In the wake of Cameron’s speech denouncing the “Norwegian model” as an alternative for Britain to EU membership, the Outers have all piled in to denounce the idea themselves. Odd, as they used to be quite taken with the notion of emulating that particular Scandinavian country’s way of trading with the world (as many a Bruges Group pamphlet will attest to), but stepping that aside for a moment, I agree with them that Norway is no model for what a post-Brexit UK would do or look like. A much better gaze into that possible future is to look at the recent visit to these shores of the General Secretary of the Communist Party of China.
The world is becoming a series of trade blocs for an obvious reason: it’s far harder to get bossed around by a market of a billion people when you yourself are negotiating from a position of relative size. In other words, China really doesn’t have to deal with Italy, or France or indeed the UK if it doesn’t get everything it wants from the deal; being locked out of the whole of the EU however, would present them with a major problem.
We had a taste of all this on Xi Jinping’s visit this month: all the stops being pulled out, the endless sycophancy, the only dissenting voice on human rights being Jeremy Corbyn. It’s because the Tories have figured out the only way to keep public service up to scratch and balance the budget is to get someone else to pay for it. The Chinese are more than willing to do in Britain what they do already in large portions of the third world – but they expect to be treated like masters, not equals.
So to counter the Eurosceptic argument that to suggest Britain can’t make its way in the world outside of the EU is an unnecessary dressing down of this great nation, I would retort by saying that the UK punches well above its weight given its population and geographic size. But in the end, there’s only so much force of numbers any nation can fight against, regardless of how brilliant or resourceful its people are. China has 1.35 billion people to the UK’s 60 million, or to put it another way 23 times more people; geographically, China is just over 38 times larger than the United Kingdom. If Britain left the EU, it would need to do a deals with nations like China pretty quickly. We’d be in a position of having to a deal while the Chinese could take it or leave it. In basic market terms, who does that leave in a much stronger position then?
You could see the way Brexit would almost certainly play out in the words of Michael Froman, the US trade representative, this week:
“We’re not particularly in the market for FTAs (Free Trade Agreements) with individual countries. We’re building platforms that other countries can join over time. We have no FTA with the UK so they would be subject to the same tariffs – and other trade-related measures – as China, or Brazil or India.”
Whether any of us like it or not, the world is becoming one split into powerful trade blocs. For anyone to be outside of one would be extremely risky for them. The US and China are big enough on their own to count as de facto trading blocs; simply through size factor alone, the UK could not pull the same trick off. We recognised that in 1973 when we joined the European Economic Community. The only thing that’s changed in forty years is that the principal upon which Britain did so is more relevant than ever.
We’d be in a position of having to a deal while the Chinese could take it or leave it
That’s not quite true, though. We do have something they need: we have the City of London. They may have more people, but they simply can’t just create for themselves out of nowhere a global trading hub. They can produce all the steel they want, but if they want to sell bonds in a respected international market (because there will always be fears that bonds sold in say Shanghai will be subject to the whims of the Chinese Communist Party, and so will be less attractive to international investors) then they need access to a trusted nexus like New York, Frankfurt or London, and the greatest of these is London.
It may not be much but it is by no means nothing.
‘and the greatest of these is London’………. but for how much longer if we leave the EU. Frankfurt has longed to take London’s place . Dangerous game…..
but for how much longer if we leave the EU. Frankfurt has longed to take London’s place
For how much longer if we stay in the EU, given that, as you point out, France and Germany are determined to use QMV to pass rules which disadvantage the City and promote Frankfurt and Paris?