Existing agreements that deliver 12 per cent of the UK’s total trade will be lost if there is a no-deal Brexit, the government has admitted.
Trade agreements enjoyed with scores of other countries, through EU membership, will “cease to apply” if the UK crashes out of the EU next March.
The government said it would attempt to replicate the deals “as soon as possible thereafter” – but admitted those “third countries” would have leverage to demand better terms.
Until fresh agreements could be struck, exports and imports to these countries would fall under World Trade Organisation rules – and be subject to tariffs.
The admission came as the department for exiting the European Union (DExEU) released the final batch of technical papers, to prepare the public and businesses for a chaotic Brexit
The Food and Drink Federation immediately condemned the “shambolic” prospect of a no-deal exit – warning of higher shop prices and a huge loss of jobs, if tariffs were imposed.
And the British Chamber of Commerce said it underlined the need for the UK and EU to break the deadlock “as soon as possible, to avoid the confusion and significant disruption of a no deal scenario”.
The UK boasts around 40 free trade agreements, with more than 70 countries, because it is an EU member, including the United States, Canada, Switzerland, Turkey and Norway
They give businesses “a range of preferential market access opportunities”, including cheaper import tariffs and duties and more relaxed “rules of origin” requirements.
The deals also provide “enhanced market access” for services, “public procurement opportunities” and “improved protections for intellectual property”, DExEU said.
The Independent revealed last month that no country has yet agreed to “roll over’ any deal, even if a withdrawal agreement is struck and a 21-month transition period secured.
Now the new technical notice, entitled ‘Existing free trade agreements if there’s no Brexit deal’ has fully acknowledged the threat if the UK crashes out of the EU.
“In this scenario, the government will seek to bring into force bilateral UK-third country agreements from exit day, or as soon as possible thereafter,” it says.
The document says the government intends to “the effects of new bilateral agreements will be identical to, or substantially the same as, the EU agreements they replace”.
But it admits third countries will seek to use their new bargaining power, saying: “The final form of new agreements and any resulting changes will depend on ongoing discussions with our trading partners.”
Under WTO rules, “traders would pay the applied MFN [most favoured nation] tariff”, the notice said – applied equally to all countries without trade agreements.
These are small for products, but step for agricultural goods, including for dairy products (more than 30 per cent), cheese (46 per cent), tomatoes (21 per cent) and frozen beef (87 per cent).
“These technical notices demonstrate the shambolic ‘no-deal’ Brexit which is taking shape,” said Ian Wright CBE, FDF Chief Executive said:
Without a rollover, “UK food and drink will instantly lose access to more than 70 markets around the world”, he warned.
It would mean “higher prices and reduced choice for UK shoppers”, he said, adding: “It is deeply damaging for our export competitiveness and puts at risk hundreds of businesses and thousands of jobs.”
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