Theresa May plays Deal Or No Deal (Photo by Jack Taylor/Getty Images)
No deal could be the worst deal possible for Brexit
The Prime Minister has argued that, when it comes to Britain’s relationship with the EU after Brexit, no deal would be better than a bad deal (I’m worried that some Conservative MPs actually think no deal would be better than a good deal, too). It is frequently argued that holding out the prospect that Britain might simply walk away from the negotiations if we aren’t offered a good enough deal is smart negotiating tactics.
But as the cross-party Commons Select Committee on International Trade argues in its report this morning, no deal could actually be the worst deal on offer. And self harm is never a good negotiating strategy.
Everyone is agreed that a ‘good deal’ would mean zero tariffs on British exports and imports from the EU, and no bureaucractic barriers to trade in goods and services. That would mean British exports remain competitive in our largest export market, imports from Europe stay cheap in the shops, and there are no queues for lorries transporting goods across the Channel or vast paperwork requirements for the contents of thise lorries. And UK service sector firms in finance, law and design would be able to work anywhere in Europe.
Crashing out of a deal – whether it’s membership of the single market (ruled out by the PM); membership of the European Free Trade Alliance (EFTA) as advocated by the Select Committee; or a bespoke free trade agreement – would mean relying on the World Trade Organisation to set our tariffs, and no provision for trade in the services that make up the majority of our economy. The Select Committee is right to argue that that would be a disaster, especially for farmers, but for many other industries too.
Committee Chair Angus MacNeill commented:
“Key industries will want to know as soon as possible what the likely outcomes are and their consequences. The Society of Motor Manufacturers and Traders predict that, under WTO tariffs, the price of an imported car would rise, on average, by £1,500. The National Farmers Union foresee a possible fall in farm incomes of €17,000 a year, if combined with the full abolition of direct support.”
The Select Committee has therefore urged the government to rule out ‘no deal’ and consider other options like EFTA membership, alongside Iceland, Norway and Switzerland, which is smarter tactics. One of the things I told the Select Committee when giving evidence for the TUC was that our experience is that good negotiating means widening the options on the table, rather than ruling almost everything out before the negotiations even begin. Whatever deal is done, we want to ensure it’s based on a level playing field with the rest of the EU on workers’ rights, consumer safety and environmental protections, rather than engaging in a competition over who can scrap the most rights in a race to the bottom.
Responding to the report, TUC leader Frances O’Grady said:
“This report is an important reminder of the price working people will pay if we crash out of the EU into WTO trading rules. It would raise the cost of living and make it harder for British businesses to sell their goods and services in EU countries.
“The committee is right to recommend keeping a level playing field with the rest of the EU on workers’ rights, consumer safety and protecting Britain’s environment. We don’t want British people to fall behind and become the second class citizens of Europe.”