Barry Gardiner MP: Liam Fox may not like the fact that the Prime Minister is belatedly talking to Labour. But the truth is he has only himself to blame
6 min read
Labour’s Shadow International Trade Secretary writes: "Whilst the Prime Minister now appears to have looked over the edge of the abyss at the chaos her Secretary of State Liam Fox has prepared for her, she still refuses to accept that, unless she changes course, it is over the edge that she is driving us"
Liam Fox, one of the Tory Party’s most ardent right-wing Brexiteers, has been vocally supporting the Prime Minister’s deal. Why?
The Prime Minister’s deal sets out a vague future framework to underpin our trade relationship with the EU. It is weak on detail and amounts to little more than a menu. Despite the two years spent in negotiation, it certainly does not represent the Free Trade Agreement or Canada Plus Agreement that he has so long advocated. This political declaration has no binding legal status. It suits neither Fox’s ERG principles nor his vision of the Free Market Anglosphere, so what has turned this liberalising terrier into Theresa May’s toy poodle?
The answer is failure. Ministers have admitted that they are struggling to make progress with the other trade agreements that Liam Fox promised would be ready “day one after Brexit”. These “roll over” deals represent trade with approximately 70 countries which constitute 13% of our exports and 12% of our imports:
- 9 are off track;
- 19 are significantly off track;
- 4 are not possible to complete before Brexit; and
- 2 are not even being negotiated.
The government has refused to even confirm how many separate and distinct agreements, including Mutual Recognition Agreements and sector-specific trade agreements must be replicated to ensure the continuity of our trade on existing terms. But the PM’s deal offers Fox a cover. If we leave the EU with a deal and have a transition period, then the relationship will continue unchanged during the transition under the terms of the Vienna Convention on treaties. Fox is afraid that these existing deals with third party countries will fall away if there is the no deal his instincts might favour. That is why the department has desperately been trying to renegotiate them. Without new agreements in place we could have no basis of preferential trade with these countries after Exit Day and would fall back on World Trade Organisation rules. This failure is an indication of the staggering incompetence and complacency that has infected Liam Fox’s whole approach to these negotiations over the last two years. Understandably, he would prefer that the public and his colleagues were not reminded of it.
But it is not just Free Trade Agreements that expose Fox’s Failure. Last month the government announced emergency proposals to reduce up to 87% of UK tariffs to zero and to expand our tariff rate quotas in the event of a no deal. This means UK companies would face competition from a flood of cheap imports that undercut them putting thousands of UK jobs at risk. It is extraordinary that the government has instituted these measures without consulting business and giving no time for them to prepare or adjust. Just about every single major trade body and trade union has decried the lack of engagement with them or their members. At the same time our exports to the EU would be subject to new tariffs making them more expensive to EU consumers. This is a double whammy on UK manufacturing. The fact that government has exempted cross border trade with Ireland only opens up a backdoor route for smuggling and risks creating the very divergence of customs regimes between Northern Ireland and the rest of the UK that parliament has been so determined to avoid.
The government's proposals fall foul of the WTO’s most favoured nation rules (MFN Rules), and could see the UK facing costly challenges from other countries demanding the same treatment as Ireland where the government has said that they would not carry out checks and would not impose tariffs on trade across the border. The EU's Agriculture Commissioner has suggested the measures are "illegal" and called them a "political stunt, pure and simple". The Environment Secretary has admitted that legal challenges would be likely.
The commitment to a free trade area with no tariffs between us does not mean that trade will be “frictionless” at borders. In the event that we do not have a Customs Union with a Common External Tariff a change in processing and customs checks would be required and it is clear that the UK is not ready and resourced to manage this. The new Customs Declaration Service (CDS) has been years in the making and will not be fully rolled out by the time we leave the European Union. In any event, the CDS was designed for us staying in as a Member State, not for a Leave scenario. It is simply not possible for it to accommodate any upsurge in the processing demand.
Nor, for that matter, has Liam Fox been able to give any reassurance that our border and entry points will have the required staff to carry out inspections and veterinarian checks. Ironically, the government’s own reports found that 95% of Official Veterinarians who carry out food hygiene inspections are non-UK EU nationals. Both existing and replacement staff will require substantial training to meet the increased volume and the new regulatory regime.
The government is entirely unprepared for any changes to risk profile or regulatory divergence at the border. Any regulatory divergence could see a substantial increase in risk profile for goods exported from the United Kingdom and could result in border delays, increased paperwork and checks at the border and along the supply chain.
There is another deal though: one that could win a majority in the House of Commons. That is why Labour has called for a new customs union in which the UK has a say on trade agreements and a deep and close relationship with the Single Market. Labour’s proposal would protect business, the economy and jobs; solve the question of the Irish border and give us a voice in negotiating future trade deals with the power of a 500million strong consumer market.
Whilst the Prime Minister now appears to have looked over the edge of the abyss at the chaos her Secretary of State has prepared for her she still refuses to accept that, unless she changes course, it is over the edge that she is driving us. To avoid that chaos she must do more than simply holding talks with the Labour Party – she must indicate where she is willing to compromise and accept that Labour’s proposals represent a better way of delivering upon the referendum vote to leave the European Union. Labour’s proposals would ensure the continuation of existing trade remedy measures safeguarding our manufacturing sector and preventing the threat of dumped goods from overseas undermining our producers. They would ensure that the existing terms on which our businesses trade with international partners can continue and restore a measure of confidence and stability. Liam Fox may not like the fact that the Prime Minister is belatedly talking to Labour. But the truth is he has only himself to blame.
Barry Gardiner is the International Trade Secretary and the Labour MP for Brent North
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