Why are cars and fishing so essential to post-Brexit trade?

Anglers blame indiscriminate trawlers for overfishing (Alamy)

To a fair degree, the now five-year long Brexit debate comprises as a series of reruns of arguments rehearsed and settled many decades ago.   

So it is now with the two present hot Brexit topics – fish and cars. Or, rather, fish versus cars, on one reading of the situation. The idea – putting it crudely – that Britain’s fishing communities were cynically sacrificed to continental competitors when Ted Heath (a Conservative premier of a different stripe) took Britain into Europe in 1972 has long held sway. According to some accounts, one casualty of this exercise in realpolitik was a wholesale wet fish business in Aberdeen owned by Michael Gove’s father. At any rate, the Common Fisheries Policy has long been held to have inflicted cruel damage on places such as Hull and Grimsby, once thriving communities built on the success and hard dangerous work of their trawlermen and trawlerwomen.

The argument runs that Heath took the view that fishing, despite its ancient heritage, was far less important to the British economy than manufacturing, including the motor industry. So it was “given away”. In Heath’s world view, at long last French, German and Italian motorists would soon have unimpeded access to the Triumph Stag, Austin Allegro, Jaguar XJ-S and other fruits of our national champion, the British Leyland Motor Corporation. Millions of jobs and the health of the balance of payments depended on expanding trade in such manufactures, and not on cod. You might think that a rational if tough choice was made in the national interest; or a straight betrayal. The emotional tug of the fishing fields remains, and the bitterness, witnessed by that referendum stunt when Nigel Farage was water cannoned by Bob Geldof on the Thames at Westminster.

Something of the same car/fish trade off that we first made in the 1970s seems to being discussed now, if not directly. Reports suggest that the British are willing to offer the EU the effect continuation of the CFP for another three years. But the UK negotiators have also asked for special treatment for the British car industry. There are different analyses about the chances of such a deal happening, but the biggest obstacle is the definition of “rules of origin”. It’s worth looking at that in more detail.  

The problem with a “British” car such as a Nissan Leaf made in Sunderland or a Mini manufactured in Oxford is that it is full of parts that have crossed many national boundaries multiple times, to be assembled into still larger components and sub assemblies until they find their way into the final polished product. They do so in dizzying variations in today’s near-customised choice even within one model range. Calculating the percentage of the bits and the overall value of the car that is “British” is a huge task – but a vital one. Below a set level, say 45 per cent of its price/cost/fair value, a tariff or import tax will be imposed on it before its allowed on sale in the EU. The British would like the EU to cut them some slack on this, especially as lots of components come from the EU, as well as China, Japan and the US. The EU refuse to do so because they fear the UK becoming a sort of industrial Trojan horse, an offshore racket. Thus if, say, some big car firm brought in an almost finished car and then they just stuck some “Made in Britain” badges and a Union Jack on it that would not make it “British” even if they declared it was. That is the risk they foresee. Such regulations are called ROOs - “rules of origin” and figure in all trade deals. If there is a UK-EU free trade deal then various products would need to be demonstrably “British” to qualify for tariff-free entry. If there is no deal it doesn’t matter so much. The three-year concession on fish in return for an easier regime on vehicles suggests that a deal is conceivable, or at least being explored.  

Yet the ROOs debate also sheds some light on the myths of Brexit. For while the actual fishing side of the industry is a shadow of its former self (also due to fluctuating fish stocks and British concerns selling off their quotas to Spanish firms), the British fish processing industry is much healthier, with Icelandic and other fish being made into ready meals and the like and exported - with a high “value added” from British production. Thus arguably the broader British fishing industry has done as well as the modern British auto industry. As well as that, new specialities such as Scottish salmon and Welsh shellfish find a ready market in Europe - but only if they are super fresh and not delayed at the English Channel.  

Nor did the UK car industry after 1973 have an easy time on exposed to European competition. It needed to adjust, just as did fishing. Initially the British car industry was hammered by the wave of VWs, Fiats and German-made Vauxhalls and Fords that flooded the UK market after EU entry. The British auto industry eventually turned itself around with the aid of foreign direct investment and linking in to globalised supply chains, especially to and from Europe.

Over a half century or so the car industry and fishing have both undergone huge change, as has every other industry in adapting to the common market, the single market and the wider impact of globalisation. Europe helped both industries in some respects, and damaged them in others, just as it did to everything else from financial services to brewing to telecoms to aerospace. The net benefit to the while economy from EU membership in the 1970s was at first not at all apparent, and it took decades to work its way through the UK economy,  allied to other factors such as labour market reforms, liberalisation and globalisation. Brexit might, in 40 or 50 years’ time yield a similar balance sheet or wins and losses. For now, though, all we know is the the adjustments will be as painful reversing out as they were when we sailed in, for the car workers, fisherfolk and everyone else.