways. The quicker we leave, the quicker we can begin to rid ourselves of the barriers imposed by the EU’s formidable bureaucracy, achieving lower prices for consumers, better opportunities for business, and greater efficiencies for government.
This is not something new, the EU admits that it abides by a ‘precautionary principle’ which is detailed in Article 191 of the Treaty on the Functioning of the European Union. The purpose of this principle was to ensure a high-level of environmental protection, however over time its scope has widened and it has led to a hidden form of protectionism.
It’s thanks to the precautionary principle that the EU has set its face against perfectly safe GM foods, biotechnology and pesticides that have no proven danger. For example In 2003, the US started a World Trade Organization (WTO) case against the EU on the grounds that the approval of biotech products was so slow that it amounted to a moratorium. In this case, the EU invoked the precautionary principle.
There has also been much written about the damage the customs unions has done to the UK and for good reason too. The European Union’s customs union is essentially a tax on goods from across the world entering the EU. All its members must operate external tariffs which are identical and often not in the interests of British consumers.
A good example is the 16% tariff on oranges, designed to protect the massive orange industry in Spain. This is not a unique example; the UK must levy high tariffs on many kinds of foodstuffs which are not grown in the UK but are grown elsewhere in the EU mainly in Southern Europe.
In total the EU imposes over 13,000 tariffs on imported goods. The consequence is that consumers within the European Union essentially pay an average of a 17% tax on world food prices. This hits the most disadvantaged the hardest as food accounts for a larger proportion of their overall spending.
I personally believe tariffs should be as low as possible or negligible and once the UK leaves the customs union, the UK can begin to reduce tariffs on goods from around the world and thereby reduce the costs for consumers in the UK.
The same goes for the single market. The entire purpose of the single market was to reduce barriers and bureaucracy between nations. Whilst it has been successful in doing so, it has been at the expense of vastly increasing barriers with countries outside of the single market. Unfortunately, a very worthwhile project has evolved into a single protectionist zone which has created a stranglehold around British businesses.
The key point is this: only 8% of UK companies trade with the EU – accounting for around 12% of GDP – yet 100% of EU regulations apply to British businesses, including for the 92% of UK companies that do not do any exporting to the EU.
It is a system that does not work in the interests of the UK and that is even before taking a look at the broader regulations and costs that are being imposed by British businesses due to the EU. We have all heard about the ‘tampon tax’ and the example of the UK not being able to reduce VAT on energy bills, which Vote Leave exploited very effectively. But there are many cases like this which unnecessarily push up costs for UK consumers.
However, it is not just monetary costs which the EU increases, there are also significant environmental costs from some EU regulation.
A recent example is the EU’s policy on palm oil. The EU would like to ban palm oil in transport fuels from 2030. The EU ban on palm oil favours alternative crops like rapeseed and soybeans that are grown in Europe as a source of oil for biofuel. Ironically, these alternative crops require much more land to generate the same amount of oil as palm plantations, and they store less CO2 than palm oil. Rapeseed, for example produces four to 10 times less oil than palm oil per unit of land and requires more fertiliser and pesticides. Net palm oil production is more efficient in preventing climate change through biofuel than alternative crops.
Yet, unsurprisingly, we do not hear about how EU regulation is damaging the environment from the climate change activists who claim Brexit is a Trojan Horse for wanton environmental degradation.
The simple fact of the matter is that the EU is a protectionist organisation which does not work in the best interests of the UK and the quicker we leave, the quicker we can map our path to a free-trading, competitive, vibrant nation, unencumbered by unnecessary bureaucracy and regulation.
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