Grayling: We will have tariff-free trade deal

Minister plays down warnings in wake of EU opposition to Canada and a report showing UK could be forced to pay £5bn

THE Government will agree a tariff-free trade deal with the European Union because of the strength of the UK export market, a Cabinet minister has said.

Chris Grayling downplayed warnings that a free trade deal between Britain and the EU could be blocked in a similar manner to the Canadian deal, saying that the UK’s relationship with European markets was “different”.

He made the comments as a report into trade tariffs after the UK’s exit from the union found that EU states could be left with a £13 billion-a-year bill, while Britain could be forced to pay around £5 billion.

The research by Civitas, a think tank, found that German businesses alone would face £3.4 billion in costs when exporting to an independent UK if the relationship falls back on World Trade Organisation rules.

Speaking on the BBC’s Andrew Marr programme yesterday, the Transport Secretary said: “We want the Canadian deal to be done, it is in the interests of everyone on both sides of the Atlantic that that happens.

“But I think there is a very different question with our relationship with the European Union. We are their most important export market.

“If you look at the issue of Belgium this week, which has been at the heart of the debate over the Canadian deal, we are a huge market for Belgian agriculture.

“Nobody in continental Europe benefits from a reduction in the ability to trade with the United Kingdom.”

He played down reports that a UK deal could be struck down by one EU nation in a similar way to Wallonian opposition to an agreement with Canada which prompted the nation to with- draw last week. Mr Grayling said: “We buy a whole load of produce from Walloon farmers, so therefore it is not going to be in their interests to see tariffs imposed.

“This is why I have always been convinced that we will have tariff-free trade, we will have sensible trading arrangements, because it is in both of our interests that should happen.”

The Civitas report found EU firms could face tariff costs of nearly £13 billion a year on exports if the UK leaves without a free trade deal in place. Britain would also be hit with about £5 billion in costs for selling goods to EU states under such an arrangement.

On a country-by-country basis, just five of the EU 27 states would have less tariffs to pay to the UK than the Government would be forced to stump up to deal with those nations. The other 22 would all have to pay more, tipping the balance of power towards Theresa May, the report found.

Justin Protts, a Civitas research fellow, said: “These figures highlight the importance of securing a post-Brexit trade deal, not just for the UK but also for the EU. European exporters have a great deal to lose if without free trade across the continent – the knock-on effect of tariffs and increased prices will harm their ability to sell to the UK.

“The UK would be better placed to adjust for these changes. It has the opportunity on leaving the EU to alter its tariff schedule in a manner that is more favourable to UK businesses, reducing tariffs on input products for UK manufacturers and other products that are not manufactured in the UK, while keeping tariffs on goods that can be manufactured in the UK that are perhaps not yet competitively produced.

“Further still, the depreciation of sterling, although it will lead to increases in import prices, will reduce the cost of buying goods from the UK.”

‘We buy a load of produce from Walloon farmers. It is not in their interests to see tariffs imposed’