Trading with the EU under World Trade Organisation rules “isn’t the end of the world” said Theresa May, during Prime Minister’s Questions. She was quoting the WTO Director General Roberto Azevedo, the world’s leading trade diplomat.
Azevedo first publicly said those words in a Telegraph interview with me in November 2017. He also described UK-EU trade under WTO rules, with no formal free trade agreement, as “perfectly manageable” – discrediting the doom-mongers who claim Britain must bow to Brussels’ every demand as “crashing out” would be “disastrous”.
His words won’t surprise anyone with an open mind and knowledge of global trade. Britain conducts most of its trade outside the EU, largely under WTO rules. Such trade is growing, forms the majority of our exports and generates a surplus. Our EU trade, in contrast, accounts for well under half our exports, is falling and in deficit – despite us making massive annual EU contributions and accepting Brussels-derived rules to gain “single-market access”.
It is vital Britain declares “no deal” a realistic and acceptable outcome – not least as it’s true and, with the clock ticking ahead of March 2019, could well happen. Unless we prepare for “no deal”, we’ll be forced to accept any trade agreement the EU offers, however much it favours Germany, France and other member states.
May has lately played down “no deal”, keen to promote her Chequers proposals. Philip Hammond has pitched in, with yet another blood-curdling Treasury prediction that “no deal” would reduce GDP by 8 per cent over 15 years. The idea is to present Brexit as a choice between Chequers and “no deal” – hence the need to make “no deal” look ghastly. Such a strategy is misguided and, if the Prime Minister is to survive beyond next month’s party conference, she must rapidly change tack. Citing Azevedo across the Commons dispatch box suggests she just might understand.
For the truth is, Chequers is dead. Plans to accept EU rules on goods, a modified customs union and ongoing Brussels diktat, with no say, have been viciously rejected by May’s party. Boris Johnson’s description – “vassalage” and “miserable permanent limbo” – was right. Even arch Remainer Justine Greening, foreseeing a grassroots rebellion, says Chequers is “more hated than the poll tax”.
Michel Barnier, too, has dismissed May’s plan as “insane, illegal, and fraudulent”, seeing as it breaks single market rules. Perhaps the EU’s lead negotiator is bluffing and will suddenly relent if Britain makes even more concessions. All the more reason for the Prime Minister to abandon this Whitehall-contrived nonsense and take Chequers off the table, returning to the coherent vision she outlined in January 2017 at Lancaster House.
For the real choice isn’t between Chequers and a “no deal disaster”. It’s between “no deal” – “perfectly manageable” – and a free trade agreement with the EU. Barnier has long acknowledged that “Canada-plus” is acceptable, a comprehensive trade deal similar to the recent EU-Canada agreement. That could happen quite quickly. Trade deals are normally very complex, as both sides start with conflicting regulatory regimes. Not so here – the UK and EU have been trading freely for decades, so begin “perfectly aligned”.
A formal UK-EU trade agreement may be impossible before next March. I’ve long said the chances are limited, given required ratification by 27 member states and the European Parliament. So, if the EU won’t accept ongoing tariff-free trade, we go to WTO rules. That’s a good platform to strike a trade agreement with the EU once the tensions of Brexit itself have passed, helping Britain secure a better long-term deal.
As such, May must ditch Chequers and reassert, as she did at Lancaster House, that the UK is unequivocally leaving the single market and customs union. She should publicly stress our preparations for WTO rules, not least the ongoing HMRC upgrade that means required extra “no deal” border checks are possible from January 2019.
May should state the UK won’t put up customs posts across Ireland and that technological solutions are available and adequate – as both British and Irish border authorities have said. And while declaring “no deal” on trade is fine, May must press hard for a basic “withdrawal agreement” on issues such as trade facilitation and airspace – stressing the £39 billion “divorce payment” is contingent on rapid progress.
The EU is legally obliged to extend such non-contentious administrative protocols to the UK, as it has to almost all other non-EU countries. To refuse would break EU treaties, WTO rules and make the eurocrats a global laughing stock.
The world understands trading under WTO rules. It wouldn’t understand the deliberate destruction by Brussels of UK-EU commerce, costing member states billions of euros in profit and countless jobs. And neither would EU voters.
So Chuck Chequers, Theresa! Or be replaced by someone who will.
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