The UK is now in a position of weighing up options and possibilities. Yet, we seem to be scared what these options present; viewing ourselves not as a nation free to grasp the opportunities that lie ahead but instead one about to jump off a cliff with our eyes fully closed. But it’s time we realised that the Chequers plan currently proposed is much more of a daunting cliff to jump off than the “no deal” option.
Leaving with no trade deal with the EU does have some consequences. First, we would trade with the EU on World Trade Organisation terms. WTO terms, which are adhered to by 164 countries from across the globe, are designed to provide a safety net ensuring all members can trade without discrimination. The EU will have to offer us the most favoured nation terms its other major trading partners enjoy.
The Uruguay Round, which in essence established the WTO, also halved most tariffs. As a result, the average tariff the EU would levy on our exports would be 4 per cent. Non-tariff border costs add just 0.1 per cent, according to the Swiss. This is dwarfed by the 15 per cent boost to our exporters’ competitiveness from movement of the pound since the referendum.
Naturally this would result in both winners and losers; a 10 per cent tariff on cars, higher still on food. But applying EU tariffs to our imports from Europe would yield £13 billion. Even if we slash those tariffs, as we should, it would leave enough to compensate the losers.
There are those argue that tariff-free access to the EU market was worth paying for. But Britain’s £10 billion net contribution is 7 per cent of the value of our exports. We have been paying 7 per cent to avoid 4 per cent, which makes little sense.
Negotiations must happen immediately to work with the United States and even join the Trans Pacific Partnership in order to negate some of the losses that would occur; especially in food and textile manufacturing. The essence of the no-deal however, is that we will be free and able to do such a deal the moment we leave the EU with the 164 other countries that trade on WTO terms.
However, listening to some of the fevered debates currently surround Britain’s future, one pictures motorways becoming lorry parks, food and drug shortages and grounded planes
But such arguments forget that how we control imports is entirely up to us. Lorries laden with fresh food will not be queuing for hours at Dover since Dover sees no need for new physical checks. Tariffs would be collected electronically like excise and VAT. If some firms initially fail to complete electronic customs declarations, HMRC will avoid delays by waving lorries through. If the French slow down Calais, the Dutch and Belgian ports want the business and will offer speedier service.
We will continue to authorise medicines we currently import – the EU can either reciprocate or put their patients at risk.
British Airways too, has dismissed fears of planes being grounded and continental airlines are selling tickets way beyond March 2019. It’s highly unlikely that Spain would not forgo 1.5 million British tourists a month.
The hostile non-cooperation envisaged in the current would be not only impractical but not legal. It contravenes the EU’s constitution, which requires it “to establish an area of good neighbourliness” with neighbouring countries; the WTO treaty which forbids discrimination against trading partners; and the new trade facilitation treaty which commits members to facilitate trade not obstruct it.
It’s time to stop underestimating the British people. Let’s focus on the options available to us and stop the scaremongering. A no deal Brexit does not leave us blindly jumping off a cliff but rather working within tried and tested parameters. Let’s approach this debate with a sense of rationality.