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Second evidence session on the costs and benefits of European Unhon | :00:16. | :00:21. | |
membership for the UK's rold in the world. Mr Avery, I apologisd for the | :00:22. | :00:27. | |
slightly late start of thesd proceedings. Perhaps you cotld | :00:28. | :00:38. | |
introduce yourself for the record. Excuse me, I have had a terrible | :00:39. | :00:43. | |
cold. I must get my cough sweets out. I worked first of all for the | :00:44. | :00:51. | |
British Government, I was a very junior member of the team | :00:52. | :00:55. | |
negotiating Britain's accession to the European Community 's, `nd then | :00:56. | :01:00. | |
I worked for 33 years in thd European Commission. Here I speak | :01:01. | :01:05. | |
entirely in a personal capacity I don't pretend any more to rdpresent | :01:06. | :01:10. | |
the EU European Commission, though I still have good contacts in Brussels | :01:11. | :01:16. | |
with friends from other countries. One of the privileges of retirement | :01:17. | :01:20. | |
is that I can now say exactly what I really think, and I shall do that. | :01:21. | :01:25. | |
And sometimes I will critichse the European Union. I've submitted a few | :01:26. | :01:30. | |
pages of evidence in which H have concentrated on the question, but | :01:31. | :01:34. | |
would British foreign policx look like if we left the European Union? | :01:35. | :01:40. | |
I think one of the weaknessds of the present stage of the debate is that | :01:41. | :01:45. | |
serious examination of the practical consequences of leaving is not | :01:46. | :01:51. | |
generally done, so I am glad we are examining that. I have not tried to | :01:52. | :01:56. | |
examine in any detail econolic and financial questions raised by | :01:57. | :02:03. | |
except, we have other experts we are talking to about that. Let recently | :02:04. | :02:09. | |
said that although I think these economic all and trade questions are | :02:10. | :02:15. | |
important, I don't think thdy are the most important questions | :02:16. | :02:17. | |
concerning British men Bishop of the EU. I think too much -- British | :02:18. | :02:25. | |
membership. I think too much focus is on a profit and loss account of | :02:26. | :02:30. | |
membership, and in foreign policy it is difficult to make such an | :02:31. | :02:39. | |
analysis. Anyway, one thing is clear to me, the main reason why countries | :02:40. | :02:45. | |
joined the EU is to obtain ` seat at the table and to vote in thd | :02:46. | :02:51. | |
decision-making process. Th`t is why it we applied to join 50 ye`rs ago, | :02:52. | :02:59. | |
not just for trade and prosperity, and by the same argument thd most | :03:00. | :03:06. | |
important thing we lose if we leave is our place at the table. | :03:07. | :03:11. | |
I had hoped for the session that you would be joined by Sir Nigel, who | :03:12. | :03:19. | |
had a distinguished career representing the UK in the Foreign | :03:20. | :03:23. | |
Office, sadly he has somethhng else to do today. Also -- so we `re not | :03:24. | :03:29. | |
good to get the benefit of his advice to this committee. Btt I am | :03:30. | :03:34. | |
sure you will more than makd up for, and problem we share a perspective | :03:35. | :03:41. | |
with his. -- probably. I wotld like to invite Andrew Rossendale to lead | :03:42. | :03:48. | |
all with our questions. In our last evidence session, | :03:49. | :03:55. | |
witnesses said that the UK had the best of both worlds in forehgn | :03:56. | :03:59. | |
policy because it could act through the EU or unilaterally. Do xou agree | :04:00. | :04:06. | |
with that? I think it is a slight exaggeration | :04:07. | :04:10. | |
to say that Britain can act unilaterally, when we do th`t it is | :04:11. | :04:15. | |
often less effective. But it is certainly the case that the main | :04:16. | :04:19. | |
characteristic of the EU's foreign and Security policy is that it is | :04:20. | :04:25. | |
decided by unanimity, therefore you can block anything you do not want | :04:26. | :04:30. | |
to go along with, and you c`n take independent action also frol time to | :04:31. | :04:34. | |
time. I think that our partners in European Union have always greatly | :04:35. | :04:39. | |
appreciated the professionalism of British ministers and diplolats and | :04:40. | :04:45. | |
their contribution to the foreign policy which the EU is trying to | :04:46. | :04:48. | |
create. Indeed, I think that that would be one of the things that they | :04:49. | :04:55. | |
would both -- most miss if we leave. They have looked to us for ` lead in | :04:56. | :05:00. | |
this field of EU Foreign Policy Chief. | :05:01. | :05:05. | |
So how significant are the benefits of UK diplomacy working through the | :05:06. | :05:13. | |
EU, compared to the ability of our own country to do what we h`ve | :05:14. | :05:16. | |
traditionally done and decide our own diplomatic strategy? How can it | :05:17. | :05:26. | |
be argued that it is better to pause decision-making in that respect | :05:27. | :05:28. | |
compared to what we have traditionally done as a country | :05:29. | :05:34. | |
If I felt that the decision,making of the EU within foreign policy | :05:35. | :05:40. | |
including in the more broaddr fields of development policy, enlargement, | :05:41. | :05:46. | |
neighbourhood policy, if I felt that that had constrained Britain from | :05:47. | :05:52. | |
maximising its influence on the world, I would be more sceptical. I | :05:53. | :06:00. | |
don't think it has. I have talked... I was never in the Foreign Office so | :06:01. | :06:05. | |
I can speak independently about Britain's diplomats, and I want to | :06:06. | :06:08. | |
say in front of this committee that some of the people I have most | :06:09. | :06:12. | |
admired in my professional career have been British diplomats, and I | :06:13. | :06:16. | |
don't think the British public understands how well served it is by | :06:17. | :06:21. | |
British diplomacy. But I put this question to one or two of mx friends | :06:22. | :06:26. | |
who have served as ambassador in European countries, I asked them to | :06:27. | :06:30. | |
characterise what British foreign policy would be outside the European | :06:31. | :06:34. | |
Union. One of them gave me ` very hefty reply, saying in two words, | :06:35. | :06:46. | |
less weight. -- a very tersd reply. Another friend, they put it in a | :06:47. | :06:56. | |
rather more special way, he said that, he talked about the | :06:57. | :07:00. | |
unconnected but is. He expl`ined that we would continue to press the | :07:01. | :07:07. | |
bilateral buttons to promotd our objectives as we do now, but that we | :07:08. | :07:11. | |
would find quite often that they were not connected to anythhng | :07:12. | :07:16. | |
because our usual partners, the Europeans, the Americans, and our | :07:17. | :07:22. | |
adversaries, the Russians, would regard us as a relevant bec`use we | :07:23. | :07:26. | |
were not part of the Europe`n hole. -- irrelevant. So if we werd to | :07:27. | :07:31. | |
leave, are you suggesting that our allies in Europe would no longer | :07:32. | :07:36. | |
wish to engage with us on m`tters of foreign policy, that we would be | :07:37. | :07:40. | |
excluded, or would we not fhnd another sensible mechanism for us to | :07:41. | :07:45. | |
work together and cooperate on things of common interest? | :07:46. | :07:49. | |
I would like to say that I have always tried to avoid | :07:50. | :07:56. | |
overdramatising the effects of leaving the EU, both in the economic | :07:57. | :08:00. | |
field and a foreign policy field. Plainly Britain would survive, and | :08:01. | :08:06. | |
would be a success -- successful small state outside the EU. Your | :08:07. | :08:15. | |
question is about the allies... When you said small state, what is | :08:16. | :08:20. | |
your definition of that? Smaller, I think he said. | :08:21. | :08:27. | |
Small state in comparison whth the size of the United States, China | :08:28. | :08:33. | |
over 500 million of the EU. But we are talking about a Duropean | :08:34. | :08:39. | |
context. Would we be a small state suddenly? | :08:40. | :08:43. | |
In worlds time it is not such a big state. You were asking about the | :08:44. | :08:49. | |
allies. -- in world terms. On the European allies, why should they pay | :08:50. | :08:56. | |
attention? I think as say in the written evidence I have sublitted | :08:57. | :09:00. | |
that one of the areas in whhch Britain could expect to havd an | :09:01. | :09:04. | |
agreement with the EU would be Corporation in foreign policy. They | :09:05. | :09:10. | |
would very much want to do that with us, but the important difference in | :09:11. | :09:13. | |
that context would be that we would not be at the table when thd other | :09:14. | :09:19. | |
Europeans decided what to do. As far as the Americans are concerned, I | :09:20. | :09:24. | |
have to be quite blunt. I think they would simply a less attention if we | :09:25. | :09:30. | |
were no longer in the Europdan Union. They would fly direct to | :09:31. | :09:34. | |
Berlin and Paris and pass over London. | :09:35. | :09:39. | |
Do you believe that the UK has become less influential in policy | :09:40. | :09:52. | |
making in the last five years? Yes. 1-macro have we become less | :09:53. | :09:58. | |
influential? It is difficult to measure this. The announcemdnt of | :09:59. | :10:09. | |
the referendum has given us the impression that it is isolating | :10:10. | :10:15. | |
itself from mainstream disctssion by threatening to leave. The w`y this | :10:16. | :10:24. | |
situation has been handled, it can give us a foretaste of what we can | :10:25. | :10:36. | |
get. Putin has been talking about -- has been talking to Francois | :10:37. | :10:38. | |
Hollande without the presence of the British prime minister. That is an | :10:39. | :10:43. | |
example where the European partners have become a little bit | :10:44. | :10:46. | |
disenchanted with Britain's plans in the European Union. | :10:47. | :10:59. | |
In our recent development in international relationships, when | :11:00. | :11:04. | |
did we stop becoming a main player and so influential in the world in | :11:05. | :11:08. | |
terms of international coopdration? It seems from what you are saying, | :11:09. | :11:15. | |
that the EU is now where it is out -- at an Britain alone would not | :11:16. | :11:20. | |
have anything like this way we have of tradition. At what point did that | :11:21. | :11:26. | |
happen? I don't think I could put a date on it. The centuries, ht has | :11:27. | :11:33. | |
been the nightmare of brushds from policymakers, for there to dxist a | :11:34. | :11:38. | |
group in the States. -- British policymakers. | :11:39. | :11:48. | |
1-macro you said that peopld just fly over London, a pretty mhserable | :11:49. | :12:03. | |
analogy. Actor 9/11, one aeroplane flew over. With Tier one spdcial | :12:04. | :12:12. | |
forces, the surveillance assets the biggest investment in the US and we | :12:13. | :12:17. | |
still have a huge trade relationship. What would be | :12:18. | :12:19. | |
different in terms of the Alerican feeling that we are outside the EU? | :12:20. | :12:27. | |
You raised that question whhch is a complicated question. The | :12:28. | :12:33. | |
relationship between trade negotiations and foreign policy are | :12:34. | :12:39. | |
broader terms. One thing is quite clear to me, the success of American | :12:40. | :12:45. | |
Administration for quite a number of years, I wanted the Europeans to | :12:46. | :12:50. | |
take more collective responsibility for affairs in the European | :12:51. | :12:55. | |
neighbourhood. If Britain is not part of this collective acthon, I | :12:56. | :12:57. | |
think it would be less relevant to Washington. | :12:58. | :13:11. | |
If we were to leave the European Union, clearly there would be a need | :13:12. | :13:22. | |
to reorientate the Foreign Commonwealth Office and othdr | :13:23. | :13:26. | |
government departments. What level of resources do you think wd would | :13:27. | :13:42. | |
need to dedicate for having, for example, maintaining the European | :13:43. | :13:49. | |
Union compared with what we do now. As I have tried to explain, the | :13:50. | :13:54. | |
British government would have to put a lot of effort into lobbying the | :13:55. | :14:00. | |
other European Union 's, both in Brussels and by laterally, to | :14:01. | :14:02. | |
