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Twelve Brexit Opportunities

By David Campbell Bannerman, Chairman of The Freedom Association 

When you hear of Brexit changes in the media, inevitably there is an excessive emphasis on the claimed negatives of Brexit: supposed lorry delays, increased paperwork (how do they manage trading with the rest of the world – 57% of our exports go to the rest of world!), the loss of benefits such as pet passports, free movement or the expensive Erasmus student programme (replaced by the UK Global Turin programme). 

The campaign to ‘Re-join’ the EU has already started, and this is the latest return to failed and tedious Project Fear claims. But strangely Dover and other ports are flowing freely, and the media have given up hanging around there hoping to see major disruption. 

Well, how about these benefits of Brexit?:

New Free Trade Opportunities: The UK has gone into superdrive on signing new free trade agreements (FTAs) with nations all round the world – the latest count is around 63 but before Christmas a new one was being added daily! 

Yes, it is true that quite a number are rolled over EU trade deals, adapted for a post-Brexit UK, but even these deals are going further than the EU’s own deals – such as the Japan one. This is because the UK is more free trading and less protectionist than the EU is, and this is reflected in the UK deals being struck. 

The UK can also do deals that the EU has failed to do. Whilst it is currently highlighting its rather embarrassing China investment agreement, this is not a full free trade deal – investment is normally a chapter or two of fuller trade deals and there is no China Free Trade Agreement. 

The EU has failed to deliver on 12 years of negotiations with India for a free trade agreement, but the UK is in prime position to do a deal. I was responsible for reporting on the EU-India FTA, and can see real benefit for the UK, particularly in cutting massive taxes on ‘luxury goods’ – from Scotch whisky to Jaguar cars (ironically, as Tata is an Indian company). 

A US trade deal would be of great benefit to the UK, and at least five negotiation rounds have taken place. Whilst there are rumours of President Biden being cooler on the UK deal and more pro-EU, delivering a ready-to-go trade deal will make him look good. Given the length of negotiating trade deals, it is quite common for political opponents to complete deals started by rivals, as with the EU-Canada deal, where I met Prime Minister Trudeau in Strasbourg. 

Then there is an opportunity to join a trade bloc fast outpacing the EU – the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership) which accounts for 14% of the global economy, and where countries such as Japan and Australians are backing us. 

Cutting EU Red Tape and Overregulation: In the EU Referendum, the combined total of the EU’s body of law, the Acquis Communautaire – was assessed at 700,000 pages, equivalent to a Nelson’s Column of paper. It will be even more now. One of the main reasons for dissatisfaction with the EU was the scale and unsuitability of this body of law. 

The UK should now be assessing what EU laws, now incorporated into UK law, can be improved, retained or swept away. 47 years of inherited legislation, simply placed into UK law by the Great Repeal Act, can now be revisited anew. The UK won the vital battle in the EU negotiations not to be tied into EU laws, including not slavishly adopting new EU laws with no input, as Norway has to do within the EEA Agreement and not signing up to retaining existing laws through ‘non regression’ clauses. 

The first indication of new Brexit freedoms is the banning of live animal transport - which can be distressing to animals if long distance – and is something that EU Single Market legislation protects. 

But in bigger terms, we are talking or reviewing the Working Time Directive, that costs the NHS £4 billion a year alone for unnecessary use of locums, or counting surgeons sleeping overnight in a hospital to ensure an early start as working, thereby reducing their effectiveness. Historically, the UK rejected this under Social legislation but the EU got round it by forcing it through under Health and Safety laws. 

There is the Agency Workers Directive, which hit the UK harder – with 8 out of 10 jobs affected across the UK (250,000) owing to Britain’s more flexible economy and greater value on self-employment – can now be reviewed or removed with the right sort of activity. This sought to make the self-employed, employees, with much of the same costs for businesses after 12 weeks of work by ‘Temporary Agency Workers’. This is a lifestyle choice that the contractors prefer, and this can now be respected again. 

The REACH Chemicals Directive, still not fully implemented or even fully costed, which seeks to place grossly onerous and costly demands on small business in particular, can also be reworked to suit British needs and sensibilities. Chemicals is an important business to the UK, and one we have some expertise in. 

