‘No deal’ with EU on trade post Brexit does not mean disaster for the UK
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A new report from the Institute of Economic Affairs calls for unilateral free trade following Brexit, complemented by free trade agreements with our major trading partners such as the US, Canada and Australia. This would bring us significant benefits including lower prices for consumers, increased productivity and higher wages by eliminating all barriers to imports.
The report goes on to assert several facts about trade policy that are often overlooked or completely disregarded, particularly concerning membership of the single market.
6 facts about trade policy:
No deal with the EU would not be a disaster
- The UK could trade with the EU under WTO rules
- It would then be up to the EU if it wanted to impose tariffs, which would hurt EU consumers by raising prices
Most tariffs make no sense
- They impose large compliance and administration costs on importers
- For example: In October the EU increased eight tariffs on imported oranges five-fold because Spanish producers objected to competition from South African producers, resulting in UK consumers having to pay more for oranges
UK would be given tariff free access to the single market
- All European countries with the exception of Belarus and Russia have tariff free access to the single market; there is no reason why the UK wouldn’t also
Protectionist policies disadvantage workers in non-protected sectors
- 92 per cent of UK workers are in non-protected sectors. Tariffs on imports competing with protected sectors mean they have to pay higher prices as consumers and their employers have to pay higher prices on imports, leading to lower wages and fewer jobs
- Abolishing tariffs would create more jobs, offsetting the loss of jobs in the 8 per cent of workers in protected sector
Trade negotiations are not a bargaining game
- Consumer interests should be the primary focus in trade deals
- Trade is about all parties benefiting, not one at the expense of another
Multilateral trade deals have achieved little trade liberalisation
- Deals such as TTIP and TPP focus on regulatory harmonisation rather than free trade
Commenting on the report, Jamie Whyte, Research Director at the Institute of Economic Affairs, said:
“There are many myths being perpetuated about trade policy – and more specifically about the UK’s relationship with the EU – that must be debunked. Many people believe that disaster will befall us if we do not forge a deal with the EU. In fact, we could unilaterally eliminate all import tariffs, which would give us most of the benefits of trade, and export to the EU under the umbrella of the WTO rules. Then we can seek free trade deals with all major trading partners, including the EU.”
Notes to editors:
For media enquiries please contact Nerissa Chesterfield, Communications Officer: [email protected] or 020 7799 8920 or 07791 390268
To download a copy of ‘A Trade Policy for a Brexited Britain’ please click here.
In June 2017 the IEA launched its Brexit Unit to ensure a strong free market voice is heard clearly as the UK prepares to leave the European Union. To read more about the Brexit Unit please click here.
In June 2016 the IEA published ‘No Need to Queue: The benefits of free trade without trade agreements’. To download a copy please click here.
Further IEA Reading: The IEA Brexit Prize: A Blueprint for Britain-Openness not Isolation
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.
The IEA is a registered educational charity and independent of all political parties.