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Analysis

Hidden clause in May’s deal means less control over trade

by Nick Kent | 30.11.2018

The bare-bones customs union Theresa May has agreed to as part of our ‘backstop’ deal means the UK could be dragged into damaging EU trade wars against its will after Brexit. And remember, this customs arrangement is seen as the basis for our future trade deal with the EU too.

Hidden away in an obscure clause in May’s Brexit deal is a provision that means that the UK could be unwillingly dragged into EU trade disputes with other countries. Not only is this yet another loss of sovereignty, it could have big implications for the UK’s chances of reaching good trade deals with other countries after Brexit at a time when global trade disputes are escalating dangerously.

You have to search for it, but in Article 4 of Annex 2 to the Northern Ireland Protocol of the Withdrawal Agreement there is a requirement on the UK to adopt the same trade defence measures as the EU. This means that if the EU was in dispute with a third country, such as China or the US, the UK would be bound to follow the EU’s policies but would have no vote on them.

The EU has an active trade defence policy. It seeks to protect European businesses and consumers from unfair trade practices by other countries. The EU can adopt measures, such as imposing penal tariffs on imports of goods that are being dumped at unfairly low prices, lodging a protest with the World Trade Organisation’s (WTO) dispute resolution system, or increasing tariffs on goods whose production has been unfairly subsidised.

As a member of the EU, the UK has benefited from trade defence measures, such as those to protect our steel industry from unfair Chinese competition. But outside the EU, the government wants the UK to be in charge of its own trade policy. That means being able to reach deals with other countries, and that means taking control of trade defence policy. That is why the government’s Trade Bill makes provision for ministers to do so after Brexit.

The EU is currently involved in some significant trade disputes. Most of its anti-dumping and anti-subsidy measures are directed against China. But it is also in an important dispute with the US about Donald Trump’s decision to slap extra import tariffs on metals on the grounds of “national security”. At the moment the UK doesn’t just have a say but also a vote over such EU interventions. In May’s backstop customs union (which could become permanent), we will have the right to be consulted but crucially no vote.

Not only might the UK object to being bound by EU trade defence measures in a particular dispute after Brexit, there are also implications for negotiating trade deals with other countries. Trump’s trade policy makes the US a tough partner but the US is the UK’s largest trade and investment partner – apart from the EU – so we will want to try and reach an agreement with it. Finding ourselves involved in a trade dispute between the EU and the US might seriously inhibit our chances of getting such a deal. Similar problems could emerge in talks with China and other major trading nations.

This is yet another example of why, as former Brexit minister Dominic Raab has admitted, the prime minister’s bad Brexit deal is worse than remaining in the EU. There is no excuse now for Parliament not giving the people the chance to decide whether staying in the EU is better than May’s botched Brexit.

Edited by Luke Lythgoe

2 Responses to “Hidden clause in May’s deal means less control over trade”

  • But of course, if there is a People’s Vote, how are we going to organise ourselves so as to be able to persuade those who voted Leave , not only that it is in the national interest to vote to remain in the EU , but to convince them to do so with enthusiasm ?

    Given the state of the popular press in the UK and the financial resources of the Brexiteers, that is going to be a major major task.

  • Joseph Mullen

    3:07 AM (1 hour ago)

    to i

    The reporting of a secret plan to unilaterally withdraw from the Backstop Agreement (Independent 30/11) is another devious attempt to subvert any shred of good faith in May’s/ Raab’s Brexit office. When taken in conjunction with the Charity Commissioners withdrawal of the Brexit-sponsored Institute of Economic Affairs flagship paper on future ambitious trade policy (deemed to be potentially in breach of the IEA charitable status requirement of impartiality); the professional integrity of the ERG and the Brexit Office of the Raab era, is seriously undermined. How could Barnier and others believe anything they say?
    Joseph Mullen (Dr)