A real win is for smaller businesses wanting a share of UK Government Public Procurement schemes. EU rules require much greater ‘bundling’ up of contracts which suit larger companies and EU competitors, and make it harder for British SMEs to compete for a share of this £292 billion market. The Prime Minister and Ministers are on record wanting to see the share taken up by British SMEs and their 5.8 million people - to rise from one quarter of central Government procurement contracts - £12.4bn a year - contracts now to one third, and change criteria to include investment in apprenticeships, environmental standards and past performance on value for money. Covid has only driven the need for such home-based suppliers. Government defence contracts should also be more favourable to UK bidders within the rules. 

The EU Landfill Directive which has resulted in fortnightly bin collections and was estimated by the Local Government Association to threaten to reach £1billion a year in fines. That’s £1 for every £25 collected; £50 on each council tax bill, and paid directly to Brussels. This was a lowest common denominator issue: the UK has more old rock quarries to fill, whilst the Netherlands has very few given its low-lying geography. An environmentally responsible review is possible whilst still encouraging widespread recycling. 

These are just a few examples of savings and reform that can be made from those 700,000+ pages of EU laws, with the potential to save billions in costs, and the creation of many new business opportunities. 

Saving EU membership fees. Whilst this has been a controversial area, it was true that the gross contribution to the EU was around £19 billion a year (£350m a week under EU control), with £11bn a year being the net contribution after deductions for returned monies such as research grants and farming subsidies. Contributions are not as simple as Treasury cash transfers – for example, a contribution of around £2bn to EU international aid was not accounted for. 

If that seems modest, think of the period of our membership at 47 years, then that equates to £517bn, nearly equivalent to clearing our Covid support package of £280bn twice over (whilst saving £40bn plus in additional contributions to the EU Covid scheme - had we stayed in the EU). 

Personally, I would like to see a proportion of this – say 15% - £1.65bn a year – over 15 years - spent on reopening local railway lines and improving local roads. The money has until now been going to building transport infrastructure in other EU nations to date. So why not hypothecate for our trains, our roads, other transport instead, to help restart the British economy?

Cutting the Cost of Living. An immediate benefit of leaving the EU’s Customs Union is a significant drop in the cost of living in the UK. Opponents have tried to obscure such benefits in the haze of extra paperwork, border controls and EU supply hold ups. What is not reported is the reality that the UK is now deploying its own system of tariffs and quotas, and that these are simpler and now far less onerous that in the EU.

Think of the Customs Union as a castle with high tariff walls designed to keep imports away or to reduce the amount let in by raising the barrier. Food prices actually went up 20% when the UK joined the EEC in 1973. Now the British equivalent – the UK Global Tariff schedule – involves lower walls, more open gates and less high barriers. Cars and agriculture remain protected. The result will be good news for consumers and producers alike. The UKGT is hardly easy reading, but it cuts import taxes from only 47% tariff free in the EU to 60% now, rising to 80% with further trade deals. 

So, LED lamps go from 3.7% to zero for example, copper alloy tubes from 5.2% to zero, cocoa powder for cooking 8% to zero. We don’t have a banana or orange producing industry to protect with 20% tariffs as Spain and the EU do. The former head of the British Chamber of Commerce, John Longworth, estimates that food costs will be 40% cheaper. 

Taking back control of our borders – One of the many reasons a majority of UK citizens voted to leave the EU was immigration. Those who wished to take back control of our borders were (and still are) described as racists and xenophobes. This is not true. When the UK was a member of the EU, immigration from EU countries skyrocketed. As a result, immigration from non-EU countries had to be severely restricted. With controlled immigration, we have the ability to recruit from all round the world, not just the EU, and we can now manage entry through a new Australian-style visa system. 

Restoring Tax freedoms – It is an illusion to think that sovereignty over tax has not been invaded by the EU. A small tax maybe, but one highly symbolic return of sovereignty is the tampon tax, where a 5% VAT rate could not be abolished whilst in the EU, but has been immediately on Brexit. VAT is the second largest UK tax and is mandatory for all EU members; forming much of the payment of our membership fee, alongside customs duties, which are now also returning to HM Exchequer.

VAT now could be abolished and replaced with a number of other more local taxes. Could we return to a UK Retail Sales Tax that VAT replaced? Or could we usher in a new US style layering of sales taxes – with some going to national assemblies, or some to city mayors or counties, to reflect devolution reality? 

