Apparel Sourcing Intelligence - Worldwide

UK Government: “Prepare to leave EU without a free trade deal”

The UK government was reported on March 1 to have instructed its departments to have plans ready for governing if Britain fails to secure an adequate free trade deal with the EU after leaving in spring 2017.

A report based on “senior British government sources” in The Times claims that among the systems and facilities the UK will need to develop by April 2019 are:

  • A new IT system capable of dealing with 390 million customs declarations every year for goods crossing in and out of the EU. Customs and holding facilities at big ports will also have to be upgraded while plans for a new EU/UK customs border will have to be developed in Ireland.
  • A new immigration system able to process applications from the 3.3 million EU citizens living and working in the UK while doubling the capacity to handle applications for work permits.
  • Renegotiated air transport agreements with dozens of countries, including the US, that have agreements only with the EU as a whole.
  • An upgraded medicines and healthcare products regulatory agency to take on responsibility for assessing the safety of every new drug and device from the European Medicines Agency that will relocate out of London.
  • A Civil Aviation Authority with the powers of the European Aviation Safety Agency to run a safety inspection regime and airline licensing.
  • Renegotiated free-trade agreements with more than two dozen countries with which Britain has deals only as an EU member.

There seems little doubt the reports are based on fact: since early February it has been clear that Britain will have to have plans for three different Spring 2019 scenarios:

  • Britain has a unique trade deal with the EU intended to last a considerable time
  • Britain and the EU have failed to agree a full deal, but agree transitional arrangements for as long as itmtakes to agree a final deal
  • Britain and the EU fail to agree any deal, and Britain by April 2019 has much the same relationship wuth the EU as the EU currently has with China or the US.

UK government sources quoted said that “We can’t let [the EU] hold a gun to our heads. Britain has to be in a position to walk away if the terms of the deal are not acceptable. We have to be in a position that we are able to govern on day one.”

Ensuring there are adequate plans for such a situation does not indicate there is a high likelihood it will occur: indeed Prime Minister Theresa May can use a threat to walk away as a credible weapon for improving Britain’s deal if the rest of Europe believes that the threat is credible.

In the words of The Times: “The best way to achieve a soft Brexit is to prepare for a hard one.”