Daily Telegraph: Scrap tariffs to pile pressure on EU for best Brexit deal, ministers told

The government should put pressure on the EU by laying out plans for a ‘no deal’ Brexit scenario where it scraps all trade tariffs on imported goods, a group of right-wing economists has said.

Abolishing tariffs would drive down prices for consumers and stimulate competition by allowing cheap imports such as food and clothing to flood the British market, according to researchers at Policy Exchange.

The threat of the UK abolishing tariffs as part of its ‘no deal’ backup plan would also encourage Brussels to offer a more favourable trade agreement, the economists said.

“Many worry that pursuing unilateral tariff liberalisation would reduce the chances of achieving a strong UK-EU trade deal,” wrote Warwick Lightfoot, a co-author of Policy Exchange’s report, which was published today.

“Conversely however, a good deal is more likely if the UK has a realistic ‘no deal’ fallback.”

“Estimates suggest that even halving our tariffs could see a 2.6% boost to UK GDP and unilaterally abolishing tariffs could reduce household bills by £160 a year,” said Mr Lightfoot, a former special adviser to Conservative chancellors Nigel Lawson, John Major and Norman Lamont.

He added: “Brexit offers Britain an opportunity to become truly, once again, a global leader and champion of free trade.”

Theresa May has pledged to leave the EU‘s customs union after Brexit, which would allow the UK to set its own trade tariffs or scrap them altogether.

It comes after several EU diplomats warned privately that the aggressive stance adopted by Michel Barnier, the EU‘s chief negotiator, risked pushing the UK closer to walking away from the negotiating table.

Mr Barnier has demanded that the UK accepts all EU rules and regulations during the transition period, but Theresa May is under intense pressure from Eurosceptics in her cabinet to resist this.

British officials say they are still prepared to leave the EU with no deal if the terms are unacceptable.

Critics of scrapping tariffs warn it could damage key British industries such as farming and manufacturing, as they would be undercut by cheaper foreign competition.

They also say that tariffs are an important bargaining chip in trade negotiations, as the ability to lower them can be used as leverage in talks with other countries.

Under WTO rules, the UK could not pick and choose which countries would benefit from zero tariffs – the move would have to apply to all WTO trading partners, unless they had already signed a free trade agreement.

The bold proposals were endorsed by Alexander Downer, a prominent Eurosceptic and the outgoing Australian High Commissioner.

He said: “In the decades ahead all major economies should remove their tariffs and open their markets to competition.

“As the UK once again takes its place at the WTO it should take the opportunity to lead by example and remove its tariffs. Other economies should follow that example if they want to increase the prosperity of their people.”

Jacob-Rees Mogg, an influential Conservative backbencher, is also in favour of scrapping tariffs as he believes it would lead to cheaper food and clothes for low-income families.

Last year another right-wing think tank, Economists for Free Trade, claimed that abolishing tariffs would inject £135bn into the British economy each year.

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