Since the 2016 referendum, analogies comparing Britain to Singapore have circled widely—former Foreign Secretary Jeremy Hunt went so far as to travel to the Asian city-state and write a piece in the Daily Mail titled “Why I’m Looking East for my Vision of Post-Brexit Prosperity.”
It should come as no surprise, then, that German Chancellor Angela Merkel the other week warned the European Parliament of a Singapore-style United Kingdom off the coast of the EU.
All this has sparked quite a bit of debate between economists regarding exactly how Singapore-esque the UK could become. Those arguing in favour point to the UK being able to free itself from European regulations and bureaucracy, while others point to the many differences between the two, including tax rates and dependence on the welfare state. Regardless of how accurate the analogy is, a Britain free from EU regulation and able to forge its own trade deals is one that poses a threat to the status quo in Europe—and Merkel’s speech illustrates just that.
At its founding, the European Economic Community can be described as the quintessential liberal project. As European Politics Professor Jan Zielonka argues,
The EC/EU generated growth by enforcing rules of economic competition and by abolishing barriers to the movement of capital, goods, services, and people within its orders. It negotiated external trade agreements protecting member states from exporters using lower labour or environmental standards. It helped weaken economic actors (in the private sector such as the farmers and in the public sector such as the regions) to cope with economic pressures.
This, of course, did not remain the case throughout the years. The economic stagnation and political gridlock that has come to grip Europe over the last several decades can best be captured in its unwillingness to negotiate a free trade deal with the United States, which it still
trades with on World Trade Organization (WTO) terms. The lack of progress made on this crucial trade relationship has restricted innovation and hurt consumers on both sides of the Atlantic—and the EU doesn’t seem particularly inclined to change its course in the near future.
Looking specifically at a US-UK free trade deal, there is enormous potential for growth by lowering tariffs on both sides. Despite the daily apocalyptic rhetoric regarding an independent Britain’s comparative weakness to negotiate free trade deals in its own interests, as well as the impact that a no-deal Brexit would have, the fact that no trade deal has been reached between the EU and US mean that London and Washington currently trade on World Trade Organization (WTO) standards. If Britain was to crash out of the EU on 31 October without a deal, trade rules between the two countries would not be impacted.
Thus, any trade deal reached between the two countries would have the result of lowering tariffs from current levels. There is strong support from both London and Washington for such a deal, and a number of think tanks from both sides of the Atlantic joined together to produce a detailed draft free trade agreement for politicians to use.
Progress is not limited to the US, of course. Since taking office as Secretary of State for International Trade, Liz Truss has been travelling the globe attempting to negotiate more free trade deals with various countries in preparation for when the UK leaves the EU. This effort is already paying off, most recently with the signing of a trade continuity deal with South Korea. This is just the beginning of the once-in-a-lifetime opportunity that will present itself to the world once Britain is able to implement its own free trade deals. Held back for decades, the world’s fifth-largest economy will be open to renegotiate terms of trade across the globe.
None of this is to suggest that there wouldn’t be real fallout from a failure to negotiate a deal with Brussels. Combined, EU states account for a larger portion of the UK’s imports and
exports than the US does. However, the reality that Europe is so afraid of realizing is that they simply aren’t the only game in town anymore. The rise of China, India, and many other eastern Asian states as current or future economic heavyweights is a gamechanger for the way that Europe will need to conduct business.
With storm clouds forming over much of Europe’s economies, the continent is facing the prospect of Brussels presiding over yet another lost decade. Europe has and can do better than cathartic low growth and high unemployment, but it must be willing to act in order to do so.
An independent United Kingdom that declares itself open for business with comparatively better trading terms and less regulation would attract investment and opportunity for itself while making the status quo on the continent less and less attractive. Brussels’ steadfast dedication to keep Britain in the single market and a customs union must be seen as an insurance policy to avoid a truly global Britain—and mustn’t be one that Westminster buys into.