persuade the Europeans to follow the British point of view. I don't think | :14:03. | :14:08. | |
this is automatic at the molent They don't necessarily follow our | :14:09. | :14:12. | |
point of view but we have a better chance of persuading them. Outside | :14:13. | :14:16. | |
the European Union, the Fordign Office would have to reversd the | :14:17. | :14:22. | |
cuts that have been made recently in bilateral embassies in the other 20 | :14:23. | :14:29. | |
states of the European Union. It would be important to lobby them as | :14:30. | :14:32. | |
well as the institutions in Brussels. Presumably, as thd Prime | :14:33. | :14:40. | |
Minister has pointed out in his visit to Iceland, if we werd to be | :14:41. | :14:45. | |
outside, we would potentially, be in the same position as Norway is | :14:46. | :14:53. | |
today. To not have any representation within the | :14:54. | :14:56. | |
structures, but we might sthll want to sessions to be favourabld to us | :14:57. | :15:01. | |
and the form of integration without representation. As a countrx that | :15:02. | :15:10. | |
wished to have access, what level and what time would we have that | :15:11. | :15:16. | |
access if we were not a member state? Would we be consulted at the | :15:17. | :15:20. | |
earliest stages in the forehgn policy discussions or would we be a | :15:21. | :15:28. | |
bystander? As I tried to wrhte in my written evidence, my prediction is | :15:29. | :15:33. | |
what the EU would offer to Britain leaving the European Union, will be | :15:34. | :15:38. | |
membership of the economic `rea Sometimes called the Norway model. | :15:39. | :15:46. | |
The European economic area, at one stage, I managed while in Brussels, | :15:47. | :15:50. | |
has the merit from the point of view from the other member states of | :15:51. | :15:55. | |
existing and haven't been tdsted over 20 years. Its well and it is a | :15:56. | :16:00. | |
trouble-free relationship. 0-macro they are small areas. The population | :16:01. | :16:08. | |
of these countries is minutd compared to ours. I am saying what | :16:09. | :16:12. | |
the European Union would offer, not what the British government would | :16:13. | :16:18. | |
say. I don't think the European Union would be prepared to offer | :16:19. | :16:23. | |
something better. It might give it another name but to simplifx, in | :16:24. | :16:28. | |
order to have the best access to the single market, which is what we | :16:29. | :16:33. | |
would want, the other Europdans would insist that Britain rdspects | :16:34. | :16:39. | |
the EU rules in -- which ard relevant to the single markdt. When | :16:40. | :16:46. | |
it comes to consultation, I don t think there is anything better. | :16:47. | :17:00. | |
There is a committee in which new European things are discussdd. In | :17:01. | :17:06. | |
the lead up to decisions by the Council, the other members of the | :17:07. | :17:09. | |
year can make representations. In the last resort, they don't have a | :17:10. | :17:14. | |
vote and have to accept what has been decided. You have referred to | :17:15. | :17:22. | |
the need to reinforce the dhplomatic resources by laterally with existing | :17:23. | :17:29. | |
EU states and to beef up our diplomatic presence if we wdre | :17:30. | :17:32. | |
outside the European Union. Howard that relate to our presence in the | :17:33. | :17:39. | |
institutional framework of the European Union? Would there be a | :17:40. | :17:44. | |
cost of reinforcing our presence in Brussels and other countries? If | :17:45. | :17:51. | |
that is the case, how would you assess that would be dealt with | :17:52. | :17:58. | |
Would it be offset by savings from reducing our contribution to the EU | :17:59. | :18:05. | |
budget or would it be a net cost to us? In the context of a typd of | :18:06. | :18:18. | |
arrangement, as I explained in my written evidence, I'm sure the other | :18:19. | :18:23. | |
European Union 's would want them to make some of budgetary contribution. | :18:24. | :18:29. | |
The Norwegians do it, so whx shouldn't the Brits? On the question | :18:30. | :18:35. | |
of how Britain would organise itself to make representations in Brussels, | :18:36. | :18:40. | |
I don't think that is terribly complicated because member states of | :18:41. | :18:43. | |
the European Union have offhcers headed by ambassadors which are | :18:44. | :18:50. | |
permanent representations. The ambassadors are permanent | :18:51. | :18:52. | |
representatives. Non-member states have delegations headed by | :18:53. | :18:57. | |
ambassadors. On the face of it, I don't think Britain would nded to | :18:58. | :19:01. | |
increase its representation in Brussels. There are enough dxpert | :19:02. | :19:07. | |
people there. The problem is, who would listen to them and at what | :19:08. | :19:09. | |
stage in the decision-making progress? Can I take you back to | :19:10. | :19:17. | |
your answer. We asked you about the United States. President Ob`ma and | :19:18. | :19:21. | |
other members of his administration have been clear that they w`nt the | :19:22. | :19:28. | |
UK to remain. They would prdfer us to remain in the European Union If | :19:29. | :19:34. | |
we chose if the British people chose to leave the European Union, would | :19:35. | :19:39. | |
that then lead to a damage of the relationship between the UK and the | :19:40. | :19:47. | |
US? Well, you'd use the word, damnation, I would say diminished. | :19:48. | :19:55. | |
-- you use the word, damage, I would say diminished. The union would be | :19:56. | :20:03. | |
extremely important for London but it would be meaning a great deal | :20:04. | :20:09. | |
less for Washington. What c`n the UK do? Would it mitigate or offset that | :20:10. | :20:16. | |
diminishing of influence th`t you have referred to? I don't sde how. | :20:17. | :20:24. | |
You don't see how? Whatever we did, the fact that we have lacked the | :20:25. | :20:28. | |
European Union will be diminishing in our relationship to the TS? | :20:29. | :20:36. | |
Britain has a voice in the DU decisions and they will no longer | :20:37. | :20:41. | |
have that voice. I don't thhnk we could pretend to do it. Even if we | :20:42. | :20:47. | |
are a keen ally through Nato? It was still damage or do diminishdd that | :20:48. | :20:53. | |
relationship? Yes. What abott relations of the UK, sorry, of the | :20:54. | :21:02. | |
US with the rest of the EU? How would that be affected by the UK | :21:03. | :21:07. | |
withdrawal? I think you havd to ask the Americans that. Plainly, they | :21:08. | :21:13. | |
would intensify relations whth Paris and Berlin. They would focus on the | :21:14. | :21:20. | |
others. I don't know if there is much more to say about it. Why | :21:21. | :21:27. | |
should they bother to try and ask London to influence EU decisions | :21:28. | :21:35. | |
when London no longer has a vote? They wouldn't be telephoning London | :21:36. | :21:42. | |
so often? Yes. Perhaps I cotld ask about the effect on the European | :21:43. | :21:48. | |
Union of British exit, parthcularly on the EU institutions in which he | :21:49. | :21:53. | |
worked. We had evidence last week from Charles Grant saying that the | :21:54. | :21:58. | |
nature of the commission from the view of Paris was that from Paris, | :21:59. | :22:05. | |
they can say the problem with the European Commission is it is so | :22:06. | :22:09. | |
bloody British these days. Hf we are talking about economic policy, it is | :22:10. | :22:14. | |
driven by British interest `nd philosophy. That is how it hs | :22:15. | :22:19. | |
perceived in parts of the ET. They speak English, also. Even the French | :22:20. | :22:24. | |
as Commissioner Mark if we left with the commission be able to work | :22:25. | :22:28. | |
rather more with a grain of our continental partners? They wouldn't | :22:29. | :22:34. | |
find it such an Anglo-Saxon institution. What would be the | :22:35. | :22:41. | |
institutional effects on thd EU institutions? Would it be a disaster | :22:42. | :22:50. | |
for the rest of the institutions or would they find it easier to get on | :22:51. | :22:56. | |
without the bloody British? Getting in the way and applying a break all | :22:57. | :23:05. | |
the time on the effectiveness of policy. If we are talking about | :23:06. | :23:10. | |
foreign policy, it is not h`ndled by the European Commission. It is about | :23:11. | :23:15. | |
the whole effect on institutions of the British... I think that the | :23:16. | :23:24. | |
benefits of having Brits working there for many years wouldn't wear | :23:25. | :23:27. | |
for quite a long time. They might still higher British experts to | :23:28. | :23:32. | |
advise them, but manifestly, the present situation which is puite | :23:33. | :23:37. | |
alarming, there is a very low percentage of British staff in the | :23:38. | :23:41. | |
European mission. That would go down almost to zero. In terms of foreign | :23:42. | :23:49. | |
policy and the way it was conducted by the US... My question isn't about | :23:50. | :23:55. | |
foreign policy, it is about the coherence as the driving force of | :23:56. | :23:59. | |
the union, whether it will be the commission working better whthout us | :24:00. | :24:03. | |
on the council and without this Anglo-Saxon influence. The `bility | :24:04. | :24:10. | |
to integrate, there wouldn't be this large fly in the European or | :24:11. | :24:16. | |
treatment, consequently, asking difficult questions and being | :24:17. | :24:20. | |
hostile to integration and the institutions working togethdr in a | :24:21. | :24:23. | |
way that is seen as more communitarian than our position | :24:24. | :24:29. | |
traditionally is to stop I don't think it will make instituthons more | :24:30. | :24:35. | |
coherent. There would be 27 instead of 28 members. I don't think it | :24:36. | :24:41. | |
would make it more coherent. Coherence within the Europe`n | :24:42. | :24:46. | |
Commission, which I could ghve you a long lecture about, I don't think | :24:47. | :24:48. | |
they'll related to that. I think Britain's departure would be | :24:49. | :24:58. | |
greatly regretted, and they would still want to talk from timd to time | :24:59. | :25:04. | |
to the United Kingdom. But dxcuse me if I repeat myself, in the last | :25:05. | :25:08. | |
resort Britain would not be there when the decisions are taken. I am | :25:09. | :25:14. | |
driving at something else, hn terms of, would there be a sort of collect | :25:15. | :25:19. | |
live sigh of relief inside those pursuing a... -- collector. Within a | :25:20. | :25:27. | |
rather narrow group of people who are anxious to pursue a mord | :25:28. | :25:34. | |
effectively federal project with the cooperation with the nation States | :25:35. | :25:41. | |
within the institutions of the EU, that this would actually become | :25:42. | :25:47. | |
easier without the British presence? I understand. | :25:48. | :25:55. | |
I understand we have uncovered evidence that Brexit would be | :25:56. | :26:01. | |
regretted by nearly all of our partners, but would there bd those | :26:02. | :26:08. | |
who actually say delivering greater degree of fiscal union, Corporation | :26:09. | :26:12. | |
-- coordination, to support the currency, that this would bd | :26:13. | :26:19. | |
advanced by the British leaving Though maybe some, perhaps they | :26:20. | :26:22. | |
could even be some French who would say thank God to get rid of these | :26:23. | :26:27. | |
Brits who always wanted to demolish the system, but I think thex are in | :26:28. | :26:33. | |
a minority. Perhaps you could argue that the EU could do better with | :26:34. | :26:40. | |
less. But in my personal ophnion, with less members the EU cotld do | :26:41. | :26:46. | |
less, it could be less infltential and efficient in its policids. | :26:47. | :26:54. | |
Mr Avery, China's president appeared to indicate after a state vhsit that | :26:55. | :27:00. | |
China wants the UK to remain a part of the EU. If the United Kingdom | :27:01. | :27:08. | |
left the EU, how might its bilateral relationship with China change? | :27:09. | :27:19. | |
Well, first of all I have t`lked a certain amount about the policy -- | :27:20. | :27:24. | |
foreign policy negotiations of Britain leaving. I think thd | :27:25. | :27:30. | |
implications would be more problematic in what you might call | :27:31. | :27:33. | |
the European theatre, the rdgions surrounding Europe. And in perhaps | :27:34. | :27:38. | |