The EU was also moving in on Corporation Tax receipts through a Common Consolidated Tax Base, where richer members subsidised poorer members. The EU also wants to label low Corporation Tax as a form of State Aid, with Ireland and Belgium in the frame, and the Commission has fought several court cases on this in the ECJ, unsuccessfully – so far. 

Establishing Real Freeports – Again, it is claimed incorrectly that the EU has ‘freeports’ – that is low or zero taxed areas where goods can be imported duty free, be worked on, and then re-exported very competitively. The EU versions must follow EU Single Market rules and tax policies. 

Britain can introduce a number of true freeports, with low or zero taxes and light regulation to compete effectively with lower cost areas around the world rather than Europe, and bring local jobs and training to areas needing major economic development; particularly as Britain boasts many ports and harbours around its coast. Freeports is a personal crusade for Rishi Sunak. 

The UK can also now run its own shaped and appropriate Regional Aid schemes, free of the prescription of EU programmes which were also heavily weighted towards benefiting poorer areas of the EU and were so often ruled unavailable to UK regions, as I as an MEP witnessed directly. The UK Shared Prosperity Fund has real potential for British businesses; and Britain has been denied the successful Enterprise Zones of the Thatcher era on grounds of EU rules.

Trade in Services benefits – Again, negative briefing has intervened on the UK-EU trade deal being a ‘thin deal’ because it doesn’t have services. The reality is that services do not have tariffs and therefore tend to be secondary in FTAs, despite the UK and EU economies being around 70-80% services. There is not much on services in the EU-Canada CETA deal either, despite Toronto being the 10th largest financial centre in the world, well ahead of Frankfurt and Paris, although the EU-Japan deal is a bit better. 

The real benefit of service treatment is leaving EU interference and intervention behind, rather than specifically reducing non-tariff barriers, which can come later.

For example, with follow up agreements in Data and Financial Services and equivalence between the UK and EU expected, there will be substantial scope for regulatory divergence across wide areas of technological and financial regulation. For example, the unpopular Alternative Investment Fund Managers (AIFM) Directive, which hit the City of London and Hedge managers hard, can be revisited and even removed. SOLVENCY II’s excessive insurance capital holding regulation can be eased, and the UK will be saved from the devastating threat of the EU’s favoured Financial Transaction Tax on trades.

Rebuilding Britain’s Fishing Industry – Whilst British fishermen didn’t get all they desired immediately, and the system of allocations is complex, and the process being more slow burn, they are still getting a substantial increase in quota – with the share of British waters fished by British boats rising to 75% from 50% now over 5 years. After that a trade off can be enacted between achieving more quota and losing preferential access to the EU market for UK-caught fish. 

The industry has a chance now to rebuild from Scotland to Cornwall, after the devastation of the EU’s Common Fishing Policy, and the Government has a £100 million fund able to help the industry with new boats, facilities and skills. 

Restoring British Farming – similarly, the EU’s Common Agricultural Policy did not benefit Britain’s more efficient farming industry, heavily subsidising French and Polish farmers in particular at the UK’s cost. Leaving the EU with a deal avoiding heavy agricultural tariffs has brought extraordinary harmony in a future, fairer, more suitable and more innovative vision between farmer representatives, food industry and environmental groups on the way forward, which bodes well for the future. 

Still retaining some of the best of the EU – The UK has left the EU but not Europe, or the 47 nation Council of Europe. In addition, as many non-EU European and some non-European nations do, Britain can continue to remain in favoured EU programmes, paying a membership fee for each. In particular, the important Northern Ireland Peace Programme continues, supporting reconciliation in Northern Ireland, and Britain stays in the Horizon research programme, which was one area the UK did do well out of from within the EU, such as for science. Continuing the Erasmus Student programme was favoured, but proved not possible in negotiations, but the new UK Global Turin Scheme will replace it. Erasmus tended to favour EU students coming to the UK, at British taxpayers’ expense. 

Strengthening The British Union – contrary to many claims, the case for breaking up the British Union is weakened not strengthened by Brexit, because nations such as Scotland, if they became independent and joined the EU, would have to join the Euro, involving large Greek-style public spending cuts, the loss of Barnett payments, and face a hard border with the rest of the British Union, where 60% of Scottish exports go to. 

