LEADING THE WAY OUT OF THE EU

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6 July 2017

Europhiles are making a lot of noise today about an allegedly major trade deal set to be struck between the sclerotic European Union and Japan, but should commentators be so easily impressed?

European diplomats are reportedly thrilled at the development, with one telling Politico that officials were “ecstatic” and that “I’ve never seen [them] so happy”. Shinzō Abe, the Prime Minister of Japan, arrives in Brussels today to much fanfare to finalise the political agreement before the final text of the trade pact is signed off as pro-EU columnists praise left-wing Eurocrat Cecilia Malmström for coming to terms with Japanese counterparts led by Fumio Kishida. The element of ritual is so intense that negotiators are exchanging traditional Japanese daruma dolls to celebrate the occasion, with the New York Times dubbing the event “an act of geopolitical theatre”.

The EU’s latest propaganda campaign

But much of the ceremony is for our benefit – a sad attempt to highlight a single potential act of trade liberalisation in order to deter enthusiastic Brexiteers who rightly see our exit from the crumbling EU as a once in a generation chance to re-engage with the wider world.

The bloc has made some weak attempts to rectify the chronic problems diagnosed by the Brexit campaign. Selected chapters of the agreement will be published in a laughable attempt at providing transparency to European citizens. Highly controversial investor-state dispute resolution provisions, which drove much of the opposition to the dangerous TTIP deal, have been left out altogether to the horror of ambitious pro-European politicians.

The entire message, motivated by pettiness rather than a serious change in guiding philosophy, is rendered totally incoherent by noises from lead EU Brexit negotiator Michel Barnier, who insists that frictionless trade with an independent UK is impossible while others in Brussels try to inspire British jealousy with a superficial commitment to global trade.

Premature celebrations

The celebration is not only overblown but massively premature. The deal fails to tackle the issue of transnational data flows, with nothing on the issue present but a review clause, rendering the agreement outdated in the 21st century. Europhiles will herald the deal for liberalising access to the Japanese services market, but the giant digital shaped hole will severely limit the meaning of this deal for major tech firms. It’s also worth bearing in mind that Eurocrats haven’t even waited long enough for the ink on the preliminary deal to dry before celebrating. Today’s events only mark a political agreement, European businesses will still have to wait much longer for the final text of a comprehensive trade package to be drawn up and delivered through the bloc’s torpid mechanisms. But already, reporters in Brussels are labelling the EU-Japan

Today’s events only mark a political agreement, European businesses will still have to wait much longer for the final text of a comprehensive trade package to be drawn up and delivered through the bloc’s sluggish and convoluted decision-making bodies. The uninspiring reality is not stopping reporters in Brussels from labelling the EU-Japan pact as the world’s biggest trade area. Absolute madness, not to mention deception.

After 18 rounds of talks and four years of intense negotiation – itself the product of nearly two decades of painfully slow moves towards closer cooperation – a limited deal is finally on the table. Could we not do significantly better than this, free of the neurotic impulses of the hugely diverse economies of mainland Europe?

Consider the similar Comprehensive Economic and Trade Agreement between the EU and Canada. That deal took seven years to forge and was held up by a single Belgian province. Now that it’s passed the European Parliament, it still awaits ratification by national parliaments to take full effect. Europhiles have hailed the deal as a major breakthrough despite the fact that glacial EU procedure means that it still hasn’t even come into full effect. The small victories of European trade commissioners are routinely touted as serious triumphs by propagandists for the European project, but far less attention is paid to the needless web of complexity that stops these achievements from being more substantial and more frequent.

The future of Anglo-Japanese relations

It’s also an odd subject to try to mobilise as a weapon against Brexiteers given that Japanese paper Nikkei has reported a mutual desire to strike a trade deal as soon as our nation is freed from Brussels. Only a fortnight ago it was reported that Abe was prepared to launch informal talks with the UK, carefully avoiding antiquated EU rules, so that an agreement can be made immediately following official withdrawal.

Japan currently runs a huge trade surplus with Britain, exporting almost $11bn worth of goods every year while importing only $6.5bn from the UK. As such, the pressure for Abe to strike a great, liberal trade pact with Britain following Brexit is huge – certainly much greater than their need for a deal with Germany and France, both of whom run surpluses against Japan. Japanese firms also do huge business in Britain’s domestic market too, with more than 1,000 companies operating in the UK employing 140,000 people. Direct investment totals an eye-watering £71bn. Meanwhile, 450 British firms operate in Japan. The prospects of the UK jumping the queue and striking a deal with the famously pragmatic Abe are very strong indeed.

And beyond the European Union, couldn’t more be achieved that focuses on the particular needs of Britain – rather than France and Germany – during trade talks? The major achievements of the proposed deal are the liberalisation of the flow of Japanese cars into Europe and the flow of European agricultural goods into Japan. What about the major goods that Britain exports to Japan: machinery, chemicals, industrial and scientific equipment, and financial and insurance services? Let’s free ourselves of the irrelevant trade objectives of 27 totally different neighbouring countries and carve out agreements that suit us.

The shared commitment to a trade deal between the UK and Japan points to the future of Britain’s genuinely global economy, which couldn’t be further removed from the faux-liberalism of European trade policy. And it isn’t only Japan either. Partners in the United States, China, India, Australia, and Canada are all enthusiastic about the prospects for post-Brexit trade while European negotiator Michel Barnier forces himself into all sorts of bizarre contortions to talk down the possibility of frictionless free trade with an independent United Kingdom. In 2016 we had a clear choice, and we made the right one.