Former EU Trade Commissioner Peter Mandelson has warned eurosceptics that a British renegotiation of its relationship with Europe after a ‘Brexit’ would take up to a decade.
Speaking at an invite-only audience of Asian business leaders and diplomats at the Asia House venue in London, Lord Mandelson also cautioned that the UK “would essentially be supplicants” when it then came to negotiating new free trade deals with much larger economies such as China and India.
His remarks come as last night (21 October), the Governor of the Bank of England, Mark Carney, gave a qualified endorsement of the UK’s membership of the European Union – up for renegotiation before a referendum by the end of 2017.
Lord Mandelson, now a Labour member of Britain’s upper house, but a Commissioner from 2004 to 2008, told an audience of around 150 diplomats and business leaders that “Whitehall would be doing nothing else” in the wake of a British exit, when faced with up to 50 global trade agreements to renegotiate.
In remarks cited on the Asia House website, Mandelson told his audience on future ties with the EU that “The problem we will face if we leave the EU are not only to do with devising, agreeing and negotiating a new and different model of our relationship with the EU. That will be long, complex and disagreeable to finalise an agreement that we will have to arrive at with the interests of the various states. That will be a two to 10-year process.”
But turning to the perhaps even bigger question of Britain’s then global trading position, he warned businesses that: “Whatever our prejudices for or against the EU and our membership of it, the really interesting questions arise, questions on which business should focus, is what needs to happen after a negative vote in a referendum.
“Having left the European Union, we would then have to renegotiate all the free trade agreements that currently exist between the EU and the rest of the world, ok?
“Three problems: One: We ourselves finding the capacity to negotiate free trade agreements…how many of them? 20, 30, 40, 50. I mean Whitehall would be doing nothing else.
“Secondly, persuading negotiating partners, with whom we have to reform these agreements, that they can be bothered to do that with us, as a priority. They’ve got other fish to fry. They’ve got many other trade agreements and possibilities that they can negotiate. They have limited capacity. How do we know which part in the queue we will be? Certainly wouldn’t be at the front of it.
“And the third is, the severe imbalance is sort of negotiating terms, between Britain, with (a) 64 million people market, which is not small, but it’s not big in global terms either.
“We would essentially be supplicants…”
“How would we start negotiating with China, India and other countries, which are way bigger than ours, with whom there would be a very severe negotiating imbalance. We would essentially be supplicants. We would be begging to go nearer the top of the queue. We would be having to settle on terms that were not necessarily greatly advantageous to us for the sake of having that agreement, and again, it would take a very long time to achieve.
The talk came on 13 October at the Asia House venue in London. Peter Wilding, Chairman of the ‘stay’ campaign’s British Influence, said “Lord Mandelson paints a serious picture of the difficulties that will arise with a Brexit in negotiations with the EU, and FTAs (free trade agreements) outside of Europe.
“The British government, if it had an an energetic and positive approach to a more competitive Europe, would find it had allies…instead of appearing to plough the EU’s own furrow.”
UKIP trade spokesman William Dartmouth responded: “Who listens to ‘Heart of Darkness’ Mandelson, a Federalist spin doctor who advocated Euro membership and is dependent on a fat EU pension?
“Iceland has a free trade agreement with China showing that small and nimble is better for making trade agreements. It is clear the UK would not have to wait many years to get the common agreement of 27 other states – and could reach a deal quicker because of this factor.
“China and India don’t have a trade agreement with the EU but both are keen to do business with the UK which is a major market for both countries.”
In Oxford last night (21 October), the Bank of England’s Carney gave a guarded and nuanced endorsement of the benefits of EU membership for Britain.
Stressing that his speech was solely concerned with how EU membership affected Britain’s central bank, Carney said “Overall EU membership has increased the openness of the UK economy, facilitating dynamism but also creating some monetary and financial stability challenges for the Bank of England to manage.
“Thus far, we have been able to meet these challenges.”
But he also had warnings for both the closer integration of the eurozone on Britain – which has retained the pound sterling – and on the affect of future EU legislation on the financial sector for the City of London.
“Since the crisis began, shocks arising from our biggest and closest trading partner have challenged UK dynamism and made it more volatile,” he said.
“In the aftermath of the crisis, it is essential that EU rules, directives and regulation continue to support the UK’s ability to address risks to financial stability.”
“The impact of EU membership on financial stability is more challenging?.?.?.?it is imperative that UK authorities, including the Bank of England, continue to retain the flexibility to impose the high standards necessary to manage the world’s leading global financial centre.”
And he added: “It is desirable, particularly given the weight of the?.?.?.?members of the single currency within the EU, that there are clear principles to safeguard the interests of non-euro member states.”
However, his speech was immediately welcomed last night by both Prime Minister David Cameron, and the Chancellor, George Osborne
Cameron tweeted, “An important speech from Mark Carney – making clear where reform is needed in Europe, as well as the benefits of the single market,” implying the PM saw it as an endorsement of his renegotiation strategy, which focuses on both liberalisation and the single market.
Osborne tweeted that the speech was “impressive”, adding “right to argue that we need safeguards for non-euro countries like Britain in the EU”.
Carney’s intervention comes shortly after the launch of rival campaigns to influence voters ahead of the EU membership vote Cameron has promised to hold before the end of 2017 – and is likely to take place next year.
Carney had previously sought to play down the speech, saying it would be “a bit of a yawner”, but it made the front-pages of most UK newspapers Thursday.
Most opinion polls have shown more Britons favour staying in the EU rather than leaving, but two recent polls have shown a narrow majority supporting an exit.
In May, the Bank of England let slip it was looking at the implications of a so-called ‘Brexit’ when it inadvertently sent an email to a reporter saying the project should be kept secret from Bank staff, and journalists asking about it should be told a broad range of economic issues was being considered.