In conclusion, many of the benefits of Brexit have been deliberately and unhelpfully rubbished or obscured, for political reasons. But now, with five years since the referendum, it is time to move on together, united as one, and together to seize the very real opportunities Brexit now presents our country and its businesses.

David Campbell Bannerman is Chairman of The Freedom Association, a former Member of European Parliament 2009-19, and a strategic trade adviser

 

Photo Credit: Flag map of the European Union. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.


Defence and Security: the great new post-Brexit opportunities

In the latest Freedom Association webinar, recorded on 2nd February, we looked at defence and security: the opportunities post-Brexit Britain presents, and the challenges that as a country we face.

Click HERE to watch it 

The panellists were:

Colonel Richard Kemp: Richard served as an officer in the British Army from 1977 to 2006. During his years of service, he completed eight tours of Northern Ireland. During one of those tours he was wounded in a multiple terrorist mortar attack in South Armagh. He took command of British Forces in Afghanistan in 2003, although most of the last five years of Richard’s military career were spent in Downing Street as head of the international terrorism team at the Joint Intelligence Committee, where he was responsible for producing assessments on the growing global terrorist problem for the Prime Minister and the Cabinet.

Rt. Hon Julian Lewis MP: Julian is the Chair of the Intelligence and Security Committee of Parliament. Prior to that, he was Chair of the House of Commons Defence Committee from 2015 to 2019. During that period he supervised the production of more than 30 Inquiry Reports and consistently campaigned to renew the Trident nuclear deterrent submarines and to restore the Defence budget from two per cent to three per cent of GDP. Julian is a member of The Freedom Association, and has served as the Conservative Member of Parliament for New Forest East since 1997.

Tim Scott: Tim is the Treasurer of The Freedom Association and served as a Captain in The Queen’s Fusiliers. Tim was a Platoon Commander in charge of 25-30 soldiers, and served in Cyprus and Northern Ireland. Tim now works as a Business Development Manager.

The webinar was chaired by David Campbell Bannerman, our Chairman, who served on the Defence Sub-Committee at the European Parliament and also served in the Territorial Army (OTC).

To become a member of The Freedom Association, click here


Join us for our next webinar - Defence and Security: the great new post-Brexit opportunities

During our next webinar, The Freedom Association will be looking at defence and security: the opportunities post-Brexit Britain presents, and the challenges that as a country we face. It will be held on Tuesday 2nd February at 6.00 pm. Confirmed panellists are:

Colonel Richard Kemp: Richard served as an officer in the British Army from 1977 to 2006. During his years of service, he completed eight tours of Northern Ireland. During one of those tours he was wounded in a multiple terrorist mortar attack in South Armagh. He took command of British Forces in Afghanistan in 2003, although most of the last five years of Richard’s military career were spent in Downing Street as head of the international terrorism team at the Joint Intelligence Committee, where he was responsible for producing assessments on the growing global terrorist problem for the Prime Minister and the Cabinet.

Rt. Hon Julian Lewis MP: Julian is the Chair of the Intelligence and Security Committee of Parliament. Prior to that, he was Chair of the House of Commons Defence Committee from 2015 to 2019. During that period he supervised the production of more than 30 Inquiry Reports and consistently campaigned to renew the Trident nuclear deterrent submarines and to restore the Defence budget from two per cent to three per cent of GDP. Julian is a member of The Freedom Association, and has served as the Conservative Member of Parliament for New Forest East since 1997.

Tim Scott: Tim is the Treasurer of The Freedom Association and served as a Captain in The Queen’s Fusiliers. Tim was a Platoon Commander in charge of 25-30 soldiers, and served in Cyprus and Northern Ireland. Tim now works as a Business Development Manager.

The webinar will be chaired by David Cambell Bannerman, our Chairman, who served on the Defence Sub-Committee at the European Parliament and also served in the Territorial Army (OTC).

Places are limited. Click here to register.


No deal just became the most attractive way forward

By David Campbell Bannerman, Chairman of The Freedom Association

Very soon a choice will have to be made: whether to continue negotiating a trade deal with the EU or to end negotiations and to prepare for ‘no deal’/Australia deal/WTO rules.

