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Politicians ignore Brexit trade impact, says Tudor Freight boss – updated

[ December 5, 2019   //   ]

The current political debate over Brexit has largely ignored the question of whether any free trade deal with the US would counter the damage caused by leaving the EU, says director of Leeds-based Tudor International Freight, Adam Johnson.

The reality, he argues, is that “it wouldn’t come close to doing so”. However with a few exceptions, such as the former Chancellor of the Exchequer Philip Hammond, who is not standing for re-election on 12 December, no leading politician seems to be making this crucial point, he says.

Most of the debate has centred on whether the US would gain access to the UK health market.

Adam Johnson explained that the think tank The UK in a Changing Europe had estimated that if the UK left the EU under the Prime Minister’s current draft withdrawal deal, its gross domestic product (GDP) or national wealth per head would be 7% lower after 10 years than if it had remained in the bloc.

Other commentators had previously estimated that leaving the EU single market and customs union, without compensating measures, could cost UK businesses £45bn and £25bn respectively each They had also predicted the bill for new tariffs for UK exporters to the EU could be £4.5bn annually. HMRC also estimated new customs checks could increase the prices of goods UK companies import from the bloc by 24%.

In contrast, the government’s own estimates suggested all new free trade agreements the UK might sign with countries outside the EU after Brexit would add only between 0.2% and 0.7% to GDP per head, including any such deal with the US.

Adam Johnson also warned: “Moreover, negotiating any such agreements will take many years. As a longstanding EU member, the UK also lacks independent experience of this process and the other countries are likely to exercise leverage, as they know we will be anxious to conclude these deals.”

He added that so talks are unlikely to begin until next March at the earliest. Before they can start, the UK Parliament has to approve the withdrawal agreement and the UK must leave the EU. Even if the Conservatives win an overall majority in Thursday’s General Election, the latter is unlikely to happen until 31 January 2020. Negotiating mandates for the trade talks then must be drawn up and agreed on both sides.

Johnson said: “The trade talks will be the first negotiations in history where the object will be erecting trade barriers, not removing them. The EU will thus be keen to ensure the UK is not allowed to undercut it, by abandoning current level playing field obligations on issues such as workers’ rights and environmental protections. It will also want to secure the maximum access to UK waters for its eight member states with fishing fleets and the many other potential points of conflict in the talks include over food standards and agriculture.”

He said that while the UK does lack recent experience in negotiating its own trade deals, “we certainly hope mistakes can be avoided, if we do find ourselves negotiating our own free trade deals. There’s no doubt, however, that the UK has not negotiated its own deals since the 1970s and that reaching such agreements in the 21st Century is a complex, time-consuming and wide-ranging business, encompassing a mass of matters, including health and safety, animal welfare and environmental standards.

As Sir Ivan Rogers, formerly the UK’s permanent representative to the EU, pointed out recently, the EU’s agreement with Canada, covering some goods but no services, for example, has a substantive text running to 550 pages and a total text of almost 2,000 pages. This includes three protocols and 60 annexes, with the process for calculating rules of origin alone taking up about 150 pages and the documentation containing specific rules covering products from barbeque sauce to soap.