UK industry has reacted positively to the Brexit white paper published this week by the government, but visiting US President Donald Trump says it could jeopardise a transatlantic trade deal.
The white paper proposes a free trade area between the UK and EU for goods, including agri-food, whereby the UK would remain in harmonisation with EU rules. This would cover only the goods necessary to maintain frictionless trade, but would facilitate just-in-time supply chains for manufacturing and prevent a hard border in Ireland. While the white paper claims the role of the European Court of Justice would come to an end, the ECJ is the ultimate arbiter on the rules with which the UK is planning to remain in sync.
Theresa May’s ‘third way’ in relations to customs would see the UK collecting tariffs on behalf of the EU for goods that were destined for the Continent. Labelled the ‘Facilitated Customs Arrangement’ (FCA), the proposal would also enable the UK to level different tariffs for goods to be consumed in the UK. The FCA proposal has been criticised for its complexity, but if successful it could help retain some benefits of EU membership while also allowing the UK to strike trade deals with countries outside the EU.
“Today’s white paper is a welcome step forward in replicating the benefits of the single market and customs union as we leave the EU,” said Mike Hawes, SMMT chief executive. “The paper is evidence that government recognises the importance of the automotive sector and the need to safeguard our competitiveness in our future relationship with the EU. Trade with the EU must be completely without friction, tariffs or disruption to supply chains or just-in-time manufacturing. This can only be achieved by the avoidance of any customs checks or other barriers and by ensuring that the UK and the EU operate within the same regulation framework.”
Elsewhere, Ian Wright chief executive of the Food and Drink Federation (FDF), praised the government for its pursuit of frictionless trade but said more details were needed on the common rulebook and the way in which UK industry would be bound by it.
“The UK Government is right to make no-friction trade with our most important trading partner its number one Brexit priority; it is extremely encouraging that the white paper seeks to do so,” he said. “Our food and drink manufacturers rely upon integrated supply chains, with ingredients and finished products crossing UK and EU borders frequently – nowhere more so than to and from the Republic of Ireland.
“We also need to understand much more about how the common rulebook will work in practice. Businesses and consumers urgently need clarity and confidence in the process for both following and deviating from EU rules. It is welcome that the UK will seek to participate and influence EU technical committees and have access to RASFF, but many questions still remain around our valued relationship with the European Food Safety Authority (EFSA). The devil is in the detail. FDF will insist that the proposals support the competitiveness of the UK’s largest manufacturing sector.”
Despite the positive noise from UK industry, May’s plans have come under fire. Staunch Brexiteers have criticised the white paper for conceding too much, and on Thursday night it emerged that President Trump said the softer Brexit strategy would scupper any proposed trade deal with the US. In an interview with The Sun timed to coincide with his visit to the UK, the president said the prime minister had ignored his advice on exit negotiations and that this would “probably kill the deal”. Trump went on to say that he thought Boris Johnson would make a good prime minister, while also appearing to suggest that London Mayor Sadiq Khan was responsible for UK immigration.