PM May urged to drop threat of no Brexit deal

Brexit question draws US, Russia, Chinese interest at WTO

LONDON, March 27, (RTRS): Britain’s manufacturers told Prime Minister Theresa May on Monday to drop her threat that she might take the country out of the European Union without a new trade deal, saying they would bear the brunt of trade barriers with the EU.

May plans to trigger the two-year Brexit process on Wednesday and she has warned the other 27 EU countries that no deal would be better than a bad deal.

“The idea of being able to walk away empty-handed might be a negotiating tactic, but it would in reality deliver a risky and expensive blow,” Terry Scuoler, chief executive of EEF, Britain’s manufacturing lobby, said.

“The rhetoric from the UK government needs to focus instead on achieving a deal that will work for the UK and the EU.”

May has decided to make control over immigration her priority for Brexit, and has conceded that Britain must give up its membership of the EU’s single market and customs union in order to achieve that.

In the absence of a deal, trade between Britain and the EU would default to World Trade Organization rules and tariffs.

The EEF said British manufacturing exports to the EU — such as cars, chemicals and machinery — could face tariffs averaging 5.3 percent. There was also the risk of other obstacles to trade through customs procedures and higher compliance costs.

Just over half of Britain’s manufactured exports, as measured by value, go to the EU. Many factories rely on goods and parts crisscrossing the bloc during production, leaving them particularly exposed to any increase in trade barriers.

The EEF called for close consultations with the government on its Brexit strategy and said a transitional period to ease Britain into its new relationship with the EU was essential.

In Geneva, China, Russia and the United States said on Monday they were taking an interest in Brexit, a World Trade Organization source said, after a question about a tricky but vital reform required by Britain arose at the Geneva-based trade body. The question, posed at the WTO’s agriculture committee by Indonesia, was about how Britain would handle its agricultural tariff system and preferential trade scheme for poorer countries after Britain leaves the European Union.

The United States, Argentina, China and Russia all registered their interest in the matter, the WTO source said.

The European Union’s brief answer was that the EU common external policy still applied to Britain as an EU member state, and although it was not possible to answer immediately, a more substantive reply would be provided in due course.

Trade diplomats say the agricultural tariff question is the stickiest problem facing Britain as it prepares to establish its own distinct terms of trade at the WTO.

Britain is a member of the WTO in its own right but its terms of trade are not spelled out separately in its own “trade schedules”, the WTO document setting out each member’s obligations. Instead, Britain uses the collective EU schedules.