some of those areas of the world where they -- there are problems | :27:39. | :27:43. | |
developing. In the case of ` country like China? I don't think it would | :27:44. | :27:50. | |
make much difference in terls of foreign policy, however in terms of | :27:51. | :27:54. | |
trade it is quite clear that for the purposes of negotiation, thd | :27:55. | :28:03. | |
European market would remain much the most attractive target for the | :28:04. | :28:08. | |
Chinese for negotiations, and for investment, than if the British were | :28:09. | :28:13. | |
on their own outside. Do you think it might affect China's | :28:14. | :28:16. | |
willingness to invest in Brhtain in a way which it would not have done | :28:17. | :28:23. | |
because Britain would have had a much easier and quicker accdss to | :28:24. | :28:26. | |
the single market which you wouldn't have if the UK left the EU? | :28:27. | :28:31. | |
That seems to be one of the reasons that motivate foreign investors | :28:32. | :28:36. | |
that we have the right and unfettered access to the single | :28:37. | :28:39. | |
market. However good access we had to the single market as nonlembers, | :28:40. | :28:47. | |
it wouldn't be entirely unfdttered? Do you think Britain's political and | :28:48. | :28:52. | |
particular economic clout mhght be affected by the fact that there was | :28:53. | :28:57. | |
no longer the same access to these, we would be less influential when it | :28:58. | :29:04. | |
came to decisions made by the EU? Yes, I think that would be the case. | :29:05. | :29:14. | |
You alluded to Russia earlidr on in your statement, and gave us the | :29:15. | :29:21. | |
impression that they are negotiating with Angela Merkel and Francois | :29:22. | :29:26. | |
Hollande, I would dispute that as a result of the structures of the EU, | :29:27. | :29:32. | |
that may be to do with our own Prime Minister's priorities. But can I | :29:33. | :29:36. | |
press you on how you perceive our relationship with Russia to change | :29:37. | :29:46. | |
if we were to pull out of the EU? Well, first, in the context of | :29:47. | :29:52. | |
Ukraine, the instrument that we British have decided to use is not | :29:53. | :30:01. | |
the military instrument, it is the instrument of sanctions. It is not | :30:02. | :30:10. | |
clear to me whether with handling Russia, either this parliamdnt or | :30:11. | :30:13. | |
the parliaments of the other member States are ready to investmdnt the | :30:14. | :30:17. | |
Tory action in confrontation with Russia. -- military action. So let's | :30:18. | :30:23. | |
imagine the way we would handle Russia would be by economic means. | :30:24. | :30:29. | |
There I think it is a questhon to which I don't have a clear `nd so, | :30:30. | :30:33. | |
whether outside the EU written would take a tougher line with thd | :30:34. | :30:37. | |
Russians, or a weaker line than the other European partners. I lean | :30:38. | :30:41. | |
there is a certain scale of attitudes within Europe tow`rds | :30:42. | :30:48. | |
Russia in which this countrx is rather on the hostile side, not | :30:49. | :30:51. | |
quite as hostile as some of the smaller member States but you know | :30:52. | :30:54. | |
what I mean. But personally I think the most likely scenario if we talk | :30:55. | :30:59. | |
about the use of economic ldvers to deal with Russia, is that wd British | :31:00. | :31:07. | |
would want to do the same thing as the others are Europeans or the | :31:08. | :31:10. | |
Americans. So we would prob`bly spend our diplomatic efforts trying | :31:11. | :31:16. | |
to persuade others to adopt the same sanctions and levers as ours. | :31:17. | :31:21. | |
I understand your perspective about Britain's approach, but if we had a | :31:22. | :31:25. | |
Government in the future th`t was far more interested in promoting | :31:26. | :31:31. | |
bilateral trade with Russia and a rapprochement with Russia, `nd we | :31:32. | :31:34. | |
were outside of the EU, then surely it would be easier for us to engage | :31:35. | :31:41. | |
in those sorts of discussions rather than being constrained by the | :31:42. | :31:46. | |
uniform approach of the EU? Well, let's hope that this scenario | :31:47. | :31:52. | |
would come about, that relations with Russia would be possible to | :31:53. | :31:56. | |
relax. Personally I don't sde a scenario where, faced with the kind | :31:57. | :32:00. | |
of regression we have seen hn Ukraine, Britain would want to take | :32:01. | :32:04. | |
a softer line than the other European partners. | :32:05. | :32:10. | |
OK. Moving on to the neighbourhood policy. If the UK, if we were to | :32:11. | :32:16. | |
leave the EU and consequently withdraw from the neighbourhood | :32:17. | :32:21. | |
policy, how would this change the way the UK engages with countries on | :32:22. | :32:25. | |
Europe's eastern and southern borders? By pulling out of this | :32:26. | :32:34. | |
accord. Well, I guess that Britain would | :32:35. | :32:43. | |
wish that the countries in puestion, Ukraine, Belarus, Georgia, `round | :32:44. | :32:51. | |
there, we wish to promote to the maximum stability and presbxtery in | :32:52. | :32:55. | |
these countries. This seems to me a given of British foreign policy -- | :32:56. | :33:02. | |
prosperity. So the question is how to do that. And... | :33:03. | :33:14. | |
I regret, we have a division and the meeting will be suspended. | :33:15. | :33:22. | |
Can we resume the meeting, Lr Avery, if you can remember where you were | :33:23. | :33:34. | |
15 minutes ago. I was asked about British foreign | :33:35. | :33:37. | |
policy in relation to the e`stern European countries. I was trying to | :33:38. | :33:41. | |
say that I don't think that the aims of British policy would be | :33:42. | :33:46. | |
significant the -- signific`ntly different outside the EU, the | :33:47. | :33:49. | |
question is the means by whhch we could affect them. And I have to say | :33:50. | :33:56. | |
that in the case of these so-called neighbourhood countries, and also | :33:57. | :33:59. | |
the countries which are in the EU's accession progress -- process, like | :34:00. | :34:05. | |
the Western Balkans, the EU offers financial and economic instruments | :34:06. | :34:12. | |
and methods of corporation ,- cooperation, and levers of political | :34:13. | :34:14. | |
influence, but Britain could not much on its own. -- that Brhtain. | :34:15. | :34:24. | |
My last question to you reg`rds the strategy of enlargement. If the | :34:25. | :34:33. | |
United Kingdom was to pull out, -- of this structure, with that in your | :34:34. | :34:37. | |
estimation affect the way in which the European Union tries to increase | :34:38. | :34:43. | |
-- continue to increase its member should? -- with that. | :34:44. | :34:50. | |
I was quite heavily involved in the enlargement process, and I want to | :34:51. | :34:54. | |
make the point that the enl`rgement of the EU was taking place | :34:55. | :34:58. | |
systematically not through some sort of imperialistic ambition from | :34:59. | :35:03. | |
Brussels but because the nehghbours knocked on the door. So it has been | :35:04. | :35:07. | |
a reactive process. And I think it will continue to be so. It hs | :35:08. | :35:12. | |
correct that her Majesty's Government ever since 1973 has been | :35:13. | :35:17. | |
among the most enthusiastic for success -- successful enlargement of | :35:18. | :35:23. | |
the EU, for most of this th`t I sometimes questioned among the | :35:24. | :35:27. | |
European partners. -- for motives. But I don't think in the case of the | :35:28. | :35:32. | |
Western Balkans, Britain's leaving the EU would diminish the attraction | :35:33. | :35:38. | |
for them, or the EU's commitment to try to bring peace and stabhlity to | :35:39. | :35:43. | |
that part of the world. Turkey is a different kind of question, it is a | :35:44. | :35:48. | |
very big country, it will soon overtake Germany in populathon size, | :35:49. | :35:53. | |
and would be, already is, the biggest state that ever applied to | :35:54. | :35:58. | |
join the EU. And I think with Britain in or outside the ET, the | :35:59. | :36:01. | |
prospects of Turkish membership at a very long way off. And I wotldn t | :36:02. | :36:07. | |
put too much money on it. However, in the meantime, the EU, with us as | :36:08. | :36:15. | |
member, is strongly engaged with Turkey in trying to bring Etropean | :36:16. | :36:24. | |
values and European democracy to a reform -- a reformed Turkey. I think | :36:25. | :36:28. | |
the possibility of Turkish membership can still be a vdry | :36:29. | :36:33. | |
powerful evil of influence to get the tax to behave the way wd want | :36:34. | :36:39. | |
them to. -- lever. -- to get the Turkish people. | :36:40. | :36:49. | |
In terms of enlargement, how do you think Brexit is viewed especially in | :36:50. | :36:54. | |
the Western Balkans which mhght realistically the next set of | :36:55. | :36:59. | |
countries to come into the DU? I don't think they pay a lot of | :37:00. | :37:03. | |
attention to aid, it is not the number one, number two or even | :37:04. | :37:07. | |
number three domestic foreign policy programme. Since Britain has often | :37:08. | :37:14. | |
been a good friend to that part of the world, I think they would regret | :37:15. | :37:19. | |
it. But I don't think it wotld inflect in any significant way their | :37:20. | :37:26. | |
attitude or the attitudes of the European institutions. I have - as | :37:27. | :37:31. | |
I have said in my written evidence, I think Britain is a nonmember of | :37:32. | :37:36. | |
the EU would probably wish Like the Norwegians do to provide financial | :37:37. | :37:43. | |
aid and technical assistancd to Serbia and other countries. We want | :37:44. | :37:48. | |
things to come right in that part of the world whether or not we are in | :37:49. | :37:52. | |
the EU, but there we would hn the case of the Western Balkans, be | :37:53. | :37:57. | |
assisting and helping foreign policy, not deciding it. | :37:58. | :38:03. | |
Would we really be that intdrested in the Western Balkans if wd weren't | :38:04. | :38:11. | |
in the EU? Britain, like the international | :38:12. | :38:15. | |
community in general, is colmitted to try and find ways to bring peace, | :38:16. | :38:18. | |
prosperity and security to that heart of the world. Many reports | :38:19. | :38:23. | |
have been written, thousands of trees felled on these probldms, but | :38:24. | :38:30. | |
nobody has come up with a convincing alternative to moving them `long the | :38:31. | :38:35. | |
path towards European membership, taking on European values, Duropean | :38:36. | :38:40. | |
governments and so on. I find it hard to believe Britain would not | :38:41. | :38:44. | |
want to support that. How else can we give them presbytery and | :38:45. | :38:48. | |
stability? But I want to investigate hdre | :38:49. | :38:52. | |
whether, we made an enormous commitment in Bosnia in the 199 s in | :38:53. | :39:00. | |
the Bosnian crisis and were leading players in trying to resolvd that | :39:01. | :39:04. | |
and provided Paddy Ashdown `s the EU's commissioner. If we weren't in | :39:05. | :39:10. | |
the EU, we would surely havd said that responsibility to the Duropean | :39:11. | :39:17. | |
Union? And it would have bedn, we would not have -- there would not | :39:18. | :39:22. | |
have been that sense of British interest, and there would bd | :39:23. | :39:26. | |
somebody else's responsibilhty to all of that effort in there. -- put | :39:27. | :39:33. | |
all that effort in. I don't think it would be whthin the | :39:34. | :39:37. | |
British tradition to considdr stability and was buried to in that | :39:38. | :39:40. | |
heart of Europe as somebody else's responsibility. -- stabilitx and | :39:41. | :39:42. | |
prosperity. It will be a bit like mucking about | :39:43. | :39:57. | |
in Costa Rica if the Americ`ns were engaged in them, wouldn't it? We | :39:58. | :40:03. | |
would be looking to the leadership from the United States if it wasn't | :40:04. | :40:07. | |
their backyard. If we were not in the European Union and therd were | :40:08. | :40:11. | |
these problems on the Europdan Union Southern border, if we weren't in | :40:12. | :40:17. | |
the European Union, the levdl of our interest and role in it, it would be | :40:18. | :40:24. | |
much to diminished, wouldn't it Other non-EU members like Norway | :40:25. | :40:32. | |
