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UK frictionless trade with EU ‘not possible’ after Brexit

10/07/2017

Chief negotiator says EU’s refusal to grant ‘single market’ access piecemeal may not have been fully understood in London

The UK’s insistence on leaving the European Union’s single market and customs union will make frictionless trade with the EU impossible after Brexit, EU chief Brexit negotiator Michel Barnier warned yesterday.

Addressing an EU business forum in Brussels, Barnier said the UK’s “red lines” for a future trade relationship meant Britain was definitely leaving the single market and the customs union, and only membership of both allowed “frictionless” trading arrangements, Reuters reported.

Barnier said the EU’s refusal to grant single market access piecemeal and insistence on control of standards in the single market may not have been fully understood in the UK.

“I have heard some people in the UK argue that one can leave the single market and build a customs union to achieve ‘frictionless trade’ – that is not possible,” he said.

Barnier said time was tight for a deal by the time Britain automatically leaves the EU in March 2019. He said he was ready to handle a failure of talks and “no deal”, but that would be damaging, especially to the UK, and he saw “no reasonable justification” for it.

“A fair deal is far better than no deal,” he said, in a playful reworking of UK Prime Minister Theresa May’s controversial assertion that “No deal is better than a bad deal”.

He called for rapid agreement on priority issues in talks begun last month to build a “climate of trust” so that trade negotiations could begin as soon as possible, Reuters reported. But in urging businesses to prepare for Brexit now, he stressed that whatever deal was done would carry significant consequences.

“A trading relationship with a country that does not belong to the European Union obviously involves friction,” Barnier said. He cited disruption to cross-border traders processing value-added tax (VAT) and a need for all EU imports of animals and animal products to be tested at borders.

Meanwhile, the EU’s conclusion of a free trade deal with Japan on yesterday was hailed by EU leaders as a sign of what the combined economic power of the European bloc can achieve  – and of what Britain will miss when it leaves.

European Council President Donald Tusk said: “In the context of the discussion about Brexit, we have heard statements claiming that it isn't worth being in the European Union, as it is easier to do global trade outside of the EU,” Reuters reported. “Today we have shown that this is not true.”

EU Agriculture Commissioner Phil Hogan said the deal, which will open Japan to European food and drink exports, “shows the importance of size in global trade negotiations; no individual member state could ever hope to achieve what the EU can achieve together,” he added.

The EU hopes it will take effect in early 2019, just when Britain is leaving. Reuters said the UK may seek to emulate its benefits for Britain’s Scotch whisky and other important exports markets to Japan.

 

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