The chilling warning
EU’s chief Brexit negotiator delivers sobering message for Wales’industry
THE EU’s chief Brexit negotiator has delivered a chilling warning to Wales about the threat that leaving the European Union poses to industries such as Flintshire-based Airbus.
Michel Barnier used a hard-hitting speech to stamp on the idea the UK could enjoy “frictionless trade” with the EU outside the single market and the customs union.
“A trading relationship with a country that does not belong to the European Union,” he warned, “obviously involves friction.”
The negotiator said trade would “never be as fluid for a country that chooses to leave” these groupings.
Flagging up what is at stake for Airbus in Wales, he said: “The success of the Airbus factory in Broughton, north Wales, is largely owing to its ability to attract qualified engineers and technicians from all over Europe. And to the ease of the procedures for certification and for delivery to assembly sites in Hamburg or Toulouse.”
Mr Barnier also warned of the consequences for lamb exports, saying these could face customs duties of 12% if no deal is struck.
He said the UK Government’s negotiating “red lines” implied that the country was on the way out of both the customs union and the single market.
Earlier this year Theresa May expressed hopes that “elements of
current single market arrangements” could continue for specific sectors of the economy.
But Mr Barnier said: “You cannot leave the single market and then optin to those sectors you like most – say the automobile industry and financial services. You cannot be half-in and half-out of the single market.”
He told his Brussels audience he was “not sure” whether these points “have been fully understood across the Channel”.
Mr Barnier left people in no doubt that his top priority is defending the interests of the remaining 27 member states.
He said his “task is to limit the cost of Brexit for the 27 as much as possible”.
Insisting that Brexit came with a “cost”, he pledged there will “never be any aggressiveness or arrogance on my part” and called on others to “adopt the same attitude”.
Warning of the impact of “no deal” being struck, he said: “There would be customs duties of almost 10% on vehicle imports, an average of 19% for alcoholic beverages, and an average of 12% on lamb and also fish, for which the vast majority of British exports go to the EU...
“In practice, ‘no deal’ would worsen the ‘lose-lose’ situation which is bound to result from Brexit. And I think, objectively, that the UK would have more to lose than its partners.”
The Farmers’ Union of Wales fears the reality of a “hard Brexit” could be even worse than Mr Barnier had warned.
FUW President Glyn Roberts said: “Mr Barnier’s comments simply reflect what the FUW has been highlighting since before the referendum.
“Unfortunately, in the extreme scenario Mr Barnier describes, the tariffs on some of the main lamb products we export could be closer to 40% under [World Trade Organisation] rules, with similarly high tariffs for other agricultural exports.
“This is why it is essential for the UK and the EU to avoid such extreme ‘hard Brexit’ type scenarios.”
NFU Cymru President Stephen James said: “It is hard to overstate the potential trade implications of Brexit for Wales’ farmers, with for example, 90% of our food and drink exports and over a third of our lamb crop currently going to the EU.
“The Article 50 countdown, started by Theresa May at the end of March this year, means that in 20 months’ time, the UK will be a third country outside of the EU’s single market.
“In its trade negotiations with the European Commission, the UK Government must seek the most favourable possible terms for accessing the single market, with exports subject to minimal tariff and non-tariff barriers, without such a trade deal we will face crippling WTO tariffs of around 50% for our lamb and beef exports.”
First Minister Carwyn Jones will meet Mr Barnier in Brussels next week.
A Welsh Government spokeswoman said: “The threat to the Welsh economy of a hard Brexit is clear. Michel Barnier’s comments that maintaining access to the European market is vital for Welsh jobs and economic security backs up what the First Minister has said from the outset about our approach to Brexit negotiations – that the UK must prioritise full and unfettered access to the single market and must avoid any new barriers which impede Welsh businesses from operating effectively.
“Airbus is a very important employer in Wales and Mr Barnier’s comments should be taken seriously. The First Minister will discuss the issues raised by Mr Barnier with him when they meet in Brussels next week.
“In the meantime we will continue to press the UK government to ensure we have a successful Brexit that protects jobs and our economy.”
A Ukip Wales spokesman said: “Barnier is resorting to threats against the people of Broughton in order to weaken our resolve to leave the EU. The USA, China and Japan to name just three, export enormous quantities of goods to the EU without having formal trade agreements.
“Barnier’s comments are simply early negotiation bluster as the EU attempts to give the impression that they’re going in with a strong hand. They have nothing of the sort.”
Plaid Cymru Brexit spokesperson, Hywel Williams MP said: “Airbus needs to be able to pass its products from one European site to another without pointless red tape. The wings made in Wales can’t fly without the tail and the body of the plane made in other countries.
“This is how modern large scale manufacturers work – though the Government in London either does not know this or more likely does not care.”
