Survey Offered No Alternative To Leaving E.U.
SMMT Tarnishes Auto Industry With Its Blatant Political Interference.
“if Britain left the EU, as Europe’s second biggest economy, it would quickly negotiate a free trade deal with little difference to the current arrangements”
The Society of Motor Manufacturers and Traders (SMMT) has tarnished the automotive industry with its blatant attempt to bamboozle British voters into fearing the consequences of leaving the European Union (E.U), which at worst probably wouldn’t do us much harm, and might well be a big plus for all of us.
Britain’s membership of the E.U. has come under pressure recently because the organisation is seen as distant and undemocratic. The turmoil amongst smaller countries like Greece, Spain and Italy, as their economies were ruined by over-borrowing, has been prominent in the news. Membership of the single European currency has trapped the afflicted countries into an apparent never ending spiral of increasing poverty, weakening economies, and high unemployment. Growing disaffection with the E.U in Britain has led to the rise of the United Kingdom Independence Party (UKIP), which is expected to make big gains in next month’s elections for the European Parliament. Britain’s Conservative Party has promised that if it wins the election in 2015, it will hold an “In/Out” referendum in 2017.
The automotive industry has grown impressively in Britain in recent years, and the SMMT thinks withdrawal would do major harm to the business. Others disagree. But last week, the SMMT published a survey widely reported as showing the industry was four-square against withdrawal. In my view, the survey was a hopelessly biased attempt to manipulate public opinion into fear of the consequences of withdrawal, and should either be redone with fair questions not seeking to influence the result. Better still, the SMMT, many members of which are foreign, should eschew involvement in British politics.
Button your lips
Some members of the SMMT have form in trying to frighten the British into taking actions they want no part of. You will remember CEOs from Ford Europe, GM Europe and Nissan were at the forefront of those demanding Britain join the single European currency last century. If we didn’t join, they said, we might as well all stay in bed. Industry would collapse. Given the fate of the single currency, that misguided venture into politics brought the automotive industry into disrepute.
This latest attempt to influence British voters has done it again.
If you were the CEO of a big international company, it stands to reason that the perfect world for you would be one government, with one currency, and one group responsible for regulation. But that’s never going to happen, so the best course of action is for international CEOs to button their collective lips and work within the rules approved of by the voters in different countries.
But back to the survey – “The UK Automotive Industry and the EU”. The survey was reported by the media as showing overwhelming support by industry for remaining in the E.U. It was cited up front by Nick Clegg, Lib-Dem leader and Deputy Prime Minister, as evidence on behalf of his case on a national televised debate on Britain’s E.U. membership. Clegg’s Lib-Dems seek to retain the bureaucracy in Brussels. Opinion polls show Brussels is despised by most voters in this country. The SMMT allied the UK automotive industry with Clegg’s cause.
Biased
Why do I say the survey was biased? After all, it showed 92 per cent of automotive companies believed it was more beneficial to their business for the UK to stay in the E.U. The problem is that the survey posed the question in a vacuum, with no sensible alternatives, and suggested that if Britain was to leave, the trade barriers would slam shut on our trade. For this question to be unbiased and meaningful, it needs to be posed with alternatives. Most sensible economists and commentators know that if Britain left the E.U., as Europe’s second biggest economy, it would quickly negotiate a free trade deal with little difference to the current arrangements. The survey suggested some kind of second rate arrangement would be likely if we left the EU, but that wouldn’t be the case.
Later in the survey the SMMT quotes the result of this question – “What would the impact be on your business and on foreign investment in UK businesses if the UK left the EU?” Again, without posing an alternative, this is a meaningless question.
The SMMT says Britain does not have the “critical mass” to negotiate trade deals as effectively as the E.U. The reverse is true. Europe’s second biggest economy would be in a stronger and clearer position not having to negotiate for scores of other minor countries too.
WTO
The SMMT quotes Jaguar Land Rover saying – “Being part of a large single E.U. market puts the UK in a far stronger position, with regard to ensuring free and fair trade with the rest of the world”. Again this excludes the possibility of a strong alternative. The barriers to trade aren’t going to suddenly slam shut. The World Trade Organisation (WTO) springs to mind if a free trade agreement wasn’t immediately forthcoming.
In a report on the survey, John Leech of KPMG which helped compiled the survey, lists four reasons for Britain staying in the EU.
“Continued unhindered access to this (EU) single market is fundamental for most UK vehicle manufacturers,” says Leech. I submit that this access would not be in jeopardy.
The ability to influence regulations. This would not be a problem for Europe’s 2nd biggest economy.
The EU is a powerful voice for trade with emerging markets. See my previous point.
Free movement of labour is crucial to the smooth running of the industry across Europe. BMW, Mercedes and VW operate huge factories in the U.S. and China, to name but two countries without free movement. That seems to work well enough.
I’ve posed various questions to the SMMT and KMPG about the survey and its conclusions but so far received no reply. Among my questions were –
How did the corporate participants in your survey decide how to respond? Was it a top level board decision, or a CEO on his own, or more minor, unaccountable operatives?
What percentage of SMMT members are foreign?
The SMMT should take a neutral view, saying that if Britain decided to leave the E.U., it would most likely end up with a trading regime broadly similar to the one we have now, and it awaits the political decision of the British people with equanimity.
Mike Hawes, Chief Executive of the SMMT, had this to say later about the survey.
“As you know, the SMMT exists to support and promote the interests of its members. Given the intense debate around the European subject and the questions put by media and others to many of our members, we commissioned KPMG to produce a report to look at the facts surrounding the sector’s relationship with Europe. As part of the KPMG research, they conducted in-depth interviews with a range of members including vehicle manufacturers and suppliers at a senior level. To sit alongside that fact-based report and ensure we reflected the breadth of the UK motor industry, we conducted a survey of our members to garner their views. We are therefore confident that the report and wider survey reflects the views of our membership. It is naturally up to companies, individuals and wider stakeholders to determine their own individual positions and for all interested parties to use the report’s findings as they deem appropriate.”
“Our report allows the industry to make its position clear within this important debate, while fully respecting the fact that the final decision will be subject to the democratic process,” Hawes said.
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