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Japan’s warning to the UK needs reconsideration

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In what was described in the Sunday Times as an “extraordinary warning”, the Japanese Government has said the UK should not the leave the EU.

Quoted in the Sunday Times, diplomatic commentator Hideaki Kase described the statement as “incredible”, “impolite” and an “interference into Britain’s domestic politics.” Continuing, Mr Kase said: “I suspect somebody close to [the Japanese prime minister] Shinzo Abe instructed the embassy to issue that incredible statement, but I cannot guess who had such a bad idea.”

The Japanese Government’s position has been described as both “ill-advised” and “ill-informed” by Dr. Richard North, on the basis that the UK’s membership to the Single Market could be maintained through membership of EFTA and the EEA.

Nonetheless, even if the UK did not enter into ETFA or the EEA, it would still have access to the Single Market through an agreement on a trade – seen as “inevitable” because of the trading in-balance between the UK and the EU.

Indeed, in 2011 the trade deficit between the United Kingdom and the EU was £46 billion and is predicted to be even larger when 2012’s figures are revealed by HM Treasury at the end of this month.

In doing so, the UK creates more jobs through trade in the EU than the EU creates over here. To put it another way, the EU is more dependent on trade with the UK for its jobs and growth than vice versa.

This, of course, is informed by an understanding that trade – not membership to the EU – creates jobs. This is something that Tim Congdon CBE argued in “‘Europe’ Doesn’t Work“, a pamphlet published by The Freedom Association in association with The Hampden Trust.

Nevertheless, claims over the benefits of FDI to the UK economy have also come under scrutiny. In his new pamphlet “Setting Business Free: Into the Global Economy“, also published by The Freedom Association and the Hampden Trust, Professor Patrick Minford CBE calls the assumptions over FDI and the UK’s dependence on EU membership for it “entirely fallacious”. Indeed, Professor Minford states that the UK economy’s productivity is likely to be maximised when comparative advantage is allowed its fullest rein, i.e. outside the EU, under free trade.

In the publication Professor Minford also noted that transitional trade arrangements can (and will) be made to help those industries that might be more initially sensitive to a “Brexit”. The potential cost of any arrangement will, however, be offset by the benefits accrued elsewhere.

The fundamental point though is that free trade – not membership – promotes productivity, jobs and growth. The Japanese Government would be wise to take this into consideration.

Better Off Out is a campaign run by The Freedom Association, a non-partisan pressure group dedicated to principles of freedom and national sovereignty. To keep up to date with the campaign, do follow us on Twitter @BetterOffOut.

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