The way the EU has behaved has made no deal much more attractive. What they have done is to narrow the gap between the advantages of a free trade deal, with zero tariffs and quotas, and that of working under WTO Rules, to such an extent that having such a thin deal laden with all sorts of restrictions and continued ties is the greater risk. This is encapsulated in what they call cheekily ‘Level Playing Field’ rules, but what are in effect the EU forcing us as an independent sovereign nation to follow the rules they set, including new ones we have no say or voice on. 

Now, if we had opted for an ‘EEA’ type solution such as Norway’s then we would be signing up to such an arrangement. Norway has to follow all EU Single Market legislation with no voice and little influence. It kicked up a fuss on one Directive – on Postal Services, but even that rare challenge was overturned. EEA also means no control of immigration, which is a no-no post our Referendum. 

This is why we went, after much debate, for a free trade agreement relationship with the EU because it is looser, more arm’s length, less prescriptive, and means we are out of the Single Market and Customs Union, with its rules.

I say this as someone who has pushed for an excellent free trade agreement – what I have called ‘SuperCanada’, that is bigger, better and wider than the EU-Canada deal CETA – for years now. It is what Boris Johnson has called for – he used my term ‘SuperCanada’, as did Jacob Rees Mogg, after I presented to the ERG on the proposals in September 2018. I wanted a SuperCanada deal not just for our benefit, but for that of our EU colleagues and friendly nations. 

This is basically what the EU concluded was the only deal possible right from the start post-Brexit, and has been offered three times – by the previous President of the EU Council Donald Tusk and by Mr Barnier himself.

On 7th March 2018, after coming to Number 10, Tusk said: “I propose that we aim for a trade agreement covering all sectors and with zero tariffs on goods. Like other free trade agreements, it should address services. I hope that it will be ambitious and advanced.” Ambitious means wide and with as few tariffs or barriers as possible.

And Barnier himself said, “It is possible to respect EU principles and create a new and ambitious partnership. That is what the European Council has already proposed in March [as above, 2018]. The EU has offered a Free Trade Agreement with zero tariffs and no quantitative restrictions for goods. It proposed close customs and regulatory cooperation and access to public procurement markets, to name but a few examples.

"On security, the EU wants very close cooperation to protect our citizens and democratic societies. We should organise effective exchanges of intelligence and information and make sure our law enforcement bodies work together. We should cooperate to fight crime, money laundering and terrorist financing. We can cooperate on the exchange of DNA, fingerprints, or Passenger Name Records in aviation to better track and identify terrorists and criminals. We are also ready to discuss mechanisms for swift and effective extradition, guaranteeing procedural rights for suspects.

"If the UK understands this, and if we quickly find solutions to the outstanding withdrawal issues, including the backstop for Ireland and Northern Ireland, I am sure we can build a future partnership between the EU and the United Kingdom that is unprecedented in scope and depth.”

Yet on 18th February 2020, the same Mr Barnier suddenly declared “we remain ready to offer the UK an ambitious partnership” (partnership in EU terms normally means embracing non-trade affairs such as defence, security, judicial cooperation or foreign policy). The EU has suddenly noticed the UK is geographically close to the EU after 47 years and has reduced the partnership “unprecedented in scope and depth” to “a trade agreement that includes in particular fishing and includes a level playing field, with a country that has a very particular proximity – a unique territorial and economic closeness – which is why it can’t be compared to Canada or South Korea or Japan.

So just after we had left the EU on 31st January 2020, the EU moved the goalposts and took away a comprehensive free trade agreement, instead offering a partnership agreement which was not comparable to the kind of FTAs the EU had concluded, and which Lord (David) Frost has cleverly kept the UK’s requests very closely aligned to. The EU weren’t willing to offer the FTA they offered 3 times before because we were now considered geographically close! No wonder several of our top Brexiteer lawyers, including Bill Cash in the Commons recently, regard this as ‘bad faith’ in legal terms, which could in theory invalidate the Withdrawal Agreement itself, as our payments and approach were grounded on receiving an FTA. 

So, it is bad faith and a huge misunderstanding by the EU of the realities of the balance of power in trading terms that has brought us to this impasse. As in the Referendum, the EU makes the cardinal mistake of believing its own propaganda: they think that because the EU nation economies put together are bigger than the UK’s, that they hold all the cards. This is supported by our mainstream media, such as the BBC.

