U.K. puts forward trade plans for no-deal Brexit
In a non-binding vote on Wednesday, British MPs voted to reject leaving the European Union without a deal.
MPs voted by 321 to 278 to rule out leaving without a deal at any time.
The vote does not remove the possibility of the U.K. leaving under a so-called “no-deal” scenario, but it does make it more likely MPs will vote to delay Brexit on Thursday.
WATCH: U.K. Parliament votes 312-308 to take no-deal Brexit off the table
In advance of Wednesday’s votes, the British government put forward plans for how trade would work should the U.K. suddenly be subjected to default World Trade Organization (WTO) rules under a no-deal Brexit.
In that scenario, a temporary scheme would place zero tariffs on most imports from foreign countries into the U.K. That is despite the fact that the EU says it would be obligated to subject British exports to default tariffs, as required under WTO rules.
The British government says its no-deal plan would increase the volume of tariff-free imports from 80 per cent, as is currently the case, to 87 per cent.
Tariffs would remain on certain products, including many food items.
“What we have done is announce temporary measures, modest liberalization,” said Brexit Secretary Stephen Barclay.
“We are obviously going to listen to businesses in terms of what the impacts of that are. But these are the real-term consequences of the vote in the House of Commons (Tuesday) night.”
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The other aspect of the plan would see no customs checks or tariffs applied to any goods travelling into the U.K. across its only land border with the EU — the border between the Republic of Ireland and Northern Ireland, which is part of the U.K.
British Prime Minister Theresa May’s government wants to keep that frontier open to maintain peace in Northern Ireland. The border has effectively been fully open since the late 1990s and is seen as a vital part of the Northern Irish peace process.
However, that aspect of the plan would, theoretically, make Northern Ireland a possible backdoor route for sending products from the EU into mainland U.K. while avoiding tariffs.
“It surely has to be just a temporary solution, but given that we have only got  days, it probably wasn’t too bad as a first shot,” said Prof. Alan Winters, director of the U.K. Trade Policy Observatory at the University of Sussex.
“World Trade Organization rules say you have to charge the same tariff for a good from everyone unless you have a free trade agreement with them. We would be charging zero on goods from the Republic of Ireland and positive tariffs, in some cases, from other people. This is certainly, I think, a violation of World Trade Organization rules.”
Winters told Global News that the U.K. could argue to the WTO that an exception should be made for Northern Ireland.
“It might be justified in the sense it’s a step toward preserving peace, avoiding violence,” he said.
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Canada and free trade
Since 2017, Canada has been part of the Comprehensive Economic and Trade Agreement (CETA), a free trade deal with Europe.
Last year, Prime Minister Justin Trudeau said talks on a Canada-U.K. free trade agreement can begin “the day after Brexit.”
Winters says that should a no-deal Brexit happen, this announcement from the British government could help Canadian exporters to continue avoiding tariffs when shipping goods to the U.K.
“The Canada agreement is relatively recent. There may still be a few tariffs that exist because of transition arrangements. But yes, in principle, we already import virtually everything from Canada tariff-free and so that’s not changing [under this plan],” he said,
“It’s also the case that there may be some other suppliers of the same goods that now are facing reduced tariffs so there will be a bit of extra competition for the Canadian suppliers.”
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