Labour has an alternative to the Tories’ no-deal nightmare. Here it is
..the problem
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So why would they want a no-deal? A group of hard-right Brexit economists has proposed the unilateral abolition of UK tariffs, which they openly admit would see the loss of our manufacturing base. They think this would be a good thing, and propel us into a new, service-based economy. That is why Fox and Dominic Raab and Boris Johnson and Michael Gove are not concerned about crashing out on to WTO rules – they believe it would enable them to turn Britain into a deregulated free-market economy like Singapore.
Labour must and does oppose this dystopia. And it must do so by charting a way of leaving the EU that can unite the divided people of our country. Respecting the result of the referendum but determined not to let that decision impose new border controls that stop our just-in-time supply chains, close down our factories and lose British jobs.
People often think that no-deal is only about our relationship with Europe. They know that 44% of UK exports and 53% of UK imports go to and come from Europe. Our trading relationships with 70-plus countries, from Mexico to South Korea, also depend on trade agreements we are party to as an EU member state. A no-deal scenario would scrap our trade agreements with these countries overnight.
In such a scenario, the UK would be left trading on World Trade Organization terms. However, these terms are determined by our WTO schedules, which establish the tariffs and quotas we must apply to all goods coming into our market. The UK shares its schedules with the other 27 members at present, and while the average tariff is fairly low, at 2.6%, tariffs in some sectors such as the automotive, agricultural and dairy industries are significantly higher. Cars and automotive parts flowing in and out of the UK to the EU would face a 10% tariff; dairy products would face an average tariff of 35%; while some meat products would face tariffs of more than 80%. Beyond the EU, tariffs would be much higher still: automotive up to 35%, meat up to 100% and dairy up to 200%.
The other problem is that after Brexit, as an independent member of the WTO, we need our own schedules. And those schedules have to be agreed by every other WTO member. A year ago Fox nonchalantly explained that this was nothing but a series of “technical changes” that should pose no problem. Yet the proposed change still faces fierce resistance from key allies such as the US, New Zealand and Australia.
A no-deal scenario would leave the UK facing a host of non-tariff barriers. Currently our standards, regulation and protections – ranging from health and safety to financial services – are harmonised with those of the EU. With no-deal, we would not have mutual recognition agreements that would ensure British goods and services can enter the European market.
A no-deal scenario would leave the UK facing a host of non-tariff barriers. Currently our standards, regulation and protections – ranging from health and safety to financial services – are harmonised with those of the EU. With no-deal, we would not have mutual recognition agreements that would ensure British goods and services can enter the European market.
At first, it sounds plausible to say that no-deal is better than a bad deal; that is until you realise that no-deal is, in fact, a very, very bad deal itself. Businesses across the UK have warned time and again that a no-deal would have catastrophic consequences. Airbus, BMW and Jaguar Land Rover have warned it could lead to thousands of job losses and the closure of plants. It is extraordinary that government is refusing to listen to them and, albeit more politely, is echoing Boris Johnson’s Anglo-Saxon outburst.
..labour's solution
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The only way to ensure friction-free trade in goods between the UK and the EU is through Labour’s proposed new comprehensive customs union. This must be accompanied by a new, strong, single market deal with the EU which establishes common institutions and guarantees access for our products and services.
Crucially, we need a transition period to put this into effect. Instead of re-running the debates from two years ago, Labour must unite in our opposition to the cliff edge of no-deal that this government is currently driving us towards. This Tory nightmare is simply not an option for businesses, workers and families in this country. Labour’s alternative is. It respects the vote to leave and protects our economy at the same time.