This risks robbing the UK of the ability to sign its own trade deals

So now we know what the Cabinet has agreed the UK will propose in the Brexit trade negotiations. But what, precisely, do its proposals entail? First, ministers agreed a free trade area for goods, including agri-food, which requires not just regulatory alignment, but a commitment “by treaty to harmonisation of EU rules on goods”, now and in the future. There is an inconsistency in the text, however.

Alongside the specific reference to harmonisation, there is also mention of a “common rule-book”, with parliamentary oversight and a right not to incorporate any rule, accepting that this will have consequences.

Full harmonisation and an agreed set of rules are very different things. If the text means the latter, this is consistent with a very advanced trade agreement and could permit the UK to have an independent trade policy. There would be a common rule book that mitigates trade frictions, overseen by a joint committee (not the ECJ).

But if it is the former, then it would make it nigh on impossible for the UK to sign independent trade deals.

In practice, if Parliament wished to change UK domestic regulation, it would have to overcome powerful vested interest groups that benefit from the status quo and vote for divergence. Meanwhile, it will be very difficult to persuade Parliament, again influenced by vested interests, to diverge to secure benefits in free trade agreements that might be enormous for services but at a cost of some border friction in goods trade with the EU.

For trade agreements to be done the benefits of the agreement (in services, perhaps) would have to be so obvious that they would compensate for any losses in terms of EU market access.

Secondly, it seems the new customs partnership (NCP) is alive and well, albeit in marginally altered form. It proposes that the UK will collect tariffs for the EU, with EU-destined goods tracked using technology, and that a mechanism will repay businesses importing solely into the UK market if UK tariffs are lower than the EU’s.

This plus regulatory harmonisation would be a rope around the neck of UK trade policy and has been greeted with bemusement and confusion by our other trading partners: as New Zealand’s former trade minister and High Commissioner to the UK Sir Lockwood Smith said last month: “with NCP … you can forget global Britain”. Quite simply, this will make the UK irrelevant in trade policy.

Our Advisory Council of some of the most experienced trade negotiators in the world visited the UK 10 days ago. They made it clear that for the UK to have any kind of independent trade policy it must have regulatory autonomy, and be able to diverge from EU regulation in all areas.

If this statement, when reduced to a legal text, allows the UK government to diverge over time, even if that means some loss of access to the EU, and provides for a UK-EU rule-book which does not mean harmonisation to EU rules but an agreed set of rules between the parties, then it is possible that such autonomy might still be achieved. But if this means a commitment to harmonise with the EU rule-book, then by definition there is no “common” rule-book at all, and UK autonomy is lost, and with it any credible independent trade policy.

As always, the devil is in the detail, and we need to see how this all gets reflected in legal text. Of course, the EU may reject this anyway and come back with a customs union proposal, which the UK must not accept.

At least the statement commits the government to also prepare for “no deal” – and that means getting ready to finally unleash Britain’s potential. Shanker Singham is Director of the International Trade and Competition Unit at the Institute of Economic Affairs