consider it is worth investhng. I wouldn't like to think that the | :40:33. | :40:36. | |
Norwegians are more alt to risk it than we are. I am sure Brit`in will | :40:37. | :40:41. | |
want to ensure the best outcome for that region of Europe, whether we | :40:42. | :40:47. | |
were in or out. For me, it hs clear that the instruments of the European | :40:48. | :40:52. | |
Union are the best to use and it is -- if we were not members, we would | :40:53. | :40:56. | |
want to follow the European Union without directing it. Just to move | :40:57. | :41:06. | |
on to paragraph 14 in your written evidence, you mentioned... H don't | :41:07. | :41:13. | |
want to go through another experience in a referendum being the | :41:14. | :41:17. | |
independent referendum in Scotland, but you said difficulties for | :41:18. | :41:21. | |
Scotland to join the EU werd exaggerated. I am interested in this | :41:22. | :41:25. | |
point that you make, that should the UK leave the European Union and | :41:26. | :41:31. | |
Ireland remain within it and Scotland remain within the Duropean | :41:32. | :41:37. | |
Union, would the UK rely on Dublin and Edinburgh for more of its | :41:38. | :41:41. | |
influence in terms of broaddr foreign policy influence? I have | :41:42. | :41:52. | |
given this very provocative... Not to provoke. We have to think in | :41:53. | :41:57. | |
concrete terms of how British foreign policy would actually be | :41:58. | :42:03. | |
conducted if we were nonmembers There would have to be an effort in | :42:04. | :42:07. | |
Brussels lobbying the EU institutions. We would have to step | :42:08. | :42:12. | |
up our bilateral efforts and that means we would have to lobbx Dublin | :42:13. | :42:20. | |
and a certain scenario, Edinburgh, to persuade these member st`tes to | :42:21. | :42:24. | |
follow the line we wanted in Brussels decisions. One might say | :42:25. | :42:30. | |
provocatively that Scotland remaining a part of the EU could be | :42:31. | :42:34. | |
beneficial to what remains of the UK. I think he is challenging for a | :42:35. | :42:40. | |
vote. What do you think the standhng will | :42:41. | :43:06. | |
be on the UK if we achieved and the vote in Scotland was to stax in the | :43:07. | :43:13. | |
EU, some say that would trigger the opportunity for a Scottish | :43:14. | :43:16. | |
Nationalist to put a robust case to repeat their referendum if | :43:17. | :43:21. | |
circumstances had changed whthin our own union, and it led to Scotland | :43:22. | :43:25. | |
withdrawing from the UK, wh`t do you think would be the effect on the | :43:26. | :43:30. | |
global standing of the rest of the UK? In a scenario where...? | :43:31. | :43:46. | |
Gosh! Will the rest of the world notice? It is plain that thd | :43:47. | :43:55. | |
standing and size of the rest of the UK would be diminished. I don't | :43:56. | :44:00. | |
think it would be dramatically diminished because, how manx are | :44:01. | :44:06. | |
you? 5 million Scots? I don't think it will make a dramatic difference. | :44:07. | :44:12. | |
It won't have been seen and would be seen as a shameful event for the UK. | :44:13. | :44:25. | |
A shameful event, you said? If the UK split up. The others, I think the | :44:26. | :44:34. | |
other member states didn't want us tease -- see that, it would have | :44:35. | :44:43. | |
implications for the rest. Just to respond, I think it is clear that | :44:44. | :44:49. | |
if, in this scenario, Scotl`nd being an independent state, Scotl`nd will | :44:50. | :44:55. | |
take a similar point of view to the UK on a very large number of issues. | :44:56. | :45:00. | |
I don't think Scotland, in lany ways what would be very sympathetic and a | :45:01. | :45:08. | |
like-minded member of the Etropean Union. On a final question to move | :45:09. | :45:22. | |
away from the Scottish example, I gladly keep on it but we might | :45:23. | :45:27. | |
behave sometime. I deliberately mentioned Dublin because I think | :45:28. | :45:33. | |
that is an interesting analogy. You mentioned Scotland would be a friend | :45:34. | :45:36. | |
to the UK and would have sililar foreign policy goals. Is th`t the | :45:37. | :45:44. | |
same case with Ireland? Has Ireland been a good friend and will it | :45:45. | :45:50. | |
continue to be a good friend? The case of Ireland is a bit different | :45:51. | :46:01. | |
for historic reasons. There is different economic interest. The | :46:02. | :46:08. | |
general point is valid. Thex support less regulation. Thank you for your | :46:09. | :46:19. | |
evidence. I think we managed to provoke you sufficiently to describe | :46:20. | :46:27. | |
Mr Gethin's party policy as shameful. Sorry, I am speakhng out | :46:28. | :46:34. | |
loud. I am extremely grateftl for your evidence. May I make one last | :46:35. | :46:42. | |
remark? It is often said th`t the founding project of European | :46:43. | :46:46. | |
communities in the last century was to bring peace within Europd and it | :46:47. | :46:50. | |
succeeded in this sense that military action between one or other | :46:51. | :46:55. | |
member states of the Europe`n Union is not on the radar. It is | :46:56. | :46:58. | |
inconceivable. The enlargemdnt in the last ten years has extended this | :46:59. | :47:05. | |
to a wider part of Europe. H often say that if that part of thd project | :47:06. | :47:12. | |
was successful in the last century, what is the Project for this | :47:13. | :47:17. | |
century? For me, it is simple. The project of the European Union should | :47:18. | :47:21. | |
be to promote the interests of the citizens and protect their values in | :47:22. | :47:24. | |
the wider world by means of collective action which can be much | :47:25. | :47:28. | |
more effective if we do it together than if we do it individually. In | :47:29. | :47:34. | |
that collective action, I w`nt our country to play a leading role. I | :47:35. | :47:40. | |
think we have got the gener`l gist. Thank you very much indeed. I invite | :47:41. | :47:44. | |
our next two witnesses to come forward. | :47:45. | :47:52. | |
Gentlemen, thank you very mtch for joining us. If we could introduce -- | :47:53. | :48:00. | |
if you could introduce yourselves, for the record. I am Professor of | :48:01. | :48:07. | |
economics at Cardiff. Thank you for inviting me. I have written | :48:08. | :48:12. | |
extensively on the European Union and I have the first edition of a | :48:13. | :48:18. | |
book in 2005 called Should We Leave The European Union? I am about to | :48:19. | :48:24. | |
bring out the second edition next month. Withdrawing on your | :48:25. | :48:36. | |
expertise. My name is Steve Walker from the London School of economics. | :48:37. | :48:40. | |
Thank you for the invitation. It is an honour to be here. I teach at the | :48:41. | :48:46. | |
London School of economics International political economy and | :48:47. | :48:50. | |
international trade. We sublitted a joint written submission. Mx bit was | :48:51. | :48:59. | |
the trade part of that. That is my area of expertise and I am trying to | :49:00. | :49:02. | |
cover the other aspects of written submission. Perhaps I can ask Mark | :49:03. | :49:12. | |
Hendrick to begin our questhon. Could I start by asking you both how | :49:13. | :49:20. | |
you feel that the EU is levdrage in its economic weight in purstit of | :49:21. | :49:31. | |
its foreign policy goals? I will have a go at that one. I thhnk if... | :49:32. | :49:41. | |
You have to be defining pop foreign policy goals in terms of whdther | :49:42. | :49:46. | |
they are to maintain open trading investment systems. Is it to | :49:47. | :49:53. | |
maintain stability in the international financial markets Is | :49:54. | :49:58. | |
it to bring sustainable devdlopment in neighbouring come true is like | :49:59. | :50:04. | |
Africa and Middle East? These have security implications, forehgn | :50:05. | :50:08. | |
policy implications. Perhaps climate change, also, is an area whdre there | :50:09. | :50:13. | |
is security interest at stake. How effective is the EU in promoting | :50:14. | :50:19. | |
these policies? It varies in terms of maintaining an investment system | :50:20. | :50:27. | |
effectively. In financial m`rkets, as we have seen, not so effdctive, | :50:28. | :50:33. | |
although we have to bear in mind that most of the competence issues | :50:34. | :50:39. | |
in financial regulation still rest with the member states. In terms of | :50:40. | :50:47. | |
promoting sustainable deferlent in neighbouring countries, effdctive | :50:48. | :50:51. | |
but could be more effective and I think more effective in the trade | :50:52. | :50:54. | |
field than in terms of provhsion of aid. In climate change, I think the | :50:55. | :51:03. | |
EU provided leadership in the whole debate on climate change at a time | :51:04. | :51:08. | |
when no one else was providhng much leadership. Those are very general | :51:09. | :51:15. | |
points. The other area, I stppose, where trade may support or provide | :51:16. | :51:23. | |
leverage in foreign policy, is in terms of providing the bedrock for | :51:24. | :51:26. | |
bilateral relations with other countries. This brings us onto the | :51:27. | :51:32. | |
whole question of bilateral relations between the EU or the UK | :51:33. | :51:37. | |
and third countries and the whole question of trade and investment | :51:38. | :51:44. | |
agreements. I think the way I would characterise it, is that in the | :51:45. | :51:52. | |
academic debate, we talk about club models. In other words, | :51:53. | :51:58. | |
multilateralism has been rather superseded by what is called a club | :51:59. | :52:10. | |
medal. TPP, EU, Japan, Asia, these are all clubs and it is the big | :52:11. | :52:15. | |
clubs that we tend to infludnce our products. I don't really sttdy | :52:16. | :52:24. | |
foreign policy so haven't got much to say about this. It is a foreign | :52:25. | :52:31. | |
policy in the UK EU relationship which is what Mr Avery was talking | :52:32. | :52:42. | |
about. I think that the key thing for us is to remain friendlx with | :52:43. | :52:48. | |
our allies and they will sthll be allies. The economic interests and | :52:49. | :52:52. | |
political interest will still be the same. I don't see much implhcations | :52:53. | :52:56. | |
of leaving for any of these foreign policy areas and that is thd bit I | :52:57. | :53:02. | |
will focus on. The key thing for us is our relationship with thd EU and | :53:03. | :53:05. | |
what relationship we want. Having defined that appropriately, we can | :53:06. | :53:16. | |
go on to rebuild the same alliances, the same common interest policies as | :53:17. | :53:21. | |
we have now. As far as the broader policies of the EU in foreign | :53:22. | :53:29. | |
policy, I haven't got any comment. As a follow up to that, cle`rly | :53:30. | :53:36. | |
Britain has lots of aims in terms of trade, economic stability, helping | :53:37. | :53:38. | |
international development and climate change. Can I ask you | :53:39. | :53:46. | |
whether you feel that Britahn, as of the EU, adding to the weight of the | :53:47. | :53:51. | |
EU, could be more effective in pursuing those goals or whether a UK | :53:52. | :53:54. | |
outside of the European Union would be equally as effective? And whether | :53:55. | :54:02. | |
or not we can still do both and remain inside the European Tnion? So | :54:03. | :54:05. | |
we would get the benefit of both worlds. I would like to hear the | :54:06. | :54:07. | |
response from each of you. The EU's effectiveness in these | :54:08. | :54:25. | |
areas, I think in terms of laking an -- maintaining an open tradhng | :54:26. | :54:31. | |
system for example, I think the UK would have this influence in | :54:32. | :54:36. | |
maintaining open trading. Mx argument would be as I say, it is | :54:37. | :54:43. | |
the largest -- the UK can still play a part but it would be a sm`ller | :54:44. | :54:47. | |
part because it is a relatively smaller economy. That's in trade and | :54:48. | :54:55. | |
investment. In finance, the UK still has quite significant lever`ge in | :54:56. | :55:03. | |
the IMF, the G20, the financial stability board, the various | :55:04. | :55:11. | |
technical standards, the UK sits in all of these so could have lore | :55:12. | :55:16. | |
leverage. And has in the past. On climate change, I think there's | :55:17. | :55:23. | |
impact because again if you take the analogy of the size of the larket, | :55:24. | :55:27. | |
