Business leaders have today put forward a compromise proposal for
future trade with the European Union that would significantly
reduce barriers to trade with the bloc while still allowing the
UK to pursue trade deals with other countries.
In a new report, the
Institute of Directors puts forward a partial customs union
covering industrial goods and processed agricultural products
that would help maintain the competitiveness of some of the UK’s
key industries, while also allowing future governments to fulfil
the referendum promise of an independent trade policy, including
in areas such as tariffs on agricultural products like beef,
oranges and sugar from developing nations.
Given the UK’s unique starting position of full integration with
the EU, the IoD begins by agreeing with the Prime Minister that
the Government should not be bound by existing precedents and
must look to establish a bespoke deal with European counterparts.
The business organisation suggests that an overall bilateral
preferential trade framework could use a customs union similar in
scope to Turkey’s agreement with the EU as a base upon which to
build a broader free trade agreement. Turkey and the EU are
currently seeking to improve their agreement, and the IoD argues
the UK should take some of the proposed changes on board when
negotiating its own customs arrangements with the bloc.
In the paper, Customising Brexit: A
hybrid option for a UK-EU trade framework, the IoD
argues that a customs union covering all industrial goods and
processed agricultural products would:
- facilitate the flow of goods across UK-EU borders
- remove the need for UK manufacturing to face costly ‘rules of
origin’ that could render a tariff-free deal meaningless for many
companies
- in its partial scope, combined with the UK’s inevitable exit
from the EU’s Customs Union and its Common Commercial Policy,
allow the UK to forge its own trade agreements – both alongside
EU negotiations and with those countries the EU has not yet
pursued
- significantly help with transitioning existing EU trade
agreements to apply to the UK after the implementation period has
ended
- allow the UK to maintain full control over agricultural
tariffs, meaning it could either reduce these unilaterally or
through negotiated trade agreements with third countries – duties
on agricultural goods act as an important lever in negotiations
due to how high they usually are
- allow the UK to maintain a broadly distinct trade remedies
policy from the EU - it would not be expected to automatically
apply all EU anti-dumping or safeguard measures
The IoD points out that the EU is already taking steps to give
Turkey more of a say in EU trade policy in those areas directly
covered by its customs union deal, as well as inserting clauses
in its trade agreements to ensure third countries negotiate
reciprocal arrangements on tariff preferences directly with
Turkey. The UK could reasonably expect the same treatment, and is
in fact in a stronger position, with many of those third
countries already wanting to pursue deals with it after Brexit.
, Director General of
the Institute of Directors, said:
“As a fundamental principle of European Union membership, the
UK’s decision to leave means that leaving the Customs Union is
less a matter of choice but rather one of necessity.
“For the welfare of Britain’s businesses, prolonging its
operational effects during the transitional period is no doubt
crucial. In the long-term, the UK should consider remaining in a
narrowed customs union to mitigate the disruptive effects for
business and ensure manufacturing remains competitive and
attractive for inward investment. In the interest of our members
and the wider business community, while respecting the decision
taken by the people in June 2016, we feel this is the best way
forward.
“It’s as simple as this – there was no Canada deal before there
was a Canada deal, and no Turkey deal before there was a Turkey
deal. We must be ambitious in undertaking the most important
negotiations this country has embarked on for decades and push
for a bespoke solution.”
Allie Renison, author of the paper and Head of Europe and Trade
Policy at the Institute of Directors, said:
“There are some important choices to be made about our future
economic relationship with the EU, but sadly this debate has not
fully come to fruition. Even now, 20 months on from the
referendum, there is still much talk and much less action.
“It is crucial that this debate be focused on outcomes –
something that both the Government and the EU would do well to
remember. Inevitably every negotiation rests on a series of
compromises, and our proposal could provide the foundation for
one that would minimise disruption while ensuring the UK’s
ability to pursue new opportunities.”
Full report –
Customising Brexit, A hybrid option for a UK-EU trade
framework
