Trade, sovereignty and the car industry - who is behind the wheel?

Author: Christopher Grey



Two of the defining issues of the Referendum campaign are trade and sovereignty.

Remainers say that staying in the EU is better for trade and does not really impact upon sovereignty. Brexiters say that leaving the EU is better for sovereignty and will not really impact upon trade. To defend the trade claim they repeatedly put forward the following argument, expressed here by Peter Hargreaves, the biggest individual donor ((£3.2M) to the Leave campaign.

"Can you imagine if they put up a trade barrier - and we would reciprocate immediately - just imagine the three phone calls [German Chancellor] Angela Merkel would get the following day, the chief executive of [Volkswagen], the chief executive of Mercedes and the chief executive of BMW."

The campaigning group Get Britain Out agrees, almost word for word:

“Can you imagine … Germany damaging sales of BMW and Mercedes cars to Britain? No! Trade will carry on as normal.”

And the sentiment is echoed by veteran Tory Eurosceptic David Davis, quoting from what seems to be the Brexiters’ scripture book:

“Within minutes of a vote for Brexit the CEO’s of Mercedes, BMW, VW and Audi will be knocking down Chancellor Merkel’s door demanding that there be no barriers to German access to the British market.”

There are several things that can be said about this.

Firstly, it shows an extraordinary ignorance (if not downright dishonesty) about how government trade policies are made. Neither in Germany, nor anywhere else, is it just a matter of phone calls from leading manufacturers to the country’s leaders.

Second, it shows a complete ignorance of how the EU does trade deals, including any post-Brexit deal with the UK, which would not be done by Germany but by the whole EU, and requiring a Qualified Majority Vote of the EU Council and a simple majority vote of the EU Parliament.

Third, it contains a huge contradiction: Brexiters usually complain that the EU is slow and lumbering, with trade deals taking far longer than necessary. Yet they pretend that a post-Brexit trade deal would be done within a few minutes. Of course both the complaint and the pretence are untrue.

On the specific issue of the car industry, the consensus view is clear. In March, BMW wrote to all its UK employees in Rolls-Royce and Mini opposing Brexit and, also in March, a survey of the British Society of Motor Manufacturers and Traders found that 77% of its members wanted to remain in the EU. Nissan and Toyota, both big investors in the UK car industry, want Britain to remain in the EU.

And Honda’s CEO has said that "Anything that weakens our ability to trade with the EU region would be detrimental to UK manufacturing". These firms matter to the UK in terms of exports, jobs and foreign direct investment.

The Brexit campaign often claims to be on the side of the ordinary worker. But in the UK car industry alone there are 770,000 people employed with 53.1% of vehicles produced going to the EU. These are mostly high skill, high paid jobs and would be directly and immediately threatened by Brexit.

But suppose that what the Brexiters say about trade is realistic, and that all the concerns raised by the motor industry are wrong.

Suppose that all that the leaders of the car companies say is complete nonsense and that they know nothing about their businesses. Suppose that Boris Johnson, Michael Gove and Nigel Farage are right, despite having no knowledge or experience of the car business.

Where would it leave the Brexiters’ sovereignty argument? It would amount to saying that the future of British trade depended upon the say-so of a few German corporate executives. Where, exactly, is the sovereignty in that?


Christopher Grey

About the Author

Christopher Grey

Christopher Grey FAcSS is Professor of Organization Studies at Royal Holloway, University of London.

Before that he held Professorships at the Universities of Warwick and Cambridge, where he was also a Fellow of Wolfson College. Publications include Decoding Organization: Bletchley Park, Codebreaking and Organization Studies (Cambridge University Press, 2012) and Secrecy at Work: The Hidden Architecture of Organizational Life (Stanford University Press, 2016).

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Christopher Grey

About the Author

Christopher Grey

Christopher Grey FAcSS is Professor of Organization Studies at Royal Holloway, University of London.

Before that he held Professorships at the Universities of Warwick and Cambridge, where he was also a Fellow of Wolfson College. Publications include Decoding Organization: Bletchley Park, Codebreaking and Organization Studies (Cambridge University Press, 2012) and Secrecy at Work: The Hidden Architecture of Organizational Life (Stanford University Press, 2016).

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