the UK doesn't pollute very much, and therefore it is not so crucial | :55:28. | :55:33. | |
in international climate ch`nge negotiations by itself. On trade and | :55:34. | :55:41. | |
development the UK has made quite a significant contribution, m`intained | :55:42. | :55:48. | |
0.7% of GDP for foreign aid, but if that is not linked in with what is | :55:49. | :55:52. | |
happening in trade you have issues of coherence, and so it may not be | :55:53. | :55:57. | |
as effective. I realise this is the foreign policy | :55:58. | :56:01. | |
committee and you are very interested in foreign policx, but | :56:02. | :56:06. | |
the main national interest of the UK is to have a thriving econoly, and | :56:07. | :56:10. | |
to control its own affairs. The reason this whole issue of DU, | :56:11. | :56:19. | |
Brexit and so forth has arisen is because it isn't just a question of | :56:20. | :56:23. | |
combining and sitting at thd same table and having foreign policy | :56:24. | :56:30. | |
influence. It is how far we control our own affairs when being ` member | :56:31. | :56:36. | |
of the EU that is committed to becoming a much more powerftl state | :56:37. | :56:41. | |
in its own right and has got qualified majority voting which | :56:42. | :56:45. | |
controls a lot of our own ddcisions. As Jack Delors said in 1988, it | :56:46. | :56:53. | |
won't long before 80% of Brhtish laws are decided in Brussels, and | :56:54. | :56:57. | |
that is what has thrust this right into the centre of the stagd is an | :56:58. | :57:02. | |
issue. And really beside th`t the question of whether we have more or | :57:03. | :57:06. | |
less influence on joint fordign policy making with the EU is fairly | :57:07. | :57:12. | |
small potatoes. I think the question here is from the point of vhew of | :57:13. | :57:17. | |
our national interest, if wd are outside the EU for other re`sons, we | :57:18. | :57:21. | |
will still be there as allids and having common interests with other | :57:22. | :57:26. | |
players and no doubt we will coordinate with them just as we have | :57:27. | :57:31. | |
today. The seat of the tabld won't be there, but there will be other | :57:32. | :57:36. | |
tables at which we will be sitting. We will have benefits of thd club | :57:37. | :57:40. | |
without being members? I think foreign policy's always been | :57:41. | :57:44. | |
conducted by self-governing nation is to maintain and pursue their own | :57:45. | :57:50. | |
interests. I come from a foreign policy household by herself, was | :57:51. | :57:54. | |
always claimed it was about the interest for your own citizdns as | :57:55. | :57:57. | |
best you can. And the questhon then is obviously do you want to be | :57:58. | :58:03. | |
governed by somebody else do you want to be a common and are in some | :58:04. | :58:06. | |
alliance with them, and the answer to that question is what lids at the | :58:07. | :58:13. | |
heart of, to answer that we have to answer the question do we w`nt to be | :58:14. | :58:18. | |
part of the EU or not? Where we have shared common | :58:19. | :58:22. | |
interests, yes but when it comes to foreign policy, we will alw`ys have | :58:23. | :58:30. | |
foreign policy -- shared foreign policy with our allies. | :58:31. | :58:43. | |
I hear what you say, but we have previously taken evidence that on | :58:44. | :58:51. | |
trade deals for example, having the ability to collectively negotiate | :58:52. | :58:57. | |
being a much more powerful dconomic unit delivers a better deal than say | :58:58. | :59:03. | |
a deal that Iceland can cut with China or a smaller country would be | :59:04. | :59:09. | |
able to cut. Is that not thdn affecting our economic well,being? | :59:10. | :59:15. | |
Well, this is another compldtely irrelevant issue. Let me explain | :59:16. | :59:26. | |
why. You asked me... I am going to talk about why it is irrelevant The | :59:27. | :59:34. | |
fact is, if we are an indepdndent, self-governing nation we will join | :59:35. | :59:40. | |
countries like Japan or Singapore or the US in the world trading | :59:41. | :59:43. | |
community. And we will be a small nation of slightly over 30 lillion | :59:44. | :59:48. | |
workers in a world market of 7 billion people. And one of the | :59:49. | :59:57. | |
things that comes out of applied trade is that when you are hn that | :59:58. | :00:02. | |
position, trade agreements `re totally irrelevant to you. Because | :00:03. | :00:07. | |
you are part of a global market And you are a very small player in the | :00:08. | :00:12. | |
global market. This is known as the importance of being unimportant If | :00:13. | :00:17. | |
you are very small, you cannot influence the price of the goods you | :00:18. | :00:22. | |
tried out, you are part of ` huge market of 7 billion people. And we | :00:23. | :00:27. | |
are only 30 plus million. Therefore we will, as part of the world | :00:28. | :00:31. | |
trading environment, we won't have any influence on the prices of the | :00:32. | :00:35. | |
goods we sell. Our job is to be competitive and produce good goods | :00:36. | :00:41. | |
and services. And on the whole window, thanks to the liber`lisation | :00:42. | :00:47. | |
of our economy. -- on the whole we do. We have now a very compdtitive | :00:48. | :00:53. | |
economy, we are now a nation of entrepreneurs, and shopkeepdrs. And | :00:54. | :01:00. | |
this is why... I want to make the point that you don't seem to have | :01:01. | :01:04. | |
understood. Which is that these trade agreements are totallx | :01:05. | :01:06. | |
irrelevant, there were make any difference to anything. What we need | :01:07. | :01:12. | |
is to get out of a protectionist trade arrangement, namely the EU | :01:13. | :01:19. | |
customs union, and everyone says how wonderful it is to be insidd the EU, | :01:20. | :01:24. | |
but they then forget it is ` highly protectionist organisation, not just | :01:25. | :01:29. | |
in agriculture but also manufacturing, and it is prdferable | :01:30. | :01:32. | |
to be in the global market tnder conditions of free trade. That will | :01:33. | :01:36. | |
give us huge gains. So the trade issue, far from being a gre`t | :01:37. | :01:40. | |
negative in terms of leaving the EU, is a huge positive. What happens is | :01:41. | :01:45. | |
that people think you cannot negotiate -- it is terribly negative | :01:46. | :01:51. | |
because it cannot negotiate these trade agreements. But they have | :01:52. | :01:55. | |
understood -- misunderstood the relevance of these in the global | :01:56. | :02:00. | |
market. So why do countries sign bilateral | :02:01. | :02:06. | |
trade agreements? Well, oftdn large countries do. The EU is currently | :02:07. | :02:12. | |
negotiating a huge one with the US. And the fact that people signed | :02:13. | :02:18. | |
trade agreements when they `re very large is the case, because they are | :02:19. | :02:23. | |
large. And they have monopoly power. But if you are small, you do not | :02:24. | :02:27. | |
have monopoly power, you have no incentive to sign a trade agreement. | :02:28. | :02:31. | |
I'm not saying the word then betrayed agreements, that if we | :02:32. | :02:36. | |
leave the EU, some people s`y we will have to rush around inside a | :02:37. | :02:39. | |
lot of trade agreements. I don't agree. We may sign the odd trade | :02:40. | :02:45. | |
agreement if the -- I think we will sign an agreement with the DU, | :02:46. | :02:49. | |
mainly because the EU needs to sign an agreement with us becausd it | :02:50. | :02:54. | |
sells as so much stuff at inflated prices, and the irony is yot only | :02:55. | :02:59. | |
join a customs union, it can only be in your interest if you sell people | :03:00. | :03:03. | |
are a lot of stuff within the union much more than you buy from them. | :03:04. | :03:10. | |
But we are in a -- and opposite position, the EU will have ` strong | :03:11. | :03:14. | |
incentive to build a trade `greement with us. It will be an agredment to | :03:15. | :03:20. | |
give them some access to our markets. I have costed us ldaving | :03:21. | :03:29. | |
the EU on the basis that we sign no agreements. Now, I think it is a | :03:30. | :03:34. | |
matter of practical life th`t there will be some agreements that will be | :03:35. | :03:37. | |
signed. For what reason? Because of vested | :03:38. | :03:46. | |
interest. The reason is vested interests, not the national | :03:47. | :03:50. | |
interest. Who's vested interest? | :03:51. | :03:55. | |
Well, there are lots of people queued up -- queueing up to say we | :03:56. | :04:00. | |
should not leave the EU bec`use they have a vested interest. Who's vested | :04:01. | :04:06. | |
interest, can you answer th`t question? The point is this, that | :04:07. | :04:12. | |
the vested interest for us staying in the EU, inside the biggest trade | :04:13. | :04:17. | |
agreement we have signed on the last 40 years... You said that you signed | :04:18. | :04:24. | |
trade agreements outside thd union, we have now moved outside the EU. | :04:25. | :04:30. | |
And you said that we signed trade agreements because of vested | :04:31. | :04:33. | |
interests if we stand alone. In who's vested interest do is signed | :04:34. | :04:38. | |
those agreements? Please answer the question? Said when we leavd the | :04:39. | :04:54. | |
EU... Let me try to answer ht. When we leave the EU, we are in the world | :04:55. | :04:57. | |
know where we have left the EU, there will be a lot of upset vested | :04:58. | :05:04. | |
interests. The car industry, for example. Some parts of the city Any | :05:05. | :05:13. | |
industry that currently gets protection from the customs union, | :05:14. | :05:18. | |
OK, will be a vested interest, will be very upset when really. @nd what | :05:19. | :05:22. | |
I am saying is that therefore we are very likely to be -- have to be in | :05:23. | :05:26. | |
the process of negotiation combust -- because those vested intdrests | :05:27. | :05:31. | |
will say we want transition`l agreements. And the EU self -- the | :05:32. | :05:35. | |
EU itself will also want an agreement. Quite unlike what many | :05:36. | :05:42. | |
people say, which is that wd are going to be so badly off outside the | :05:43. | :05:47. | |
EU, what I say is the opposhte. We would be better off if we dhdn't | :05:48. | :05:51. | |
sign any trade agreements, but lots of people will be pressing ts to | :05:52. | :05:56. | |
sign agreements, both the vdsted interests that are losing, `nd also | :05:57. | :06:01. | |
the EU itself. So the vested interests outside of the EU would be | :06:02. | :06:06. | |
like the automotive sector hn my constituency, the Midlands, which is | :06:07. | :06:13. | |
now producing a car every 20 seconds, there would be harled in | :06:14. | :06:16. | |
some way and would thereford want us to signed trade agreements. Right? | :06:17. | :06:22. | |
Yes, when you abandon protectionist agreements, the print will ,- people | :06:23. | :06:29. | |
who are protected get damagdd. They don't like it. I think in practical | :06:30. | :06:33. | |
terms it is inevitable but we will sign various agreements to give | :06:34. | :06:38. | |
transitional protection to various industries, I think a lot would | :06:39. | :06:42. | |
change immediately. Because they matter for the UK. Well, whdnever | :06:43. | :06:48. | |
one changes policy environmdnts some people lose, and we have a | :06:49. | :06:52. | |
tradition of trying to compdnsate losers. So as to get consensus. I | :06:53. | :06:57. | |
think that tradition will prevail in this case. I think we will try and | :06:58. | :07:02. | |
negotiate transitional arrangements that will help these people to move | :07:03. | :07:08. | |
to a more dynamic future. Lhke the automotive sector. Some parts of it. | :07:09. | :07:19. | |
Some parts don't need it. I understood that the usual ptrpose of | :07:20. | :07:23. | |
trade agreements would be to reduce the barriers you might face between | :07:24. | :07:31. | |
the two independent small entities within a trading system, who have a | :07:32. | :07:37. | |
mutual interest in trading, but you would enter into agreements in order | :07:38. | :07:43. | |
to try and reduce the barridrs between the two entities, r`ther | :07:44. | :07:46. | |
than malice protection withhn them. And so that the usual purpose is | :07:47. | :07:52. | |
then to try and open trade from work as as a market of 30 million | :07:53. | :07:57. | |
labourers, whatever, would then be seen to protect ourselves from | :07:58. | :08:00. | |
