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No deal would be no problem for the UK

Contrary to scare tactics of professional Remainers, trading under WTO rules would be absolutely fine

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The Chequers summit, where British Prime Minister Theresa May outlined her strategy for leaving the EU, sparked the resignation of two of the Cabinet’s leading Brexiteers. Unveiling the actual details has made matters even worse. That’s because the government’s long-awaited Brexit White Paper makes a nonsense of May’s previously declared “red lines”, betraying the June 2016 referendum result.

The UK apparently accepts that disputes over trade with the EU should be referred to the European Court of Justice for interpretation — an EU-dominated court. May’s tortuously complex Facilitated Customs Arrangement, meanwhile, will have a “phased” implementation. So Britain may stay wholly inside the EU’s protectionist customs union, our consumers paying over the odds for a host of imports, until mid-2022. EU workers, we’re told, will enjoy visa-free travel for “temporary” employment, with businesses able to “move their talented people” across the Channel at will, upending promises to take back control of our borders.

According to some reports, the White Paper can’t now be altered because it was “cleared with Merkel” ahead of Chequers. And this is just the UK’s opening pitch to the European Commission — so there will be many more concessions to come.

May faces a Commons rebellion next week, after Eurospectic Tory MPs tabled a series of amendments to the government’s trade bill, warning the prime minister had “broken their trust”. The resignations of David Davis and Boris Johnson guarantee that backbench dissent will now spread way beyond Jacob Rees-Mogg and his 60-strong European Research Group.

Trading outside the EU

So, even if she can convince the EU, May lacks the votes to get her plan through Parliament. As such, Downing Street officials are touting for support from Labour, the Lib Dems and the SNP. But, when it comes to it, what opposition party could resist the chance to bring down the government — especially those determined to cause maximum havoc, in the hope we “just cancel Brexit” or reverse it with a “People’s Vote”?

I’ve long argued the most likely outcome of these tortuous Article 50 negotiations is the UK leaving the EU with “no deal”. With Parliament close to implosion, as the clock ticks towards the March 2019 deadline, that reality is now looming into view.

Leaving the EU with no free trade agreement means Britain trade instead under World Trade Organisation rules — which is absolutely fine. Britain already 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, even within the much-vaunted single market, is falling, accounts for well under half of exports and generates a deficit — with Britain making massive contributions and accepting countless anti-democratic rules for the privilege of “access”.

Unless we embrace the idea of “no deal”, the UK will be forced to accept whatever trade agreement the EU offers ahead of March 2019, however much it favours Germany, France and other EU members.

Behind the scenes, the necessary preparations are under way. The National Audit Office recently concluded an ongoing HMRC (Her Majesty’s Revenue and Customs) upgrade means Britain’s revamped customs service should be ready to cope with the extra checks as a consequence of “no deal” from January 2019. “No deal” means we can withhold the proposed €39 billion (Dh167.3 billion) EU “divorce bill” — spending it at home instead, providing a major boost to the economy. And trading under WTO rules, charging relatively low reciprocals tariffs, generates additional billions for Britain — seeing as “they sell us more than we sell them”. Such funds could support those sectors of the economy where WTO tariffs are higher.

Brexiteer backbenchers and ministers must face down the rhetorical nonsense being used to undermine “no deal”. There is no way “planes will fall out of the sky”. The UK is a massive aviation player and landing rights are reciprocal. Any necessary UK-EU agreements will be forged and, if they aren’t by next March, memorandums of understanding will extend current practices until they are.

And as for the Irish land border — that already copes with differing currencies, duties and other tax rates. There is absolutely no need for physical “hard border” posts that might inflame sectarian sensitivities if we leave the customs union. The EU won’t erect them — and nor will Dublin or London. Yet May has allowed Irish border falsehoods to warp her entire Brexit strategy.

Many MPs fear “no deal” — because Downing Street has consistently left unchallenged the scare tactics of “professional Remainers”. From big businesses seeking ongoing EU protection to Brussels-funded think tanks, many claim “no deal” would be a “disaster” to undermine Britain’s bid for a clean break. But it’s just not true.

— The Telegraph Group Limited, London 2018

Liam is a British economist, journalist and broadcaster who writes a column in The Telegraph.

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