What does ‘no deal is better than a bad deal’ mean? Theresa May speech 17.1.17
In January Theresa May set out her 12 point plan for Brexit following the referendum (June 2016) where 52% of the UK public voted to leave the EU. Both the Conservative and the Labour party have accepted this democratic decision. The Liberal Democrats are campaigning for the right to a second referendum on the deal in two years time. If the proposal is rejected at this point it would reverse the decision to leave.
What does a ‘no deal’ look like?
The EU is the largest economy in the world with 500 million customers. 3million UK jobs are currently tied to EU membership accounting for 44% of Britain’s exports. Four freedoms are integral to membership of the EU single market.
The ‘four freedoms’ of the European Union are the freedom of movement of goods, people, services and capital over borders. These key principles lie at the heart of the EU and underpin the single market, originally known as the common market. The freedoms, which are enshrined in EU treaties, aim to remove trade barriers and harmonise national rules at a EU level. Express 2016
Chancellor Angela Merkel and European Council President Donald Tusk have repeatedly stated that the UK cannot be in the single market without acceptance of the four freedoms and that includes free movement of people. Norway, Iceland and Liechtenstein have access to the single market from outside the EU on the basis that they accept the four freedoms and this includes oversight by the European Court of Justice to ensure that trading regulations and standards are maintained.
Theresa May has made immigration control her red line which means that any negotiated access to the single market would not incorporate free movement under the four freedoms. She has also stated that she wants the UK to be removed from the European Court of Justice and from the European Convention on Human Rights which is monitored by the ECHR. It is difficult to see how her negotiating team can gain frictionless access to trade with the single market whilst drawing so many red lines. From this standpoint, the UK is heading for a ‘hard Brexit’ which means that we walk away without access to the single market.
Keeping substantial access to the single market and having strict immigration controls are mutually exclusive for the EU: achieving both is highly unrealistic.
If the UK remains part of the EU Customs Union then trade between the two will continue to be tariff and custom free. However, Theresa May has stated that she wishes to withdraw from the Customs Union which will result in border controls to ensure compliance with tariffs and conformity standards. Exporters from outside the EU (which we will be after Brexit) have to ensure their goods conform to EU standards and must provide evidence of their so doing. This requires putting the goods through a recognised system of ‘conformity assessment’ – putting in place a Mutual Recognition Agreement (MRA). To date, this has been carried out on our behalf by the EU but we would need to put our own monitoring systems in place after Brexit. Remaining within the Customs Union prevents the UK from making our own trade agreements which would disappoint many who voted for Brexit.
The rules of the customs union require member states to let the EU negotiate on their behalf, rather than trying to cut their own deals.
If it is not possible to make a trading deal which meets all parties red lines, then the UK will fall back on World Trade Organisation Rules (WTO) after March 2019 (following any agreed transition period).
Trade in the EU generally involves no or low tariff rates. Goods and services can move freely within the union without bureaucratic checks. 80% of UK trade involves the export of services and in particular financial services which require a banking passport to trade inside the EU. Without access to the market, it would be necessary for companies who wish to continue trading without interruption to set up offices inside the EU. That would move UK jobs abroad and could see the breakup of London as a major financial centre. Under WTO rules Britain would then have to make deals with individual countries and these deals would involve tariff checks and border controls.
Under WTO rules, which were set up to facilitate global trade, a country must give the same degree of market access to all WTO members as it gives to its “most favoured nation”. In other words there can be no special favours in the absence of a proper trade deal.
The UK trades with lots of countries under WTO rules. But the terms are far less favourable than trading within the single market, which is almost frictionless. The sudden imposition of WTO rules is likely to mean tariffs and customs checks, leading to increased financial and bureaucratic costs for British firms buying and selling goods from abroad. bbc.co.uk/news/uk-politics
The need to have border control would adversely affect access between Northern Ireland and the Republic who are still in the EU. This would continue to be a ‘soft border’ if access to the Customs Union continued after Brexit but without access, this border could be used to smuggle cheaper EU goods into Northern Ireland and would require monitoring. WTO tariffs can be set a lot higher as shown in this example.
It poses a hypothetical example: a Northern Irish farmer who exports meat and dairy to Ireland and other EU countries, tariff and paperwork free.
In the event of an “unplanned Brexit”, the farmer “would face tariffs of between 30% and 40% on meat and dairy produce,” which would make the farmer’s goods uncompetitive.
Checks at the border would be a huge bureaucratic exercise which would involve specialised computer systems and a lot of staff.
Neither the UK, Ireland nor the EU wants hard borders and customs checks between Northern Ireland and the Republic. But it is difficult to see how this could be avoided if no deal was reached. bbc.co.uk/news/uk-politics
Basically, if the UK leaves with no deal then we have to negotiate new, bilateral deals under WTO rules with all our current trading partners.
On exit, the UK would no longer have any other trade agreements because its agreements with other countries are negotiated through the EU. Although they are so-called ‘mixed agreements’, which need the consent of member states, none would be applicable to the UK without renegotiation upon withdrawal.
In relation to the US, China or Asia we are minnows, so getting the ‘best deal for Britain’ is going to be difficult, as you will see in the video below. Not to mention the lack of experience within our government circles in dealing with long and complex negotiations as described by Jill Rutter, Institute for Government’s Brexit Programme Director;
…despite the creation of a new trade department, the civil service and ministers are not even close to being ready to negotiate – let alone implement – new global trading relationships. Whitehall is not set up to do trade well. Not only does it currently lack the necessary expertise but its standard ways of working – generalist, secretive and unwilling to make difficult trade-offs – are all the enemies of doing trade policy well. Ministers will find that taking back control of trade also means taking back responsibility for some very difficult political choices – and they need to be ready to make and justify them.
There is presently no security for the 3.2 million EU citizens (5% of the population) living and working in the UK nor for the 1.2 million Brits living in the EU. Mrs May has stated that residency depends on the outcome of the negotiations. Once we leave the EU in 2019 UK pensions will be frozen and there will be no automatic access to free healthcare across Europe as this depends upon a reciprocal arrangement with the NHS. A recent ITV report suggested that many may be forced to sell up and come back to the UK and quite possibly fall to the State for support, just as productive workers move across to the EU to continue trade.
Theresa May has stated that the Conservatives will cut net migration to the tens of thousands a promise which has been pledged and broken in the past. The table below shows that migration from non-EU countries is roughly equivalent and we have always had total control over non-EU migration. The fact is that we need these people to keep our economy going and migrants are net contributors to the British economy.
Dominic Raab, MP for Esher and Walton since 2010, has voted consistently with the government since 2015.
- Wants hard Brexit
- Removal from Universal Declaration of Human Rights to be replaced by a UK bill of Human Rights.
- See Dominic’s voting record below
Dominic Raab has consistently campaigned for hard Brexit which is out of step with his constituents in Surrey who voted 52.2% remain. Before entering parliament he was a lawyer with a keen interest in human rights. He is the son of a Czech immigrant who was given asylum in the UK in 1938 and has a Brazilian wife. In his Meritocrats-Manifesto 2014 Dominic argues that those given refugee status should be given extra support.
Dominic Raab was absent for two votes where the majority of the House voted to stay in the EU. He voted against giving EU citizens in the UK the right to remain and against bringing 3,000 refugee children to the UK despite the fact that his own father came to the UK as a child refugee.