competition outside it was the vested interests inside the UK would | :08:01. | :08:05. | |
be working to protect our internal markets. If we're talking two small | :08:06. | :08:12. | |
nations, would they sign a trade agreement, from a point of view of | :08:13. | :08:18. | |
each of their national interests, they should abandon each from their | :08:19. | :08:23. | |
own internal point of view their tariff, because it is self harming. | :08:24. | :08:26. | |
Because the reason for thosd tariffs is some eternal -- eternal ,- in | :08:27. | :08:35. | |
vested interest. So if sometimes you get a situation where two countries | :08:36. | :08:38. | |
get together and find that they can kind of trade one vested interest of | :08:39. | :08:43. | |
against... And therefore improve their own situation. I can just | :08:44. | :08:50. | |
about the gap -- get that. But in terms of the kind of politics and | :08:51. | :08:55. | |
facts of trade agreements, what you are actually trying to do is is | :08:56. | :09:00. | |
impossible to get that perfdct situation and then abandon the | :09:01. | :09:05. | |
barriers completely, and th`t trade agreements are a rip to redtcing | :09:06. | :09:12. | |
this barriers progressively,, beginning to address the policy of | :09:13. | :09:17. | |
protectionism in countries. They are a route to begin to sweep the | :09:18. | :09:22. | |
barriers away. I would buy the free-trade argument, I think no | :09:23. | :09:26. | |
barriers are best of all, btt they exist. | :09:27. | :09:35. | |
If the UK were to abandon free and unilaterally free-trade, whhch would | :09:36. | :09:48. | |
be his best policy, bar in vested interest, then there would no point | :09:49. | :09:52. | |
in engaging in any trade agreements with anybody because we havd already | :09:53. | :09:56. | |
reduced its own self harm from its own tariff barriers will stop if you | :09:57. | :10:02. | |
are a small nation, a tariff barrier has the effect of self harmhng you. | :10:03. | :10:07. | |
You create inefficiencies in your own economy. You don't affect | :10:08. | :10:11. | |
anybody else. You raise the prices in which other people sell to you, | :10:12. | :10:16. | |
to your consumers, and your tariff between them and the world larket. | :10:17. | :10:21. | |
When you abandon the tariff, you lower the price to your consumers | :10:22. | :10:25. | |
and make your consumers and economy better off. If we had already gone | :10:26. | :10:30. | |
to free trade, there would be no point on any other trade agreements. | :10:31. | :10:35. | |
In the real world, we probably wouldn't go to complete fred-trade | :10:36. | :10:40. | |
and anything we could do to persuade our own vested interest to `bandon | :10:41. | :10:42. | |
certain sorts of protection would be good. | :10:43. | :10:58. | |
The Econometrics -- economics position is perfectly reasonable and | :10:59. | :11:09. | |
history of British liberalism. history of British liberalism. | :11:10. | :11:16. | |
Unfortunately, trade agreemdnts don't quite work that way today | :11:17. | :11:23. | |
Most trade agreements are b`sed on reciprocal commitments betwden | :11:24. | :11:30. | |
parties, meaning that your negotiating leverage in an `greement | :11:31. | :11:34. | |
depends on the size of your market and how open your market is. If you | :11:35. | :11:38. | |
have a large market which is relatively closed, you have | :11:39. | :11:45. | |
significant negotiating levdrage. If you have a relatively small market, | :11:46. | :11:52. | |
it is very open and you havd very limited to go shooting leverage The | :11:53. | :11:56. | |
EU has a bit more but it is also fairly open. On white countries sign | :11:57. | :12:04. | |
agreements, I have sat throtgh any discussions with NGO's. The reason | :12:05. | :12:17. | |
is that with tariffs down to low levels, 2%, 3%, it is about | :12:18. | :12:23. | |
nontariff barriers. 80% of the benefits from TTIP, and the TPP | :12:24. | :12:43. | |
agreement between the US and Asia, 80% of the benefits will cole from | :12:44. | :12:46. | |
removing nontariff barriers to trade. This goes on to regulation. | :12:47. | :12:55. | |
These agreements are geared to facilitate trade. You have | :12:56. | :13:00. | |
standards, in terms of health, safety, environment, food standards, | :13:01. | :13:04. | |
which differ between the economies. What the parties to these agreements | :13:05. | :13:11. | |
are trying to do now is fachlitate trade by negotiating how yot can | :13:12. | :13:14. | |
find equivalence between thd different standings. This is why the | :13:15. | :13:20. | |
trade negotiations are taking place today. That is the main focts of the | :13:21. | :13:36. | |
effort. It is not really th`t. There are always vested interests in | :13:37. | :13:40. | |
trade. Some of the major tr`de agreements have been agreed between | :13:41. | :13:46. | |
large economies and they ard effective in removing some of this | :13:47. | :13:52. | |
vested interest. If you look at the liberalisation commitments tnder | :13:53. | :13:57. | |
tariffs, we are talking abott 9 % of tariff lines being liberalised. Even | :13:58. | :14:04. | |
in agriculture, there has bden significant movement in gridvance -- | :14:05. | :14:13. | |
agreements. It is important in terms of the multilateral system but these | :14:14. | :14:20. | |
agreements have taken over from what was agreed as more true nattral | :14:21. | :14:25. | |
professionalism. It is only about specific binding commitments. You | :14:26. | :14:29. | |
can still trade and liberalhse, but what you don't have, is any | :14:30. | :14:36. | |
guarantee that you won't face discrimination in the Chinese market | :14:37. | :14:50. | |
or the Japanese market. One quick point, we would like to see a day | :14:51. | :14:55. | |
where we don't have to have trade agreements and where we havd a | :14:56. | :15:00. | |
proper market globally. The main point of this is by not being in the | :15:01. | :15:08. | |
EU, the United Kingdom could have whatever trade deals it chose to | :15:09. | :15:13. | |
have with other countries around the world, to harness the Commonwealth | :15:14. | :15:16. | |
English-speaking world, global market which is in our country. It | :15:17. | :15:23. | |
restricts us from that freedom to do just that. With the trade ddficit we | :15:24. | :15:27. | |
have with the EU, the only losers would be if you tried not to trade | :15:28. | :15:31. | |
with us or put barriers up which will be the European Union htself. | :15:32. | :15:37. | |
We have the ace card. We have the upper hand on this. This is the key | :15:38. | :15:49. | |
point. By leaving the EU, wd abandon the customs union. In the 1875 | :15:50. | :15:58. | |
campaign, they tried to explain that it wasn't a great idea to join a | :15:59. | :16:03. | |
customs union because it was highly protectionist. He got nowhere will | :16:04. | :16:07. | |
stop he didn't get his point across. It has come back now 40 years later | :16:08. | :16:13. | |
and it is central to this whole thing. What people are saying is if | :16:14. | :16:17. | |
we leave the EU, it is disastrous because of the legal leverage. The | :16:18. | :16:26. | |
truth is, we will move if wd have got any sense, to liberalisd the | :16:27. | :16:30. | |
economy, fundamentally under free trade will stop it isn't in our | :16:31. | :16:38. | |
interest not to have free trade It pays us to be a global playdr under | :16:39. | :16:43. | |
free trade. It pays us to sdll our goods to other people in thd world | :16:44. | :16:47. | |
market and to take their goods at world prices. That will lowdr our | :16:48. | :16:52. | |
cost of delivering. We have done a simulation of leaving the ET and the | :16:53. | :16:57. | |
first thing that comes out hs an 8% drop in the cost of living on day | :16:58. | :17:05. | |
one. Because of the move from EU prices to world prices. That is | :17:06. | :17:11. | |
really worth having. It means that we then are in a world which we can | :17:12. | :17:21. | |
sign and trade agreements. We will be forced by the EU for the reason | :17:22. | :17:25. | |
you have given, that they sdll so much to us, to have an agredment | :17:26. | :17:29. | |
with them. The last thing they will want us to do is walk away without | :17:30. | :17:34. | |
some sort of free trade agrdement with the EU. They are so dependent | :17:35. | :17:41. | |
on our markets relative to our dependence on them. They ard selling | :17:42. | :17:46. | |
us stuff at inflated prices at a massive scale. There will bd that | :17:47. | :17:54. | |
trade agreement with them bdcause they will push for it. Otherwise, as | :17:55. | :18:02. | |
I have argued already, we don't need to do trade agreements with anybody | :18:03. | :18:07. | |
else. Frankly, we can take the world price. If we do a trade agrdement | :18:08. | :18:11. | |
with New Zealand or something, it won't affect the world pricd you | :18:12. | :18:16. | |
get, it will affect what New Zealand has to pay for that our goods. The | :18:17. | :18:21. | |
New Zealanders, if they put a tariff on that, their consumers have to pay | :18:22. | :18:27. | |
more. It is a problem for them and not for us. I am sure we will do | :18:28. | :18:34. | |
trade agreements. I am saying that they are not necessary for our | :18:35. | :18:36. | |
well-being in terms of leavhng the EU. They would be a nice add-on for | :18:37. | :18:50. | |
people like the New Zealanddrs. Can I just ask a question, which is the | :18:51. | :18:57. | |
current situation we are in the European Union. We are wherd we are. | :18:58. | :19:02. | |
At this point, with what we have got, to what extent of the Duropean | :19:03. | :19:13. | |
Union current interest in trade reflect the national interest? Does | :19:14. | :19:16. | |
it acts as a multiplier for our economic influence in the world or | :19:17. | :19:20. | |
is it effectively putting constraint on us, the current situation? | :19:21. | :19:34. | |
I will let my colleague spe`k. In many respects, the UK has bden part | :19:35. | :19:47. | |
of the customs union and it has formed part of a single European | :19:48. | :19:52. | |
market. You have this framework agreement. Over the past 15, 20 | :19:53. | :20:00. | |
years, the UK preferences h`ve been reliant with the rest of thd EU In | :20:01. | :20:06. | |
that sense, the EU reflects the UK preferences. I think the UK has been | :20:07. | :20:14. | |
fairly effective in shaping the European Union trade policy. It has | :20:15. | :20:19. | |
been one of the key players in making it more liberal, helped by an | :20:20. | :20:23. | |
enlargement to include some other countries. You can make a c`se that | :20:24. | :20:27. | |
on agriculture, the UK may be more liberal. Broadly speaking, ht is in | :20:28. | :20:36. | |
line with UK interests. Takhng away from the economics of it, what about | :20:37. | :20:42. | |
in terms of how influential has the UK been, in determining priorities | :20:43. | :20:50. | |
for the European Union's economic diplomacy? I think it has h`d a | :20:51. | :21:03. | |
major impact. The UK has bedn very effective in shaping the detailed | :21:04. | :21:07. | |
debates within the trade policy committee, within the commission and | :21:08. | :21:11. | |
shaping the views and opinions within Europe. It has been one of | :21:12. | :21:18. | |
the main protagonists of promoting open trading systems that some | :21:19. | :21:24. | |
people would say supported by other countries. Yes, I am not sure I can | :21:25. | :21:34. | |
say any moron that. Those who favour us staying in the European Tnion | :21:35. | :21:38. | |
often say that if you are in the European Union, you were able to | :21:39. | :21:42. | |
influence what is going on `nd from what you have just said, it seems up | :21:43. | :21:49. | |
till now, Britain, being in the European Union, has been able to add | :21:50. | :21:57. | |
positive effect and affect changes in the European Union? Yes, I think | :21:58. | :22:02. | |
so. In a previous session, xou asking questions about what will | :22:03. | :22:05. | |
happen in a future which is difficult to answer. I would make | :22:06. | :22:11. | |
the case that the UK will h`ve more influence being a member of this | :22:12. | :22:17. | |
bigger club. If you are looking at how the rules of trade and | :22:18. | :22:21. | |
investment are being set, they are being set through negotiations. One | :22:22. | :22:30. | |
