November 6, 2013
by Charles Kennedy MP, President of the European Movement UK ///
The CBI published on Monday a wide-ranging report, ‘Our Global Future: the Business Vision for a Reformed EU’. The CBI argues that the UK must remain part of the EU, rules out alternatives to full membership and points out that the EU benefits each UK household by up to £3,000 a year. Their research shows that membership of the EU is in fact worth approximately 4-5% of UK Gross Domestic Product every year, or £62-78 billion.
The findings of this report are consistent with a CBI/YouGov survey of more than 400 businesses employing more than 1.5 million direct employees, which shows that 78% of firms favour staying in the EU, including 77% of small and medium-sized enterprises (SMEs). 86% believe that leaving the EU would have a negative impact on UK firms’ access to EU markets and 59% thought that an EU exit would reduce the international competitiveness of the UK as a whole.
The CBI’s report echoes what other leading business representatives have said.
85% of EEF, the manufacturing organisation, members said they would vote to remain in the EU if there were a referendum now. Terry Scuoler, EEF Chief Executive, said that Britain’s membership of the EU was central to businesses and their investment plans in the short and long-term. He argued that “The clear message from manufacturers, who employ millions in the UK, is that we must lead on this and play an active part in shaping the EU from within.”
Similarly, a report by TheCityUK, the lobbying body for the finance industry, found that 84% of UK-based chief executives, board members, directors and partners from the financial and professional services sector want the UK to remain a member of the EU. 88% agree that EU membership economically benefits the UK as a whole. 95% say that access to the Single European Market is important to the UK’s competitiveness.
Having business speak up about the UK’s membership of the EU is long overdue but it is not surprising at all why they feel the need to do so.
The EU is a common market of 500 million customers. It is worth €12.6 trillion of GDP, which makes it the largest economy in the world, representing 25.1% of world GDP and 17.0% of world trade. The US in second position with 21.6% of world GDP and 13.4% of world trade. China by comparison is worth €5.5 trillion and Japan €2.7 trillion.
50% of foreign direct investment to the UK comes from other EU member states, and is worth £351 billion a year. Over 40% of our exports go to the EU and they are tariff-free. That will not be the case if we were outside of the EU, resulting to the loss of a major export market. 61% of UK car and commercial vehicle exports in 2011 went to the EU (727,146 vehicles in total). A study by the Department of Business Innovation and Skills found that 3.5 million jobs in the UK are linked to the Single Market.
Outside of the EU car exports will have to suffer 10% tariff and van exports a 20% tariff. Why would Nissan and Honda build their factories here then? Toshiyuki Shiga, COO of Nissan, which employs about 7,000 people in the UK, said last month that “The UK is part of the European Union — that’s very important. From the foreign investor’s point of view, I hope that the UK will remain an EU member”.
The Japanese government has been even more explicit. They said that “More than 1,300 Japanese companies have invested in the UK, as part of the single market of the EU, and have created 130,000 jobs, more than anywhere else in Europe. This fact demonstrates that the advantage of the UK as a gateway to the European market has attracted Japanese investment”.
The employment and income of British workers depends on the UK being part of the EU’s Single Market.
In the Single Market, EU business can rely on one set of rules, instead of 28. As a result, red tape and regulatory burdens are reduced and cross-border trade is made easier. A level playing-field and harmonised rules reduce compliance costs for firms that trade across borders, creating savings for business and consumers.
The Single Market makes a difference, 28 of Forbes’ top 100 companies are headquartered in the EU. The EU is top trading partner for 80 countries. By comparison, the US is the top trading partner for a little over 20 countries. More than 70% of imports enter the Single Market at zero or reduced tariffs. The EU is a champion of free trade.
All that increases our negotiating weight in WTO and in bilateral free trade agreements.
In 2003, the USA was forced to lift tariffs on UK steel producers by the WTO, which authorized the EU to impose counter-tariffs on US goods if the USA ignored the WTO’s ruling.
Ian Rodgers, Director of UK Steel said “I have absolutely no doubt that the President has only been forced into taking this decision by the certain knowledge that if the tariffs had remained in place beyond 10th December, he would have faced EU sanctions on €2.4 billion of US exports.”
28 EU states are able to achieve better trade deals when negotiating with one voice. Countries like China, India, Brazil are more inclined to give us a better deal because we represent a market of 500 million consumers, worth €12 trillion.
The EU and Canada just signed a trade deal worth over €25 billion per year, with bilateral trade expected to increase by 23% and the EU’s GDP by €11.6 billion per year. The agreement will remove 99.4% of the remaining tariff barriers on industrial goods and 93% of agricultural tariffs. David Cameron himself commented that “The EU has delivered its largest free trade agreement ever and proved that it can be an asset for British business”.
The EU-South Korea Free Trade Agreement will save EU exporters £1.35 billion annually in tariffs. It created €19 billion in new trade. UK companies alone benefit by £500 million per year.
The EU-US trade deal is expected to net an increase of 28% (or €187 billion) in exports to the US each year as well as increasing global trade, producing an additional 6% growth in exports for the EU. The total benefit is anticipated to be worth approximately €220bn and provide much needed job creation for both sides. The deal has the potential to create two million jobs across the EU.
Completing other FTAs currently under negotiation could add up to £75 billion to the EU’s GDP.
Being part of the EU offers the UK enormous economic advantages and strengthens our hand when negotiating trade deals. We must remain part of the biggest market in the world and work with our EU partners to strengthen and deepen it so it can deliver more for all the EU member states and their citizens.
Author : European Movement UK