The Brexiters have had another crack at how the post-Brexit economy should look. It’s essentially a free trade agreement (FTA) similar to what the EU has with Canada. The blueprint, from the Institute for Economic Affairs (IEA), has been backed by leading Brexiters including Boris Johnson, David Davis and Jacob Rees-Mogg.
The main problem with any Canada-style deal is that it would gum up the supply chains of our manufacturing industries and do nothing to protect our services industries either. But in addition to that huge flaw, there are four specific problems in the IEA’s proposal – all likely to make it unworkable on a practical level and/or deeply unpopular with the UK public.
1. Timing totally unrealistic
The IEA is proposing a two-stage process to negotiating an FTA with the EU. First, in the next six months, we’d agree a “basic” FTA for goods. This would take effect in the transition period post-Brexit instead of the prime minister’s plan to stay in the EU’s single market and customs union during that 21-month interim phase. The IEA then wants us to negotiate a full FTA like the one Canada has.
The problem is trade deals usually take the best part of a decade to agree. So our economy would end up falling off two cliffs: first next March when we move to the basic FTA; and then in January 2021 when the transition period ends and we have nothing to govern our trade with the EU.
The IEA also wants to roll over existing FTAs we already have thanks to our EU membership by March 2019 – and argues we should start negotiating FTAs with the US and other countries now, saying this would pressure the EU into striking an even better FTA with us. The idea we’ll make fast progress is hopelessly optimistic given that other countries will want to know our trading relationship with the huge EU market on our doorstep before they start offering us terms.
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Click here to find out more2. Lowering food standards
Central to the IEA’s plan is to go full steam ahead with a US-UK trade deal. The UK wants access to the US for its services industries, and the IEA suggests the best “leverage” for this is giving the US agri-food industry access to our market.
Since the IEA advocates “maximum regulatory recognition” in all these deals, that would almost certainly mean letting food of a lower standard into our supermarkets: think chlorine-washed chicken and hormone-pumped beef. It’s all rather embarrassing for trade secretary and fellow Leave campaigner Liam Fox, who has denied several times recently that Brexit will mean lowering food standards.
3. Exposing our NHS
The IEA dismisses concerns about US pharma giants pushing up medicine prices, saying it’s not a problem because US firms have “not complained” about the NHS and it hasn’t featured in the US’ inventory of foreign country trade barriers.
In reality, American corporations are already enthusiastically making inroads into the parts of our health service which have already been privatised. And let’s not forget the Trump administration’s “American Patients First” plan to end the US being “cheated by foreign countries” who enjoy lower drugs prices and to end the “global freeloading”. His health secretary blamed “socialised systems” for higher drugs prices in the US than elsewhere.
4. No solution for the Irish border
And finally, as with a number of recent Brexiter-backed reports, there’s no workable solution for keeping the Irish border as free flowing as it is now. There’s not much new here: more technological solutions, checks away from the border and “trusted trader” schemes. This all amounts to new infrastructure and a harder border than we have today – exactly what both sides in the Brexit negotiations agree should not happen. Without a solution to the Irish border, the EU won’t give us a Canada-style trade deal.
So this is the future Brexiters are planning for: rushed-through trade deals, lower food standards, exposing our NHS and no solution in Ireland. Hopeless all round.
