THE BLOG
07/01/2019 08:00 GMT | Updated 07/01/2019 12:43 GMT

Ignore The Scare Stories – If Parliament Votes Down The Brexit Withdrawal Agreement, There Is An Ideal Alternative

A no-deal Brexit may well turn out nearer the millennium bug than armageddon

Brace yourself for a barrage of scare stories about what will happen if parliament votes down the draft Withdrawal Agreement.

Lacking any positive arguments for its deal, the government has to argue that all the alternatives are catastrophic.

In fact, there is an ideal alternative – President Tusk’s offer, made in March and repeated in October, of a Free Trade Agreement involving zero tariffs and including services – extended to the whole UK. That would involve replacing the ‘backstop’ by a commitment by Ireland, the EU and UK to retain an invisible Irish border, as all say they will do if there is no agreement.

As Donald Tusk rightly stated, a Canada +++ deal, is the only potential agreement compatible with the UK leaving the single market and customs union – as promised in the referendum and the Conservative manifesto.

However, in case the EU refuse to renegotiate the draft agreement, the government should simultaneously complete preparations for leaving on WTO terms. In a joint Global Britain and Labour Leave paper today – 30 Truths about Leaving on WTO Terms – Brendan Chilton and I argue that this should be called WTO+++ since it has several strong positives.

First, we keep £39billion. Far from ‘crashing out’ we will be ‘cashing in’. The Lords’ (heavily pro-Remain) EU Committee concluded that: “Article 50 allows the UK to leave the EU without being liable for outstanding financial obligations”. We can confidently submit the issue to international arbitration.

Second, it ends the corrosive uncertainty – economic and political – which would continue for over two years under the Withdrawal Agreement.

Third, both sides will solve the Irish border issue by administrative measures without a backstop or border posts – as they have promised if there is ‘no deal’. Mr Varadkar has said: “In... a no deal scenario... we won’t be installing a border between Northern Ireland and Ireland, and everyone knows that.” Juncker reassured the Irish Parliament that “the European Union will not impose a border, customs posts or any other kind of infrastructure on the frontier”. And the Britain has said it will not “require any infrastructure at the border... under any circumstances”. We already tackle smuggling of tobacco, alcohol, red diesel, (because of different duty and VAT rates) and traffic in drugs and arms without border checks.

Fourth, once the Irish border issue is resolved, we can take up Tusk’s offer of a Canada-style free trade deal covering the whole UK. Moreover, if both sides commit to such a deal we can, under the WTO treaty, continue to trade with the EU on zero tariffs while it is being finalised.

Despite these pluses, the idea of trading on WTO terms has been demonised.

I helped negotiate the treaty establishing the WTO which is designed to provide a safe haven not a hard option. It means the EU cannot impose punitive tariffs or barriers but must offer us ‘Most Favoured Nation’ terms. UK exports to countries we trade with on WTO terms have grown three times faster than to the single market since it was established

If the EU is initially unwilling to revert to Tusk’s offer, our exports would face EU tariffs. But they would amount to less than half the UK’s net contribution to the EU budget. Moreover, the average EU tariff is four percent, barely a third of the gain in competitiveness thanks to the exchange rate since the referendum. And if we retained the EU external tariff EU exports would pay us nearly three times what we pay them. That is because they export far more to us than we do to them, and their exports tend to be highly protected goods. So, if we reduce some of those tariffs, we could obtain them more cheaply elsewhere.

Scares about import delays are particularly ludicrous since Britain will control its own borders. Why on earth would we prevent things we need from entering our country? HMRC expect roughly the same number of physical checks of vehicles at Dover as at present because checks are based on risk – notably smuggling of tobacco, drugs and illegal immigrants. None of these will change after Brexit. Tariffs are not collected at the port but paid electronically like VAT.

Moreover, HMRC says it will “prioritise flow over compliance”. It will wave vehicles through to avoid queues even if initially customs declarations have not been properly completed.

Past problems at Calais made fear of congestion backing up across the channel more credible. A deliberate go-slow at Calais was unlikely because it would breach three treaty obligations. Moreover, France is afraid of losing business to Belgian and Dutch ports so is installing extra lorry channels and a machine to scan trains at 30km per hour at Calais. Likewise, the EU is legislating to ensure that planes will fly, lorries drive, and Airbus gets its wings.

Experience suggests that if one prepares for potentially major problems, they turn out to be minor. A WTO Brexit may well turn out nearer the millennium bug than armageddon.

That will be a disappointment for opponents of Brexit! But they’ll get over it.

Then we can focus on what is far more important than the terms of leaving – how we use the powers once we take back control of our laws, money and borders. That is an exciting challenge.