What will no-deal Brexit look like?
Boris Johnson sets 15 October deadline to finalise trade deal or UK will ‘move on’
Boris Johnson’s insistence that there will be no trade deal with the EU if talks do not conclude by mid-October has pushed trade deal negotiations into the home stretch.
The prime minister has attempted to play down concerns, claiming that a no-deal scenario will be good for the UK, giving it full control over its “laws, rules and fishing waters”, the BBC says.
“We will have the freedom to do trade deals with every country in the world,” Johnson said. “And we will prosper mightily as a result.”
However, with the PM admitting that Britain still needs to find “sensible accommodations” on issues such as flights, lorry transport, or scientific cooperation, critics of a no-deal say the UK is now careering towards disaster.
So if the October deadline passes and the UK sets a course for no-deal, what might that look like?
What has happened?
In June, Johnson said there is “no reason” why the outline of a Brexit deal could not be sealed by the end of July, after he asked EU leaders at a video summit to “put a tiger in the tank” of stalled talks.
But this deadline passed, with Johnson this week informing the EU that a free trade deal must be done by 15 October, otherwise the UK will “move on”.
Sky News reports that the PM has said Britain is entering the “final phase” of negotiations, which resume on Tuesday, and that there is “no sense in thinking about timelines that go beyond that point”.
Whether or not this deadline will be met remains to be seen, but the UK government has previously responded bluntly to calls for a Brexit transition extension.
What has the UK said?
The UK is not willing to back down on fishing rights, so-called level playing field guarantees, governance of the deal and the role of the European Court of Justice, with each of these issues causing considerable stalling in negotiations.
But No. 10 may have damaged its chances of securing a deal this week by proposing legislation to override key parts of the Brexit withdrawal agreement – a move which Environment Minister George Eustice claimed on Monday morning would merely tidy up some “legal ambiguities”.
The Internal Market Bill, which is due to be published on Wednesday, is expected to “eliminate the legal force of parts of the withdrawal agreement” in areas relating to state aid and Northern Ireland customs.
European Commission President Ursula von der Leyen called for Britain to stick to the terms of the original withdrawal agreement, describing it as the UK’s “obligation under international law”.
With talks progressing at an agonising pace, EU chief negotiator Michel Barnier is due to touch down in London to meet his UK counterpart Lord David Frost today, according to Sky News.
And despite the talk of no deal, Johnson has stated that “there is still an agreement to be had” and his government “will continue to work hard in September to achieve it”.
What does the EU want?
Speaking to the Today programme on BBC Radio 4 earlier this summer, Nathalie Loiseau, the French MEP and former Europe minister to Emmanuel Macron, said that the EU is “ready either for an agreement or for a no-deal”.
She added that the bloc is “getting prepared more actively to a no-deal considering the circumstances”.
The EU wants the UK to agree to follow its rules on fair and open competition so British companies given tariff-free access to the EU market can’t undercut their European competition.
It has warned that the UK won’t be allowed a “high-quality” market unless it signs up to EU social and environmental standards. The bloc also wants the European Court of Justice to have legal powers to police any free trade agreement reached between the UK and EU.
Tariffs and quotas
If a deal can’t be agreed with the EU, then the UK will default to WTO terms from 1 January 2021. Every WTO member has a list of tariffs and quotas that they apply to other countries.
The UK would have to apply tariffs and quotas to goods coming into the country from the EU, and the EU would apply its “third-country” tariffs and quotas to the UK.
That means the UK would be hit by big taxes when it tried to sell products to the EU market. The bloc’s average WTO tariffs are 11.1% for agricultural goods, 15.7% for animal products and 35.4% for dairy.
British car makers would be hit with a 10% tariff on exports to the bloc, which could amount to €5.7bn per year. That would increase the average price of a British car sold in the EU by €3,000.
Currently, trade between the UK and EU is tariff-free. But the Confederation of British Industry (CBI) predicts that no-deal would mean that 90% of the UK’s goods exports to the EU would be subjected to tariffs.
Without a deal, it would have to trade with every WTO member in the world on the best terms it offered any member, including the EU.
In the event of no-deal, the EU would begin imposing border checks on UK products from 1 January 2021, even if the UK hadn’t changed any of its rules and regulations.
The UK government has admitted it expects massive border queues and persistent delays for six months or longer in the UK if it leaves without securing a deal.
France has said it plans to immediately implement post-Brexit border controls at its ports in the event of no-deal. The UK government has estimated that 50% to 85% of lorry drivers would not have the necessary documentation to enter the EU via France, says The Washington Post.
HMRC has estimated that British businesses would spend £15bn extra a year on paperwork in the event of a “no deal” Brexit, reports the Financial Times.
A small number of pro-Brexit economists say that most trade around the world is done on WTO terms, and the UK would still have access to the EU market, says https://www.google.com/url?q=https://www.euronews.com/2018/12/19/how-would-uk-eu-trade-be-affected-by-a-no-deal-brexit&source=gmail&ust=1599575603545000&usg=AFQjCNGdT1RJ-bN7TfhZ_YXRx79GlGV7Eg”>Euro News.
But many other economists and academics say that crashing out and trading on WTO terms would be damaging for the British economy.
The head of the WTO has warned Johnson that standard trade terms “would slow Britain’s recovery from coronavirus, saying that sticking closer to present arrangements would be better for jobs”, The Times reports.
Roberto Azevedo, director-general of the WTO, said while WTO terms were “not a catastrophe”, they “will impose a number of adjustments and those can be painful, particularly for some sectors”.
The UK exports nearly half (46%) of its goods to the rest of the European Union, making it by far the largest UK export market. And over half (53%) of all UK imports came from the EU in 2018.
The UK’s economy relies heavily on its service industry, with British service providers making up 79% of the UK economy and accounting for 45% of exports. London’s position as a global financial hub would be threatened.
The UK crashing out of the EU with no deal at the end of 2020 isn’t just bad for UK-EU trade, it’s bad for UK trade full-stop, say some critics.
The UK could lose continuity of trade relations with many of the 72 countries that have trade deals in place with the EU, including Canada and Turkey.
Britain is in talks to continue its participation in those agreements, and has so far the government has secured continuity agreements with around a dozen countries.
No-deal would set the UK free from rule-taking
While a no-deal Brexit would mean the UK is no longer subject to EU rules, it would not mean that every rule the UK follows is made in the UK, says Full Fact.
“We would remain members of international organisations like NATO and the WTO, and membership of these things means following collective rules or decision-making,” says the fact-checking site.
And the UK will still be subject to the European Court of Human Rights after Brexit. This court isn’t an EU body, and the UK will still remain a member after the transition period ends.
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