Focus on UK domestic production not a Trade Deal

The biggest mistake the Government could make right now would be to sell out our domestic industries by handing control over the UK’s own State-Aid system to an economically stagnant European Union as part of any compromise with the EU

Raising production
Jayne Adye
On 2 November 2020 12:34

Since the United Kingdom finally left the European Union on January 31st this year, all the focus from many commentators and politicians - on both sides - has been on the supposed need for a new ‘zero-tariff’ Trade Deal with the European Union at the end of the Transition Period.

Such an exclusive focus on this issue has distracted attention away from any consideration of the true value of a UK-EU Trade Deal - and why, in reality, our focus should have been on helping to rebuild forgotten industries within the UK and giving more advantages to businesses already thriving.

When it comes down to it, only 5-8% of the total number of UK businesses actually trade with the EU. While this may account for a large portion of our economy through large multinationals, many would not be affected by the signing of an EU trade deal.

The main reason for this is ‘services’ have been excluded from the trade talks - i.e. financial services, insurance services and travel. Trade in services is the single biggest part of UK-EU trade - both in imports and exports. Both sides seem to have neglected this crucial area in these discussions - whether deliberately or not is another question! 

However, on trade in goods, the potential for a reduction in imports from the EU as a result of any tariffs in the event of ‘No Deal’, need not be the scare story we are sold. Fundamental to the success of the UK after Brexit will be the strong entrepreneurial spirit of the Great British Public, mixed in with a strong appetite for innovation. This is still very much alive and kicking in the UK, even after years spent being suffocated by the weight of EU regulations.

The Government has already made clear it has no intention of allowing the EU to have any control over the UK’s State-Aid programme. This is a commitment which must be maintained. The ability to support domestic businesses and give them help from the State when necessary, is far more valuable than any trade deal with the EU, especially when, as set out earlier, the majority of UK businesses do not even interact or trade with the EU on any level.

Even for those companies which do trade with the EU, the world is now a very different place to when we signed up to be a part of the EU back in 1973 (or the European Economic Community – the EEC as it was back then - when trade and economic co-operation was the priority instead of the political swamp we experience today).

Back then, the average tariff on goods was around 11%. Now it is down to 3%. What’s more, as the negotiations currently stand, a Free Trade Agreement with the EU does not even guarantee the removal of tariffs for many businesses!!! This is because the EU is resisting so-called ‘cumulation’ (the allowing of parts made in third countries, where either the UK or the EU already has a Free Trade Agreement, to be counted as ‘local content’).

As a result, some UK-made goods will not have enough ‘local content’ to qualify for zero tariffs via ‘rules of origin’ thresholds. For example, if a car is assembled in the UK, but has a large number of component parts which are made in Japan, India or the USA for example, then it would not be classed as a product of the UK and would have a tariff applied upon exporting. With the modern global economy as it is, this is extremely common, especially for complicated products with multiple component parts, such as cars.

What this fundamentally boils down to is, does the Government really want to make the most out of Brexit and encourage a successful Global Britain which can lead at the forefront of innovation after we Get Britain Out of the EU? If so, our top priority should not be acquiring a trade deal with the EU which does not benefit the majority of businesses in the UK.

We should refocus our economy by encouraging a higher level of domestic production. Such action would give the UK a far better hand in future trade negotiations. For example, by supporting domestic businesses, like our booming Fintech industry, we would place ourselves above global economic powers, such as the USA, putting us in a better position in the future instead of being vulnerable to trade demands as we have been during the last four years.

The biggest mistake the Government could make right now would be to sell out our domestic industries by handing control over the UK’s own State-Aid system to an economically stagnant European Union as part of any compromise with the EU. No trade deal on earth would be worth such a compromise.

Jayne Adye is the Director of the leading grassroots, cross-Party, Eurosceptic campaign Get Britain Out

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