Many Brexiteers still do not understand the difference between “after the referendum” and “after Brexit”. If there was an increase in British exports as a result of the value of the pound falling following the EU referendum in June 2016, then people need to remember that the UK’s economy at that time was still acting according to its membership of the European Union. Tariff free access to the EU’s customs union and single market will apply until the UK leaves the EU, likewise trade agreements with the rest of the world are already in place, which allow the UK as an EU member state to trade with non EU countries. The negative economic consequences of Brexit will only be fully felt when the UK leaves the EU.
China is in the process of improving its trade links with the EU. On 25th January 2018 an article entitled “Die Seidenstraße endet in Duisburg”, which translates as “The silk road ends in Duisburg” appeared on the website of the German news programme “tagesschau”. The article was about the goods trains, which run on a 10,000 kilometre stretch of railway track between the cities of Duisburg in Germany and Chongqing in China. According to the article 25 trains a week arrive in Duisburg from China, which take around 12 days to reach their destination compared to around 40 days if the freight was sent by sea. Although a freight train cannot compete with a cargo ship on the quantity of goods it can carry – one train can transport a maximum of 60 containers whereas a containership can transport around 10,000 containers – the freight train has the advantage that it brings goods to a central logistics destination in mainland Europe.
The rail link from China through Russia to the European Union could become more significant, after the UK leaves the EU. Once the UK has left the EU’s customs union and single market, then Chinese exporters will be less likely to use British ports, because the UK will no longer have privileged access to the EU’s consumer market of 27 member states. Nobody knows what percentage of tariffs the EU will put on goods arriving from the UK, once the UK becomes a third country. If it takes 49.6 days for a container ship to travel from Shanghai to Felixstowe, and goods cannot easily be distributed from the UK to other parts of Europe, then Chinese exporters will use ports such as Antwerp, Rotterdam and Hamburg as well as Duisburg which will remain in the EU rather than a British port.
Brexiteers often say that the UK does not need the EU, because the UK can export to the rest of the world. On the other hand, is it a good idea for the rest of the world to know, that the UK is voluntarily excluding itself from privileged access to Europe’s consumer market as a result of leaving the EU? Would any other country in the modern world seriously consider leaving an important economic market, because that country dislikes regulations to protect the environment, health and safety, and workers rights?
©Jolyon Gumbrell 2018