A secret government memo Saturday reveals how a trade war between European Union countries is damaging the British economy.
The damning Whitehall assessment–seen by the Telegraph–has found that France and other EU countries are hampering new “free-trade” deals because they want to protect their farmers from the extra competition.
David Cameron claims that the power of Brussels to negotiate these free-trade agreements with parts of the world such as the United States is a critical reason why Britain must not leave the EU.
But the memorandum suggests that Britain is losing out on £2.5?billion ($3.6 billion) a year in potential trade as a result of the ongoing delays to a proposed deal between the EU and Latin America.
Under EU treaties, the UK cannot negotiate its own trade arrangements and has to wait until Brussels reaches agreements that are acceptable to all 28 member states, a process that often takes years to complete.
Details of the internal government document, written earlier this year, have come to light at a critical time in the referendum contest, as rival ministers clash in an increasingly bitter campaign over Britain’s future in Europe.
Dominic Raab, the justice minister who is campaigning to leave the EU at next month’s referendum, said: “The raw truth is that the EU hates genuinely free trade. That holds Britain back, costs us jobs, and keeps prices on the high street artificially high.”
Meanwhile, on the other side of the debate, Patrick McLoughlin, the transport secretary, warned that the long-term future of Britain’s car industry–which employs 200,000 people–would be put at risk by a vote for the so-called Brexit.
In an interview with the Telegraph, McLoughlin said he feared global motor manufacturers such as Toyota and Nissan would choose to open new factories in rival countries if Britain pulled out of the EU’s single market trade zone, with its 500 million consumers.
There is “an unknown risk” that the “long-term future” of the UK’s highly successful motor industry could fall into decline, as happened with coal mining, he said.
Pushing for Trade Deals
Cameron and other EU leaders, such as German Chancellor Angela Merkel, are pushing for a range of new trade deals between Europe and other world trading blocs, including Latin America, Japan, Australia, and the United States.
George Osborne, the chancellor, has warned that leaving the EU’s single market free-trade zone would be “catastrophic” for the British economy.
The secret Whitehall briefing found that one key initiative for a sweeping new “free-trade agreement” between Europe and five South American countries has run into trouble amid opposition from other EU countries.
The private memorandum was prepared for ministers ahead of the EU’s latest round of trade talks with Latin America. It said that 14 member states–half of the EU’s 28 members–are trying to limit the agreement because they fear their farmers will suffer from increased competition.
These EU countries want to stop cheaper imports of beef and other farm products being allowed into Europe from rivals including Brazil and Argentina.
Crucially, the Whitehall assessment said this kind of opposition to free-trade deals is growing across Europe.
It could even affect plans for a high-profile transatlantic trade deal between the EU and the United States, the report said.
It warned that France and other countries have been trying to water down the proposed agreement between Europe and five South American countries, the so-called “Mercosur” group–Argentina, Brazil, Paraguay, Uruguay and Venezuela.
The government believes this deal would generate £2.5 billion a year for Britain by reducing tariffs and reforming quotas to open up trade between Europe and Latin America in beef, chicken, plant-based fuels, cars, medical drugs and services such as banking.
