A former Chair of Vote Leave, John Mills says panic at Britain’s future trading arrangements is overblownby John Mills / April 18, 2018 / Leave a comment
How much difference will Brexit make to Britain’s trade with the EU27? Most likely there will be some change but not nearly as much as some people fear.The most probable outcome to the current trade negotiations still seems to be a free trade agreement along the lines of CETA, the terms negotiated by the European Union with Canada. This would involve almost totally tariff-free trade on goods, including most agricultural products, but with rather greater limitations on services—much as at the moment.If we were outside the single market, as is currently government policy, the paperwork involved would be a little more complicated than it is at the moment, but not that much. The biggest change would be that certificates of origin would be required, as happens now with the vast majority of world trade. With pre-clearance, trusted traders and the Authorised Economic Operator (AEO) system all in place, hold-ups would be minimal. HMRC could make this all work. Trustworthy estimates of the extra costs involved, compared to the existing “free movement” of goods and services, hover around 1 per cent of the value of the trade concerned.
It is possible—although unlikely—that we will not secure a free trade deal in which case World Trade Organisation tariffs would apply. This has been portrayed in some quarters as a disastrous outcome but this is surely an absurd exaggeration. It would be disappointing to have tariffs on trade between the UK and the EU27 re-imposed, but on industrial goods the average import duty would only be about 2.5 per cent. If agricultural products are included, the average rises to about 4 per cent, but if services ae included it drops back again to around 2.5 per cent.