Thursday, 16 August 2018
Tory Brexiteers Finally Come Up With Alt-Brexit Plan
It is more than two years now since the referendum on the UK’s membership of the European Union (EU), where of course we voted to leave. It has been a feature, during the referendum campaign itself and in the period since, that those who advocated Brexit haven’t come up with any sort of plan for life outside of the union. What kind of relationship with the EU do they want, if any at all?
Lofty talk of global trade deals and vague sloganising like ‘take back control’ have been the order of the day, but no specifics have been put forward by the loudest cheerleaders for Brexit in the Tory party. At long last, the penny seems to have dropped with these people, that it might be a good idea to have one. However, this plan looks to be purely cosmetic.
I suspect that this has been forced on the Brexiteers for two main reasons. Firstly, they don’t like the prime minister’s Chequers plan, as they see it as not really leaving the EU. Secondly, public opinion in Britain seems to be shifting to favour either a ‘soft’ Brexit or another referendum on the final agreement between the UK and EU, which could well result in a vote to remain in the EU.
Whatever the motivation, the Sun reports that the European Research Group (ERG) of Tory MPs are to ‘ambush’ Theresa May with a plan for a ‘clean Brexit’ just days before the Tory conference in September. A source told the paper: "This is about delivering the clean Brexit that people voted for. No concessions."
The plan is for the UK to have a Canada-style free trade agreement with the EU. But get this, only if the EU drops its objections to having a border on the island of Ireland. If the EU will not agree to this there will be no deal at tall, and the UK will trade on World Trade Organisation (WTO) terms, with the bloc.
Canada and the EU have signed the Comprehensive Economic and Trade Agreement (CETA), which is essentially a free trade agreement, removing most tariffs on trade in goods between the two trading partners and some more limited access for services. Border controls are still in place for people and goods, so if the UK were to adopt such an agreement, it would not solve the problems of delays with imports at UK and exports at EU ports or the situation with the border in Ireland.
I think the plan is hypothetical anyway, because I can’t see any way that the EU will back down on the Irish border issue. We could have a CETA type deal otherwise, but the ERG have ruled this out for some reason. So, we are basically back to a no deal Brexit, and falling back on WTO trade rules. Hardly much of a plan?
I don’t think any country in the world trades on WTO rules only, but of course in the longer run trade deals can be negotiated, like the Trans-Pacific Partnership which the government has explored joining or bi-lateral trade arrangements with other nations. All of which takes time and skilled trade deal negotiators though, neither of which we have much of.
Under WTO rules, each member must grant the same ‘most favoured nation’ market access, to all other WTO members. This means that exports to the EU would be subject to the same customs checks, tariffs and regulatory barriers that the UK and EU currently charge on trade with countries such as the US. The UK’s exports to the EU and other WTO members would also be subject to the importing countries’ most favoured nation tariffs. But tariffs all the same.
EU tariffs on WTO goods range from zero to 45%, with the average tariff being 4.8%, making British goods under such arrangements, less competitive in the EU marketplace. Of course, costs could be reduced by UK exporters, to cover the difference, but this will almost certainly mean cutting the wages of British workers. Alternately, businesses may relocate to the EU, where it is feasible and advantageous, taking British jobs with them.
The Alt-Brexit plan turns out to be really no plan at all, with even a Canada style deal out of the question if there is no agreement on keeping the Irish border open. It is just a long winded way of crashing out of the EU with no deal whatsoever, with all of the problems that will bring for the UK. And more time wasted on pointless negotiations.