of the core elements in TTIP is regulatory regulation betwedn the US | :22:31. | :22:35. | |
and EU. If the UK is not sitting at the table, is not part of the EU in | :22:36. | :22:40. | |
these negotiations on how you reconcile different domestic | :22:41. | :22:45. | |
regulations, the UK won't h`ve any influence. The UK can be a price | :22:46. | :22:52. | |
taker, but it will have to `dopt the regulations that have been `greed | :22:53. | :22:57. | |
between the EU and the US. Ht can still trade, but it won't h`ve any | :22:58. | :23:06. | |
more influence on the outcole. It would have more influence if it was | :23:07. | :23:11. | |
in the EU. 1-macro I love this fact is that we have this great hnfluence | :23:12. | :23:16. | |
on the EU and make it a much better place. It may be true. Your question | :23:17. | :23:25. | |
originally asked, what was the cost for the UK in this arrangemdnt? That | :23:26. | :23:31. | |
is the thing that worries md. I have already answered about the fact that | :23:32. | :23:39. | |
the customs union is extremdly expensive to us. The regulations | :23:40. | :23:45. | |
that are increasingly put on as in labour markets, financial m`rkets, | :23:46. | :23:49. | |
very onerous to us and cost us serious resources. They also hold | :23:50. | :23:55. | |
back growth. Many of these regulations are not in line with | :23:56. | :24:03. | |
free-market principles. When you add all these things up, it may well be | :24:04. | :24:10. | |
that we have a forceful libdralism inside a fundamentally illiberal EU | :24:11. | :24:17. | |
political and economic philosophy. The costs to us large. The | :24:18. | :24:23. | |
questionnaires, in our national interest, it may be great for us to | :24:24. | :24:27. | |
contribute to the wider world interest by making the EU a more | :24:28. | :24:32. | |
liberal place and encouraging trade agreements, but at huge cost to | :24:33. | :24:37. | |
ourselves in being in this particularly -- particular club The | :24:38. | :24:40. | |
club wants to have more and more control over what we do and its | :24:41. | :24:43. | |
control doesn't seem to be hn our interest. | :24:44. | :24:48. | |
review the optimal friendshhp - review the optimal friendshhp - | :24:49. | :24:57. | |
framework for the UK's relationship with the EU if it chooses to | :24:58. | :25:01. | |
withdraw its membership? Ard looking in particular that the so-c`lled | :25:02. | :25:06. | |
Swiss or Norwegian model is that people have talked about. -, I am | :25:07. | :25:12. | |
looking. -- models. Optimal model if the UK with Drew -- | :25:13. | :25:21. | |
If there is such a thing. If there is such a thing. | :25:22. | :25:27. | |
Let me build a scenario frol my previous point, the point I was | :25:28. | :25:31. | |
trying to make is that it is not that the EU is imposing regtlations | :25:32. | :25:37. | |
on the UK, the health, safety, environment standards that `ll | :25:38. | :25:42. | |
countries have two comply whth. If the UK left it would still have | :25:43. | :25:46. | |
to show compliance with the standards if it wants to export to | :25:47. | :25:50. | |
the US or any other market. And in terms of the costs, the nontariff | :25:51. | :25:56. | |
barrier costs, nontariff eqtivalent cost of entering the US market are | :25:57. | :26:02. | |
something like 20%. One esthmate is 20%. So if the UK didn't negotiate | :26:03. | :26:11. | |
bilateral agreement with thd US its exporters would be at a 20% | :26:12. | :26:16. | |
disadvantage to the EU if the EU was able to negotiate an equivalence | :26:17. | :26:20. | |
agreement with the US on terms of market access. Sorry, bit tdchnical. | :26:21. | :26:27. | |
What about the relationship between the US and the EU... The pohnt I'm | :26:28. | :26:33. | |
trying to make is that the TK would still have to adopt the samd | :26:34. | :26:37. | |
standards, either EU standards or some other international st`ndards. | :26:38. | :26:42. | |
So the more optimal way would be to keep with the European standards | :26:43. | :26:46. | |
because at least we have had some role in influencing those. So then | :26:47. | :26:52. | |
if you are looking at other options, if you look at the Swiss option | :26:53. | :26:57. | |
maybe a bit closer than the Norwegian one, Switzerland | :26:58. | :27:02. | |
negotiated bilateral agreemdnt with China. So this is a scenario that | :27:03. | :27:07. | |
the UK could negotiate bilateral agreement with China. You nded to | :27:08. | :27:14. | |
look at the details of this, though. And it calls for some caution | :27:15. | :27:18. | |
because this was negotiating with China was really not much more than | :27:19. | :27:32. | |
existing commitments on services, it has got nothing on investment, | :27:33. | :27:37. | |
nothing on these nontariff barrier measures. So in other words all got | :27:38. | :27:44. | |
was a tariff agreement and some provisions of intellectual property. | :27:45. | :27:50. | |
So this is an illustration that the UK would have more leverage. But the | :27:51. | :27:57. | |
UK, it is difficult to say, you cannot really predict what the UK | :27:58. | :28:02. | |
would get outside of the EU. But if you look at what the Swiss got it | :28:03. | :28:17. | |
wasn't very much. Can answer this 1) I will answer it again becatse | :28:18. | :28:23. | |
Doctor Wilcox, a great expert on trade agreements, but as I have said | :28:24. | :28:29. | |
they are totally irrelevant to the UK in this respect because he is | :28:30. | :28:33. | |
talking about trade agreements with large blocks, large and knobbly | :28:34. | :28:38. | |
suppliers, and my answer to you if you want to hear the answer, maybe | :28:39. | :28:46. | |
you don't want to hear it. H ask you to look at the Swiss model `nd the | :28:47. | :28:53. | |
Norwegian model. I was good to say, we do not want either model. I did | :28:54. | :29:00. | |
answer this, the model we w`nt is the model of a standard, | :29:01. | :29:05. | |
self-governing country. Why does everybody is so we have got to | :29:06. | :29:12. | |
become a small dependence of the EU even when we leave? In order for the | :29:13. | :29:16. | |
new regions and this Swiss to trade with the EU, you have to colply with | :29:17. | :29:24. | |
many rules and regulations which I as a former MEP have sat down and | :29:25. | :29:28. | |
worked on directives and rules that actually you have to comply with in | :29:29. | :29:33. | |
order to trade. You saying the EU is suddenly going to drop all these | :29:34. | :29:36. | |
requirements to comply with certain standards on food quality, `ir | :29:37. | :29:41. | |
standards or so rules on how services operate, just becatse | :29:42. | :29:44. | |
Britain chooses to leave thd EU and wishes to dip -- behave differently | :29:45. | :29:49. | |
to other nations like Norwax Osasuna? | :29:50. | :29:56. | |
9% of our GDP is exported to the EU. -- Norway and Switzerland. | :29:57. | :30:01. | |
Every exporter has two is comply with all they countries -- standards | :30:02. | :30:09. | |
of the country they exported to But if you ask me do we need all the | :30:10. | :30:13. | |
regulations of the EU to sell but then percent of the GDP to the EU, I | :30:14. | :30:19. | |
would say no, because the other 91% will be free of those regul`tions, | :30:20. | :30:23. | |
and it will operate according to the regulations we as a self-governing | :30:24. | :30:27. | |
country think are good for our industries. There is no reason to be | :30:28. | :30:36. | |
the same as the EU. If the DU insists on certain things, hf you | :30:37. | :30:44. | |
export to the UK you will h`ve to do it. If you are telling me that the | :30:45. | :30:54. | |
other 91% of the economy has got to comply with everything in the EU in | :30:55. | :31:00. | |
order to comply with that 9$, I say where has that come from? On all | :31:01. | :31:13. | |
exports, as thick if you ard exporting to other markets xou have | :31:14. | :31:21. | |
to comply with the standards expecting. -- I think. But lutual | :31:22. | :31:27. | |
recognition rather than necdssarily harmonisation. Yes, but those have | :31:28. | :31:34. | |
to be negotiated. Certainly the UK standards could be lowered. If that | :31:35. | :31:39. | |
is what the voters want, yot could do that. | :31:40. | :31:52. | |
Related to this then, can I ask how significant this will be for the | :31:53. | :31:56. | |
political relationship tween the US and the EU, and how would Britain, | :31:57. | :32:02. | |
the UK in particular, fair outside an arrangement? In terms of | :32:03. | :32:19. | |
political relations, I think to consolidate transatlantic | :32:20. | :32:22. | |
relationships -- relations. So if the UK were not part of that, | :32:23. | :32:44. | |
it may have some knock on effect, I'm not quite sure what. I would | :32:45. | :32:52. | |
look more at the economic ilpact, and that would be the UK wotld still | :32:53. | :33:05. | |
face, UK exporters into the US market, and US financial services | :33:06. | :33:12. | |
exports into the US market, would face a disadvantage compared to the | :33:13. | :33:19. | |
rest of the EU. Because the EU, a TTIP, if it is successful, but it | :33:20. | :33:25. | |
won't happen overnight, the TTIP, if TTIP is successful, then it will -- | :33:26. | :33:31. | |
exporters from another part of the EU would have a preference `s to | :33:32. | :33:38. | |
what these agreements are, preference of the UK. So thd UK | :33:39. | :33:41. | |
would then have to negotiatd an equivalent agreement in orddr to | :33:42. | :33:47. | |
match those preferences. And as we have heard from the US negotiator, | :33:48. | :33:53. | |
the US with no doubt negoti`te with the UK but other bigger markets | :33:54. | :34:03. | |
would take priority. If we were outside of the EU, presumably the | :34:04. | :34:08. | |
standards we would be left with we would have to negotiate simhlar But | :34:09. | :34:16. | |
can I ask you, what other prospects you believe for a successful | :34:17. | :34:31. | |
conclusion of ten two? -- TTIP. TTIP, my own view is that TTIP is | :34:32. | :34:39. | |
going to take some time for it to be fully implemented. If you look back | :34:40. | :34:50. | |
at EU, US efforts at deepenhng market integration, they have come | :34:51. | :34:56. | |
in fits and starts, so it whll take some time before it has any real | :34:57. | :35:02. | |
impact. And can I ask you, hf the UK were excluded from TTIP, do you | :35:03. | :35:12. | |
think it would risk falling behind the transatlantic curve on setting | :35:13. | :35:17. | |
standards and regulations? Xes, I mean, the approach to dealing with | :35:18. | :35:24. | |
these trade facilitating regulations will be shaped by the EU and US in | :35:25. | :35:32. | |
this regulatory corporation. -- cooperation. So the UK will have to | :35:33. | :35:37. | |
follow either export accordhng to US standards or export according to the | :35:38. | :35:41. | |
EU standards. And these standards are very very important. Very often | :35:42. | :35:47. | |
they are aimed at promoting health, safety, for example with cars, crash | :35:48. | :35:53. | |
testing standards in terms of making sure that when there is an `ccident | :35:54. | :35:58. | |
passengers have a good chance of being safe. In a sort of frde-market | :35:59. | :36:03. | |
world scenario, without these sorts of standards, what sort of ` global | :36:04. | :36:09. | |
market might exist if we didn't have the sort of standards being set | :36:10. | :36:14. | |
through TTIP between the EU is - EU and the US? This comes to the whole | :36:15. | :36:22. | |
globalisation debate, and whether globalisation is a race to the | :36:23. | :36:26. | |
bottom in terms standards, health, environmental, social stand`rds But | :36:27. | :36:31. | |
the case for TTIP and these other agreements is that it sets `n | :36:32. | :36:34. | |
international level below which there were a pressure, in other | :36:35. | :36:40. | |
words downward pressure, resulting in globalisation, accommodation | :36:41. | :36:48. | |
between economies, would be stabilised on the basis of what the | :36:49. | :36:59. | |
Americans set. And if we had our own trade agreement with for ex`mple | :37:00. | :37:02. | |
China, outside of the EU, how effective do you think we would be | :37:03. | :37:08. | |
in terms of making sure that for example children's toys or other | :37:09. | :37:12. | |
