“I propose that we aim for a trade agreement covering all sectors and with zero tariffs on goods” – Donald Tusk, President of the European Council, 16th March 2018
The above sentiments have in the last week been echoed by the EU’s Chief Negotiator, Michel Barnier. Yet the UK Government continues to cling to its complex and flawed Chequers plan. Instead they should be grabbing the golden key being offered by the EU.
In one swoop a Free Trade Agreement solves the Irish Border stooshie, solves the concerns of large manufacturers and traders, such as ourselves, shipping across EU borders. It allows the UK to leave the EU completely, no Single Market or Customs Union membership required.
At present there are no tariffs between EU states, but VAT is collected by the country of the importer. This is not done at the border, but instead through the trader’s monthly or quarterly VAT return. Without there being any tariffs to collect, only VAT, there will be no change from the present requirements and therefore no need to change the present arrangements.
In fact there will be nothing to stop the UK from applying the same arrangements to trade with other countries with which we might enter into Free Trade Agreements.
The existing regime is policed via the Intrastat system which relies on a sharing of data between countries of the EU. Most of the information that is shared is in the public domain; however, as we will be outside the EU, HMRC will have to agree to continue to share the data it shares with the other 27 governments in the same way as it does at present. It will be in everyone’s interest to do this, especially the other countries of the EU which enjoy a substantial trade surplus with the UK.
Ah, I hear you say, what about controlling the flow of people across the Irish border? But Ireland is not in Schengen and Britain and Ireland operate a Common Travel Area and plan to continue to do so, so no change there and therefore no requirement for extra vigilance on the border.
Surely we will need to be part of the EU regulatory regime to ship into the EU ? The United States ships more to the EU27 than the UK and it is not part of the EU regulatory regime. UK traders will have to meet EU product regulations for goods exported to the EU in the same way as we at present have to meet, for example, Australian product regulations on goods exported there.
What about smuggling? There being two different jurisdictions it will be a smuggler’s charter – to which the answer again is: what will be changing? We have different currencies, different levels of taxation on fuel, alcohol, food and other commodities and these differences are being exploited at the moment, as they always are, in border areas. We are happy to ignore it as members of the EU, so why should it be any more of an issue post-Brexit?
The Canada with plusses free trade deal offered by the EU is obviously acceptable to them and should also be for anyone who stood on the manifestos of both main parties last year. If administered as outlined above, it would give us all the benefits of open trade with the EU without any of the downsides, whilst also having complete freedom to negotiate trade agreements with other countries or groups of countries around the world.
In addition to the many other benefits of a Free Trade Agreement, as far as the Irish question is concerned, it literally causes the problem to melt away.
Why does the UK Government seem so intent on grabbing defeat from the jaws of victory ?
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