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Expert View

‘Independent’ Brexit trade dream gets holed below waterline

by David Hannay | 01.03.2019

David Hannay is a member of the House of Lords and former UK ambassador to the EU and UN.

The cost of attempts to bolster the government’s “no deal Brexit on March 29” gambit continue to mount inexorably. Billions of pounds of tax revenues are being squandered on no-deal preparations; businesses are being forced to spend large sums of potential profits on contingency planning for an outcome they have pleaded with the government to avoid; inward investment is drying up and factories and head offices are migrating to elsewhere in the EU.

And now leaks of the government’s proposed tariff schedules, which would kick in if we were to leave without a deal on March 29, reveal a plan which would inflict additional damage, including holing beneath the waterline the government’s post-Brexit independent trade policy.

It appears that the government, without conducting any serious consultation with industry, is proposing to remove almost all tariffs which currently apply to imports from outside the EU. A few exceptions for particularly sensitive industries such as steel, ceramics and cars will not be much consolation to the rest.

By revealing that we attach no importance to protecting most of our industries, we will be tipping our hand in the negotiations with third countries still to come. Why should these third countries give our exporters better access to their markets if we seem so desperately keen to expose our own? Trade negotiators are hard-headed people. They will assume that we are so keen for a deal that they need not offer as much in return for concessions we had signalled we were ready to give away for nothing.

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On top of that, protection is to be maintained for beef and sheep farmers and dairy producers. Understandably so, since these producers are likely to be losing their most profitable overseas markets, which are in the other member states of the EU. WTO rules will require the imposition of high tariffs on imports to Europe from the UK where currently there are none.

Moreover those same WTO rules will require us to impose tariffs on goods being traded between the two parts of Ireland. And where will those tariffs be collected? At the border, of course, since those magic, technical alternatives of which the Brexiters routinely boast do not actually exist.

This Mad Hatters Tea Party, into which the Brexit negotiations have descended in their closing stages, will continue until the government finally recognises that the prospect of no deal, however lacking in credibility, is inflicting damage on ourselves without giving us any noticeable leverage in Brussels – and that it is the government’s duty to do everything in its power to avoid such an outcome.

That is the view expressed now by both Houses of Parliament, to which the government is not paying the blindest bit of attention. Will they do so if a short postponement of the March 29 deadline is agreed? Not necessarily. The prime minister is already emphasising that another cliff edge awaits at the end of that period. And she does not sound as if that prospect appals her, as it should do.

In ten days time all this will be put to the test in Parliament. We must hope that decisive action will be taken to rule out, in statute and not just in words, the disaster of a no deal Brexit. The government’s own calculations of the additional cost on lost economic growth if we went over that cliff are now in the public domain for all to see. It is surely high time that the electorate was asked what it thinks of all this.

Edited by Luke Lythgoe

5 Responses to “‘Independent’ Brexit trade dream gets holed below waterline”

  • It is all well and good to talk about the damage to economy in percentage terms as a result of ‘No Deal’, but as I have stated before it needs to be earthed into the £s for the average the UK citizen per annum, not 9% on the overall economy. The only document that I have seen do this was the Treasury report in 2016. We need something up to date in a readily understandable format if we want to wake people up. If my memory serves me correctly its about £5,000 a person, which is a lot compared to the average contribution of £30 pa; a factor of >100. It wouldn’t change the minds of the ‘Brexit at any cost brigade’, but thankfully we don’t need to.

  • This is an important article and I am sure it is accurate; however, it fails to mention that zero tariffs has always been an important position of a significant portion of hard Brexiteers. A few months after the vote, a “Brexiteer economic analysis” was published (I regret I forget the author’s name) that contained no analysis of actual data but essentially reprised Cobden’s anti-Corn Law arguments of the early 19th Century, to the effect that Britain would be better off with no tariffs whatever, benefiting from the flood of cheap goods that it would receive. Of course, this would not have been the position of many working class Brexiteers, those who thought they were voting for the green and pleasant land, farmers, etc., but there was always a great gap between the real ideological voices of the Brexiteers and their voters. And, of course, they rhetorically join hands with Trump, who wants to sell chlorinated chicken, hormone beef, US-standard automobiles, etc. into Britain under the magical future trade deal with the US.

  • The Labour MPs who are threatening to vote for May’s deal must be dissuaded. Are they going to vote to make their constituents poorer, having to eat substandard food, and having to buy health insurance (when the NHS is taken over by the US). What is the matter with these people?. They are elected as representatives, not delegates. BREXIT IS A PROJECT OF THE RIGHT FOR THE RIGHT.