LONDON – A Conservative MP and a member of the influential Treasury Select Committee is optimistic about Britain leaving the European Union, even though he actually voted for “remain” in the referendum last June.
Chris Philp, MP for Croydon South, told Tory members at a conference in East Croydon on Saturday, which Business Insider attended, that Brexit could lead to better trade opportunities for the nation.
He said Britain is “free to go forge free trade agreements” with major economies, such as China and India, because the country will be out of the EU’s “protectionist racket.”
“Although I voted for ‘remain’ in the referendum last June, I am optimistic about our countries prospects as we leave the European Union. I’m optimistic personally because the European Union needs us for trade more than we need them,” Philp said on Saturday.
“There’s a £60 billion trade deficit with Europe, they send £60 billion more in goods and services than we send to them. And even Michel Barnier, who is leading the negotiation for the EU, said on March 22, that it would be mutually assured damage if we don’t agree a sensible trade deal. So even the poster boy of the uncooperative Europeans is saying a sensible free trade deal is in our interest.
"The second reason why I am optimistic is because there is a whole load of free trade opportunities which our exit will open up. The European Union claims to be about free trade and internally it is about free trade - the Single Market is a very powerful free trade bloc - but when it comes to external trade, in my opinion, the European Union is a bit of a protectionist racket.
In my opinion, the European Union is a bit of a protectionist racket
"It has very few free trade agreements with other large economies - nothing with the EU, China, India or Brazil and now we can go forge free trade agreements with them ourselves. Some people say, 'Will people bother dealing with the UK?' but we are the world's fifth largest economy, we are a major trading nation and I have no doubt at all that we can and we will forge free trade agreements with those other countries."
Britain voted by a slim majority to leave the EU on June 23 last year. Since then, Prime Minister Theresa May has said she's very likely to pull the nation out of the EU's Single Market in exchange for full control over immigration - the latter being a key issue for those voting for Brexit. This is termed as a "hard Brexit."
In the event of a "hard Brexit," the UK is free to do its own trade deals without approval from any other country. If Britain remains in the EU Single Market or Customs Union, it would still have to seek approval from EU members to do any separate deals.
May is already trying to forge multiple non-EU trade deals
Earlier this month, May and two of the most important politicians involved in Brexit negotiations went on a huge roadshow across some of the world's fastest growing economies to begin the process of forging new trade deals:
- Chancellor Philip Hammond touted British fintech company services to India as it is quickly moving towards becoming a less cash-based economy. International Trade Secretary Liam Fox went to try and forge new trade ties and deals with potentially lucrative export markets, such as Indonesia, the Philippines, Malaysia, and the Gulf. May visited Jordan and Saudi Arabia to talk trade and security.
In March, investment bank ING pointed out in a note to clients that "exports to the EU have grown less quickly than exports to non-EU countries over the past decade (5% versus 60% growth). Negotiating trade deals with the likes of the USA and China could see that growth gap widen further."
The executive director of one of the world's most prominent think tanks, who was also at the conference, supported Philp in his view that it is in the EU and UK's interest to strike a post-Brexit trade deal.
"We've had some worrying signs from some in Parliament that 'we don't need German cars, we don't need French cars because we have our own car industry," said Sam Bowman from the Adam Smith Institute, who was potentially referring to Tory MP John Redwood's recent comment that "you do not have to buy German or French cars. There is a good choice of models, prices & specifications available from UK car factories."
"But that's like saying we don't need chorizo or French bread because we have Peparami and Twiglets. It's very, very important to remember that trade is something that benefits all of us, it benefits the UK to import things, it benefits the UK to export things and it benefits the EU to import and export things."
But that's like saying we don't need chorizo or French bread because we have Peparami and Twiglets
Philp said looking at what sectors depend massively on the UK also shows that it would be in the best interest of the EU to make sure a good deal is struck on both sides.
"If you look at individual industries within European countries, it's easy to understand why because we are the largest export market for German cars, 810,000 cars a year - Mercedes, BMW, Audi, if you're lucky Porsche, and so on," he said.
"We're also the largest export destination for French wine behind the US. So I can't really see the French wine industry laying down quietly if they can't export wine to this country as easily as they currently do."
Bowman also said:
"Probably many people in this room are like me - frustrated by the tone of the Brexit debate, even eight or nine months after the referendum.
"It feels like the referendum debate has never ended. On one side we have around 10% some extremely die-hard leavers, who refuse to accept there could be any difficulty on leaving the European Union. And then there is 10% extremely die-hard remainers who refuse to admit there would be any benefits from leaving the European Union.
"In the middle, I think, is the rest of us - 80% who accept the result and want to make Brexit work but also want to acknowledge that it is not necessarily going to be an easy ride."
The general election should sort out the big issue over timing
But timing is the issue. Over the last few months, a number of experts have said that it is highly improbable that Britain will be able to secure a solid trade deal with the EU, or any other countries, in just two years.
A chart of the Brexit talks timetable from the same ING report illustrates this. ING also pointed out that one of the largest and most important trade deals in recent history - the CETA EU-Canada free trade deal - " was seven years in the making, but was almost scuppered by the Wallonia regional government in Belgium."
ING added: "All EU member states will have to approve the eventual UK-EU trade deal and some constitutions require regional parliaments within a country to do likewise. The fear is that the UK could effectively be held hostage as member states try to get concessions from the EU on issues unrelated to Brexit."
So considering only 10-11 months of that timetable is assigned to negotiations on all subjects - and that is without delays - it looks highly unlikely that Britain would be able to secure a trade deal with the EU within two years.
This is why a transitional deal - a leeway period or phased process of implementation of Brexit agreements for the UK - will be incredibly important for the country.
However, Prime Minister Theresa May called for an early general election on Tuesday and after parliamentary approval the following day, it will go ahead on June 8.
Bank of America Merrill Lynch UK economist Robert Wood and his team, said earlier this week that a large Tory majority government would be hugely beneficial to Britain's Brexit negotiations.
In a scenario of a large Conservative majority, the chance of no Brexit trade deal at all - falling off the trade cliff edge - would decline in our view and the chance of a transition period increase," they said.
"Why? Shoving out the next election after the 2017 election from 2020 to perhaps 2022 gives room for a transition period out of the EU before the next election."
Philp said for all the reasons above and under a Conservative government led by May, Britain will make a "success" out of Brexit.