exports from China that werdn't uncovered by the sorts of standards | :37:13. | :37:15. | |
we would like to see, how effective we would be leaving in making sure | :37:16. | :37:19. | |
that goods and services that we bought from Japan were safe and | :37:20. | :37:25. | |
reliable? -- China. The UK could still prohibit the importathon of | :37:26. | :37:30. | |
unsafe products according to whatever UK standards were. If you | :37:31. | :37:37. | |
had health and safety stand`rds for children's toys you can still | :37:38. | :37:44. | |
import. So the economic powdr to be able to exert influence is needed to | :37:45. | :37:49. | |
put things right politicallx within China, to change the way thd market | :37:50. | :37:53. | |
operates? On the case you mdntioned, I think yes, because the Chhnese | :37:54. | :37:57. | |
have done this, they have shifted into accepting those kind of | :37:58. | :38:03. | |
international standards, in an area where China hasn't yet quitd adopted | :38:04. | :38:06. | |
international standards I think it would probably be much harddr to get | :38:07. | :38:12. | |
them to shift, to change for example one area is on Government | :38:13. | :38:17. | |
procurement. I figured it would be very difficult for the UK to get any | :38:18. | :38:25. | |
kind of fair treatment in the Chinese procurement market outside | :38:26. | :38:31. | |
of the EU. Thank you. Can I bounce my own thesis of both | :38:32. | :38:38. | |
of you. For the United Kingdom, our unique selling points as it were, | :38:39. | :38:42. | |
things like legal services, financial services, education | :38:43. | :38:46. | |
services, culture and media, pharmaceuticals perhaps, thdse are | :38:47. | :38:51. | |
all things with a global market rather than a regional one. Is it | :38:52. | :38:56. | |
possible if we are outside the European Union for us then to pursue | :38:57. | :39:02. | |
a much more aggressive and specialised agenda around those | :39:03. | :39:07. | |
industries and services? In terms of trying to get market entry to other | :39:08. | :39:16. | |
markets. Or I suspect Professor Minford would probably say we don't | :39:17. | :39:27. | |
even need to. But let's... Doctor Wilcock has told us a lot about why | :39:28. | :39:31. | |
we need these trade agreements. They economically they are prettx small | :39:32. | :39:35. | |
potatoes. I think the main thing is to have Robert that people want | :39:36. | :39:41. | |
Pharmaceuticals, -- products. You had a list of industries whdre we | :39:42. | :39:45. | |
are very competitive. Peopld falling over themselves to buy our products. | :39:46. | :39:49. | |
And that is what you want in a global market, you need to be highly | :39:50. | :39:53. | |
competitive, producing a lot of interesting products that 30 odd | :39:54. | :40:00. | |
million people get good prices in world markets because they have got | :40:01. | :40:01. | |
good products. The key thing is we should be part | :40:02. | :40:10. | |
of that global markets. Abld to compete with it and in it bdcause we | :40:11. | :40:15. | |
are buying imports from the global market and not from a protected EU | :40:16. | :40:22. | |
market which is excessively expensive. We make ourselves much | :40:23. | :40:36. | |
more competitive and we are focusing our advantage which is to produce | :40:37. | :40:42. | |
the things you just listed which are high-tech, skilled labour intensive | :40:43. | :40:47. | |
products. This is where our advantage lies. What is happening, | :40:48. | :40:55. | |
and this is the big cost to us that comes with this baggage, thd cost is | :40:56. | :41:03. | |
we are forced with a lot of injuries as who are protected in the EU. -- | :41:04. | :41:08. | |
industries. We are distorted into industries that we are not very good | :41:09. | :41:14. | |
at. The global market, we c`n focus on these industries where wd are | :41:15. | :41:18. | |
good and make sure they are highly competitive and then, as I said | :41:19. | :41:23. | |
earlier, we don't need tradd agreements. I am not against them. I | :41:24. | :41:27. | |
am happy for other people to have trade agreements and there lay be | :41:28. | :41:34. | |
minor things. In the case of the US, it is our oldest trading partner. | :41:35. | :41:39. | |
Massive trade with the US in these products you are talking about | :41:40. | :41:43. | |
already. The EU has much less trade with the EU and the US than we do. | :41:44. | :42:01. | |
For us, TTIP is a minor extra element in the story. I don't | :42:02. | :42:11. | |
disagree. We need goods and services and we need to be able to produce | :42:12. | :42:15. | |
those competitively in order to sell them. I am not saying free trade | :42:16. | :42:25. | |
agreements is the only thing. Let me illustrate with an example. Trying | :42:26. | :42:30. | |
to sell insurance services hnto India. Are we better off dohng that | :42:31. | :42:35. | |
would the heft of the Europdan Union, trying to negotiate dntry for | :42:36. | :42:41. | |
British insurance companies through them all would be -- we'd bd better | :42:42. | :42:50. | |
on our own or are we able to survive by not attempting to broker | :42:51. | :42:53. | |
agreements with India but hoping they will buy British products? The | :42:54. | :43:02. | |
trade agreements only ensurd that there would be unfair treatlent of | :43:03. | :43:07. | |
UK suppliers or EU suppliers. It doesn't mean to say that thd UK | :43:08. | :43:13. | |
insurance industry can't go to India and try and sell the servicds to the | :43:14. | :43:22. | |
Indian government. If the insurance sector is regulated in Indi` that it | :43:23. | :43:25. | |
precludes foreign investment, then you face... Batters by the benefit | :43:26. | :43:33. | |
of the trade agreement comes in -- that is where the benefits of the | :43:34. | :43:41. | |
trade agreement comes in. Wd have to get into negotiation with India to | :43:42. | :43:45. | |
investment in the insurance sector. investment in the insurance sector. | :43:46. | :43:51. | |
How does the UK get past thd vested interest of the Vernon -- Indian | :43:52. | :44:02. | |
insurance industry, so they can buy Indian politicians to delivdr the | :44:03. | :44:05. | |
regulations in order to protect them? It is a matter of massive | :44:06. | :44:13. | |
indifference to us whether the Indians inflict harm on thelselves | :44:14. | :44:18. | |
by refusing to buy insurancd services or not. Our insurance | :44:19. | :44:22. | |
industry is well competitivd. It is not infinitely large. It has a | :44:23. | :44:27. | |
definite size and is limited in size. It is a -- it is in a nation | :44:28. | :44:36. | |
of 30 million workers. If the Indian economy decides not to allow British | :44:37. | :44:41. | |
insurers, there's plenty of other people who will be ready to buy | :44:42. | :44:44. | |
British insurance. It is a global market. The insurance industry in | :44:45. | :44:49. | |
the City of London is the world s biggest market and it deals with | :44:50. | :44:55. | |
every part of the world. It is not dependent on any one countrx to sign | :44:56. | :45:02. | |
a trade agreement. The insurance industry is going to survivd fine, | :45:03. | :45:07. | |
whether or not India wants to liberalise. We would prefer it if | :45:08. | :45:13. | |
India liberalise. It is good for India. From our point of vidw, the | :45:14. | :45:17. | |
bigger issues here do we want to be part of the global market whth free | :45:18. | :45:22. | |
trade or inside the EU come inside a customs system with excessively | :45:23. | :45:34. | |
interventionist mobility -- regulatory policies. They dominate | :45:35. | :45:40. | |
this detail of trade agreemdnts once we leave this organisation. May I | :45:41. | :45:50. | |
return to the world trade organisation. There was concern | :45:51. | :45:59. | |
expressed by those saying there was punitive tariffs on the UK by the | :46:00. | :46:05. | |
EU. We know it is not in thdir interest to do so. We offer a large | :46:06. | :46:12. | |
deficit and I accept that point I doubt whether they will be `llowed | :46:13. | :46:25. | |
to do so. There is a concern out there that the EU could would tell | :46:26. | :46:34. | |
at eight -- could retaliate with massive punitive tariffs. C`n I take | :46:35. | :46:44. | |
your view on that? Most-favoured-nation is means you | :46:45. | :46:51. | |
keep the tariffs as they ard at the level of other countries. Whth the | :46:52. | :47:03. | |
states, ... That will be my understanding. In the worst,case | :47:04. | :47:11. | |
scenario, what can the EU do to us? The EU is a member of the WTO. It | :47:12. | :47:17. | |
will have to offer tariffs to the UK. It means that as far as these | :47:18. | :47:24. | |
tariffs are, there is no tariffs higher than the EU at the moment so | :47:25. | :47:29. | |
there may be an increase in tariff. Can you give us a scale? It depends | :47:30. | :47:36. | |
on the products. Agricultur`l projects -- products can go up 4%, | :47:37. | :47:49. | |
cars, 8%. It will be signifhcant. More importantly, the tariffs are | :47:50. | :47:59. | |
going down. You can negotiate an agreement. It is the nontarhff costs | :48:00. | :48:10. | |
that will come in. If the UK is not part of the EU and not part of the | :48:11. | :48:13. | |
customs union and if it has different tariffs, then it has to | :48:14. | :48:21. | |
prove origin status. If you are exporting from the UK to thd rest of | :48:22. | :48:27. | |
the EU, you have to prove status. The costs of proving that c`n be 5% | :48:28. | :48:32. | |
of production costs. You have border control costs which can be 4% of | :48:33. | :48:37. | |
production costs. The trade costs that are more important than the | :48:38. | :48:45. | |
tariff issue, there is some of the issues that would need to bd there. | :48:46. | :48:51. | |
The UK could keep the existhng tariff, but there is no point in | :48:52. | :49:03. | |
leaving the EU. On some things, there is a government procurement | :49:04. | :49:06. | |
agreement that has been negotiated within the WTO. That would have to | :49:07. | :49:15. | |
be renegotiated. It is based on bilateral commitments betwedn the EU | :49:16. | :49:22. | |
and the US. The other signatories also. The UK would have to | :49:23. | :49:37. | |
renegotiate that and tried to get access. That might be difficult to | :49:38. | :49:43. | |
negotiate. I cost of the business of leaving the EU with the asstmption | :49:44. | :49:47. | |
that we have no disagreements with anybody. The EU applies any | :49:48. | :49:56. | |
non-tariffs and what happens is we become a normal country outside the | :49:57. | :50:00. | |
EU, which is something that many countries are and we face world | :50:01. | :50:05. | |
prices. That is immensely bdtter than being inside the EU's wonderful | :50:06. | :50:11. | |
tariff wall. If a text too lany bad industries. Compared with what we | :50:12. | :50:15. | |
would have if we were out there in the global market, selling the | :50:16. | :50:23. | |
things we are good at. It is enormously liberating for us and | :50:24. | :50:27. | |
would stop is thinking of otrselves as a regional player, which we are | :50:28. | :50:32. | |
not. Give us the mindset of a global player facing world markets. We are | :50:33. | :50:38. | |
a small global player. We h`ve to produce things that are good. We can | :50:39. | :50:43. | |
sell for high prices to anybody around the world. As I have said, | :50:44. | :50:48. | |
the world is a big market place If summary wants to put extra tariffs | :50:49. | :50:54. | |
on us, it makes no difference to my calculation. I believe the DU wants | :50:55. | :50:57. | |
to sign an agreement with us because it is in our interest. It sdlls so | :50:58. | :51:05. | |
much stuff. The boot will bd entirely on the other foot to what | :51:06. | :51:08. | |
most people say. Instead of going cap in hand saying, please sign an | :51:09. | :51:14. | |
agreement, please sign an agreement with us because we want to sell to | :51:15. | :51:21. | |
you. We are not wanting to keep you here as long as Hillary Clinton was | :51:22. | :51:26. | |
kept here by the progression committee! Thank you both vdry much | :51:27. | :51:32. | |
indeed. Always stimulating to have your evidence, Professor. Thank you | :51:33. | :51:40. | |
for your expertise. It is vdry much appreciated. Thank you so mtch to | :51:41. | :51:44. | |
both of you. Order, order, this meeting is now adjourned. | :51:45. | :51:47. |