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Brexit Crexit

How will you vote? On emotion? On personal finances?
Or your vision of the future?

 

 

Both campaigns have played to emotion, the fear of Leaving or Remaining, peppered with personal attacks.  Yet we normally vote with our pocket, the effect on the value of our house and the cost of essential services and the weekly shop.

 

 

But imagine if we voted for our job, our career, our professional future.

 

That appears to be what's happening in the creative industries. According to a recent poll, 94% of the sector want to Remain. With 1.7m working in creative businesses, that's a sizeable vote. The Scottish referendum was won by 380k votes.

 

It's worth taking a look at what Brexit means for the creative industries.
Market access is the single most significant factor. The European Single Market is a huge economic area with 500m people and a GDP greater than the USA. The EU is often thought of as an economic area for the free movement of goods, because of its origins in coal and steel. But free trade in goods is of limited value to creative businesses, and is becoming a smaller and smaller component in modern economies. Far more important is the free trade in services, IP and people. And that has been implemented through a common approach to market regulation within a single market, rather than trade agreements.

A good example of this is the Satellite and Cable Directive which allows any European broadcaster to broadcast services to any EU country from one location, under a single set of regulations. Another is the copyright framework which not only grants common IP rights but also creates common rules for licensing and administering copyright, facilitating a vibrant licensing market in the EU. Similarly, the free movement of people makes touring within the EU much easier, as well as hiring top talent from a pool of 500m with diverse cultural backgrounds.

The UK has made good use of this market access. Many major corporations, in music, film and publishing, locate their international headquarters in the UK and SMEs, which make up 85% of the sector, have thrived in this large quasi-domestic market. Doing creative business in the EU is generally straightforward and profitable. Elsewhere, it is more difficult.

 

So, what would happen if the UK leaves the EU? There has been much speculation about what trade model would be adopted and how new agreements would be negotiated. Article 50 of the Treaty on European Union provides a mechanism for a Member State to Leave the EU. It gives a two year window for unpicking the Treaty and allows for negotiation of an alternative trade agreement but offers no guarantee that one would be agreed. Each trade agreement typically takes about 10 years to conclude.

The default position on trade is the WTO rules on equal treatment. The WTO has default tariffs on mainstream goods which would apply in the absence of a trade agreement, such as 10% on cars and 15% on food. But trade agreements tend to have limited application to services and IP and usually no jurisdiction over free movement of people. So creative businesses would lose the benefit of the market regulation of broadcast, spectrum, copyright and general services. Hiring non-UK talent would be subject to new immigration controls and travel for business purposes for tours and promotion would be subject to whatever visa rules each EU member state chooses to impose.

 

Of course, if the UK leaves the EU, none of this becomes impossible. After all, music, film, TV and publishing companies do business now with the USA, Canada, India, Australia, Japan and elsewhere, all outside the Single Market. It would just be more difficult, and more expensive, especially for smaller companies which make up the majority of the sector. Just look at the obstacles to touring in the USA, repatriating royalty income from Canada or complying with local market regulation in Japan. An EU without the UK would probably be more protectionist so movement of goods, services, IP and people would no longer be free.

Finally, looking at influence internationally, many insiders have observed what a disproportionate impact the UK has had on EU legislation, succeeding in creating open, competitive markets in many sectors including the creative industries. The UK, despite the tabloid rhetoric, often punches above its weight and British creative businesses have benefitted from the Single Market reforms over the last few years.

 

Perhaps that’s why 94% of people in the creative industries want to Remain.

 

Tell us what you think with this snapshot survey.

http://www.surveymoz.com/s/KGYR0/

 

 

Dominic McGonigal is Chairman of C8 Associates, a consultancy dedicated to taking creative businesses to the next level. He also chairs two creative startups, CICI and JazzUK. Read more at www.c8associates.com

 

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