Where the EU is walking the plank, the UK should be able to recognise and seize post-Brexit opportunities.
On 6 November, the Italian government asked the European Commission to apply the “safeguard clause” on rice imports from Cambodia and Myanmar in order to protect Italian rice growers. Protectionist measures against southeast Asian countries are not a novelty and have been vehemently backed up by France, Spain, Greece, Portugal, Hungary and Romania.
The EU ‘safeguard clause’ hurts consumers across the EU bloc
Under the ‘safeguard clause’ enshrined in the Treaty of Rome, when imports from a third country jeopardise the trade balance of an EU Member State, it can ask to ‘remedy the situation’, otherwise to introduce trade barriers.
Such interventions pursue a single aim: to protect a specific group from competition. However, whilst taking the producer side protectionism hurts consumers who are the main beneficiaries of free trade.
The Association of Southeast Asian Nations (ASEAN) is the third largest trading partner of the EU. In 2017, co-operation with the ASEAN resulted in the output of more than € 227,3 billion in goods. As part of this economic engagement, the European Union has been actively trading with both Myanmar and Cambodia and therefore using the agricultural imports, in particular rice, to feed up the EU market.
Should the EU choose to act at the whim of Italian rice growers, it will strip consumers all across the bloc of the opportunity to enjoy a great supply of rice and consequently a favourable pricing.
Post-Brexit UK freely trades with Southeast Asia and not only
As of now the UK has a trade deficit with Southeast Asia. In 2016, UK exports in goods and services to Southeast Asia estimated £13.6 billion and UK imports from the region amounted to £18.8 billion.
While it is of no surprise that Singapore as a former UK colony leads the region, Cambodia and Myanmar, which are next in the queue for the EU trade barriers, are important trade partners as well. In 2016, the UK imported £0,9bn in goods and services from Cambodia and £0,2bn from Myanmar.
Even though trade relations between the UK and Southeast Asia countries make up only for a small fraction of a crucially important economic engagement with the EU, they serve as a significant trade field to explore.
Some of potential co-operation channels are bilateral and multilateral free trade agreements between the UK and ASEAN countries. Moreover, once the UK has put the wind back in its sails and left the EU Single Market and the Customs Union, it will also be able to abolish all import tariffs on the goods it doesn’t produce, most of which belong to the agricultural segment, including rice.
Brexit therefore represents a momentous opportunity which has a propensity to change the history of world trade and pivot if away from protectionism. By exiting the EU, the UK is not only saving its consumers from detrimental outcomes of the EU’s protectionism, but also gets a chance to foster its co-operation with Southeast countries and reclaim its heritage as a trading nation.
Originally published here