He added: “Leaving the customs union guarantees that we will get a worse deal – as is shown by Mr Barnier’s statement. Not everything the EU says is a bargaining tactic.
“I fear that we will learn this to our great cost as the negotiations proceed.”
Katherine Bennett, senior vicepresident at Airbus UK, said there would be “ways around these challenges that may be coming up as part of Brexit”.
She told the BBC: “It’s really important that we work really closely with Michel Barnier and the UK Government to ensure that the customs issues which will arise can be dealt with and managed.”
Airbus was more worried about the non-tariff barriers, including on
free movement of employees, she said.
Mr Barnier’s comments, which amount to a stark rejection of the negotiating position set out by Theresa May and Brexit Secretary David Davis, came as British business leaders appealed for a transitional deal to keep the UK in the single market and customs union beyond the expected date of withdrawal in March 2019.
CBI director-general Carolyn Fairbairn said it was “impossible” to imagine a trade deal would be in place by that date and urged negotiators to act as soon as possible to avoid a “cliff-edge” departure.
“Our proposal is for the UK to seek to stay in the single market and a customs union until a final deal is in force,” she said. “This would create a bridge to the new trading arrangement that, for businesses, feels like the road they are on.”
Downing Street said the Government did understand the EU’s position and was focused on “getting a deal that works for both sides” but acknowledged there were “strong feelings” in Brussels about the result of the Brexit referendum.
“It isn’t new that some on the EU side have strong feelings about the decision the British people took last year but the UK Government is focused on getting the best possible deal for our whole country and a deep and special partnership that’s in the interests of the whole continent,” said the PM’s official spokesman.
Elsewhere, European Council President Donald Tusk said a new free trade deal between the EU and Japan showed that Brexit’s backers were wrong to claim it was “easier to do global trade outside of the EU”.
Meanwhile a YouGov poll of 1,661 Britons found 46% would now vote to remain in the EU, against 42% who want to leave, in the latest of a string of surveys suggesting last year’s majority for Brexit has been reversed.
EU BREXIT negotiator Michel Barnier’s speech could hardly have had greater resonance in Wales if he had learned Welsh for the occasion and delivered it in Machynlleth.
He touched on two areas of critical importance to Wales for our exports – the operations at Airbus’ giant Broughton facility and sales of lamb.
Rightly, he identified the importance to the aeroplane manufacturer of not just the “ability to attract qualified engineers and technicians from all over Europe” but also the “ease of the procedures for certification and for delivery to assembly sites in Hamburg or Toulouse”.
He further warned that lamb could face customs duties of 12% if the UK leaves without a deal, although farmers’ unions fear the true figure could be much higher.
His speech had the tone of a wake-up call, and seemed directed at both the Conservatives and Labour. He was adamant that it is not possible to enjoy the benefits of the single market and the customs union outside these groupings.
The idea there is some other way to secure “frictionless” trade is a fiction, he argued, and he stamped on any remaining hopes that individual sectors might be able to secure continuing access on single market terms.
Mr Barnier, speaking in Brussels, said he was “not sure” whether these points “have been fully understood across the Channel”.
He will hope that his words will serve as a reality check.
His message was clear: if people want the exact same benefits of being in the single market, then the UK should stay in the single market.
We can still leave the EU but stay in this colossal market if we join the European Economic Area. Norway has such an arrangement.
This would appal Brexiteers who want freedom of movement to end but there are growing calls to embrace this option as a stop-gap while a final deal is thrashed out – a process which could take many years.
Ukip has accused Mr Barnier of “resorting to threats against the people of Broughton” and dismissed his warnings as “early negotiation bluster”. He is certainly on a mission to dampen UK hopes of what can be achieved, and he will not want to give anyone in the remaining 27 EU states the notion that a better future awaits outside the union, but many Welsh exporters will agree with his assessment of the threats facing our economy.
NFU Cymru’s president said it was “hard to overstate the potential trade implications of Brexit for Wales’ farmers”, adding that “90% of our food and drink exports and over a third of our lamb crop currently go to the EU”.
Acknowledging that a botched Brexit will be a calamity for Wales is not the same as surrendering to pessimism. A narrow majority of the population backed leaving the EU but our negotiators have a duty to 100% of the population to seek a deal that minimises the potential damage to our businesses and communities.
We must get this right. The Western Mail newspaper is published by Media Wales a subsidiary company of Trinity Mirror PLC, which is a member of IPSO, the Independent Press Standards Organisation. The entire contents of The Western Mail are the copyright of Media Wales Ltd. It is an offence to copy any of its contents in any way without the company’s permission. If you require a licence to copy parts of it in any way or form, write to the Head of Finance at Six Park Street. The recycled paper content of UK newspapers in 2014 was 78.5%