Negotiations won’t be easy, but it’s clear what Britain should be aiming forby Larry Whitty / April 3, 2017 / Leave a comment
This week, Theresa May submitted to Donald Tusk a letter formally triggering Article 50. The process for Britain leaving the EU has begun.
No-one really yet knows how—or even when—that process of withdrawal will end. But over the past few months the House of Lords European Union Sub Committees have produced a range of reports on the implications of Brexit. As Chair of the Lords EU internal market sub-committee, my particular focus has been on trade—arguably the central issue in the Brexit debate.
There is much ignorance in this area, and assertions are often made which are frankly untenable. Some politicians have claimed that Britain would be fine without an EU deal at all, of any form. Boris Johnson has said that we would be “perfectly OK” in such circumstances. Indeed, in an interview with this publication, Jacob Rees-Mogg said that Britain would “of course” cope if none was agreed.
Initially the plea from almost all businesses was that Britain remain within the single market—the “Norway option,” in short. That option was effectively closed off by the prime minister’s Lancaster House speech in January: she ruled out remaining in the single market or the customs union. Instead, the government intends to negotiate a bespoke Free Trade Agreement (FTA) bilaterally with the EU27—but May warned that if she cannot get a good deal then “no deal is better than a bad deal.”
She is mistaken. An FTA is essential. Around 44 per cent of UK exports go to the EU, while only 7 per cent of EU exports go to the UK. The government rightly wants to see an FTA with the EU which is unprecedented in its scope. But there is no template for such a deal. Even the most sophisticated trade deal, such as the recent EU/ Canada one (CETA), comes nowhere near providing what is required.
If there is no deal, then Britain faces external tariffs on its exports to the EU and will fall back onto World Trade Organisation rules. Under these, British manufacturers would face EU tariffs averaging 4.5 per cent with some, including those on motor vehicles, much higher. Farmers would face tariffs averaging 14.5…