Thursday 14 February 2019

If Britain went back to free trade we should gain and the EU would lose a lot

A very appealing possible Brexit, suggested by Liam Fox, would mean Britain leaving the EU with no customs deal and levying no tariffs on imports into the UK. The EU would levy small WTO tariffs on our exports. We would import goods from around the world without tariffs and this would reduce EU exports to the UK dramatically, because they could not compete with cheap Chinese prices. This makes no deal seem pretty darn attractive to me but would be very scary for the Europeans.

Unfortunately this will not happen and instead the EU will probably make concessions on the backstop to defuse the Brexit crisis, and a deal will be made allowing the European
Court to have jurisdiction over the UK, the continuation of the acquis, fishing quotas and many other undesirable things, plus a huge divorce settlement. A pointless sort of Brexit in name only.

Writing rapidly I forgot to mention the most important thing about what Olly Robbins was overheard saying in the bar the other night. He said that he, and presumably his (political) mistress, see the backstop as "a bridge" to a long-term trading relationship between the UK and EU, which sounds like Britain remaining in some version of the customs union forever. 

Which is what Jeremy Corbyn and many (former) Remainers want. The British government denies this but no-one believes the government or Theresa May any more.

In fact something similar to a customs union makes good sense to Britain, even at the cost of following most EU rules, but the price would involve either free movement or a lot of other painful things.
Unless the UK remains in a customs union with the EU there have to be customs barriers of some sort in Ireland. This is normal and nothing to worry about. 

A hard border does not breach the Good Friday Agreement but is what Theresa May has pledged will never happen and what the Southern Irish Prime Minister does not want, though if it happens he will blame it on the British.

He may have a hard job making that stick if the British do not erect barriers and the EU force the Irish to do so, but whom the Southern Irish blame is not important.

However thee is an alternative - the customs could be levied on the big importers away from the border and the small traders and farmers who make up 80% of the cross border trade could be exempted. This was suggested in a European Parliament report “Smart Border 2.0” prepared by Lars Karlsson, former head of the World Customs Organisation.

If we copy Norway's example we shall have almost complete regulatory alignment with the EU. In fact I'd rather like us to copy the Norwegian model completely for the time being, even though it means free movement of people. Norway is not in the EU customs union and does not have to share its fisheries with the EU. The Swiss have regulatory alignment but put big tariffs on European agricultural goods.  

Some think leaving with no deal is likely but John Rentoul in The Independent thinks the hard Brexiteers have lost already.  I fear he is probably right though I hope I am wrong.

The next decision point will come in two weeks, when Yvette Cooper, the real leader of the opposition, is likely to bring back her plan to legislate against leaving without a deal. This time she is likely to succeed. Then the Tory Eurosceptics will find the no-deal option shut in their face and they will have to decide whether to back the prime minister’s deal – with whatever cosmetic amendments have been agreed in Brussels by then – or to allow parliament to seek to delay Brexit.
Then Theresa May’s zigzag may finally end, and she might even get her deal through.

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