But the reality is that the UK is just about to become the EU’s second largest trading partner after the USA. We are the world’s fifth largest economy, the same size currently as India; 20% larger than Russia. If tariffs are imposed in no deal, the EU will be paying £12-13bn a year and the UK only £5bn. Actually, although 43% of our exports go to the EU (57% to the Rest of the World notably), only 7.5% of GDP – of our economy – is exports of goods and vulnerable to EU tariffs.

The EU has a £95 billion goods surplus with the UK, mostly on tariff heavy agricultural and manufactured goods, and though the UK has a £13bn surplus in services, these don’t have tariffs on them, though are subject to licensing such as EU financial passporting, which UK institutions have already worked around. 

So, the reality is that the EU needs a trade deal with us more than we do with them. Not something you hear very often.

If we go to no deal/Australia/WTO Rules, then it is worth remembering that two-thirds of the world trades under WTO Rules, and that the USA and China export more to the EU than we do. So much for geography! Also, most countries do Free Trade Agreements from a WTO Rules position – the recent EU-Japan FTA took Japan and the EU out of a WTO rules position. 

If we are trading under WTO Rules, and the EU is hurting from £13bn a year tariffs, with job losses from these – remember the UK Market employs over a million Germans, half a million Dutch, 400,000 French people – then far from the UK rushing to do a deal, as the French arrogantly claimed, the EU would be under the cosh most. 

By the time a UK-EU FTA is signed – perhaps even finally that SuperCanada style of deal – the EU could have lost a huge chunk of that £95 billion goods surplus from ‘reshoring’ within the UK, from returning manufacturing jobs in food, drink, car parts, steel, trains and from ‘import substitution’ to UK producers or non-EU suppliers from all round the world, such as our Commonwealth, driven by less red tape and the massive surge in UK Free Trade deals Liz Truss has rolled out.  

Whilst we are not protectionist as an organisation, a resetting of the UK’s trading position with the EU, as President Trump reset relations with Mexico and Canada (replacing NAFTA with the USMCA FTA) might be in order, and allow us to redirect our trading markets and suppliers away from an EU focus. 

In short, we shouldn’t be worried if no deal occurs at the end of the year. It will affect only 7.5% of our economy directly by tariffs, and where those are high (many are low or zero rated anyway), those sectors can obtain legal support under WTO rules: farming directly and manufacturing indirectly, such as through aid for Research & Development. The EU Single Market has not suited us at all well since 1992, and a short sharp shock of rebalancing the trading figures would be no bad thing. 

So, let’s not allow the latest Project Fear hysteria to detract us. We should not be signing a deal that ties our hands on EU laws, keeps us in a regulatory straightjacket and seeks to seize our sovereign fishing waters under UN, not EU laws. Boris Johnson is holding firm on our sovereignty and we should stand right beside him and with those principles if we have to go to no deal.


WATCH a webinar we hosted in October: What‘s stopping a trade deal with the EU and is no deal better anyway?

Answering the questions were: David Campbell Bannerman, Chairman of The Freedom Association, a former MEP and international trade expert; Martin Howe QC, a leading barrister in the fields of intellectual property and EU law; Rt. Hon David Jones MP, Conservative MP for Clwyd West, and a former Minister of State at the now defunct Department for Exiting the European Union; Lee Rotherham, Director of think tank The Red Cell and a Common Fisheries Policy expert; and Barney Reynolds, a partner at Shearman & Sterling and the author of 'A Blueprint for Brexit: The Future of Global Financial Services and Markets in the UK' and many other publications.

The webinar was chaired by Alex Deane, a public affairs consultant and political commentator

 


How can we conquer cancel culture?

On Thursday 26th November 2020 we held a webinar asking how we can conquer cancel culture. The panelists were:

Andrew Allison, Head of Campaigns, The Freedom Association

Nick Buckley, CEO, Mancunian Way

Baroness Fox of Buckley, Director, Academy of Ideas

Toby Young, General Secretary of the Free Speech Union

The webinar was chaired by David Campbell Bannerman, Chairman of The Freedom Association

Click on the image below to watch it, and please consider joining us in our fight against those who wish to remove our freedom.