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UK Gov't Must Anticipate Possible EU Free Trade Deal Void

by Jason Gorringe, Tax-News.com, London

04 April 2017


The UK Government needs to be prepared for the "worst case" result of Brexit negotiations: leaving the European Union without having reached a trade deal, members of parliament have said.

In a report assessing the Government's stated negotiating objectives for leaving the EU, Hilary Benn, Chair of the Brexit Committee, said: "The Government is right to try and negotiate both the divorce settlement and a new trading relationship in tandem, but it should also be prepared for the worst case – that a new trade agreement is not reached or ratified by the day we leave – because the timescale allowed by Article 50 is particularly tight."

At the end of March, Theresa May invoked Article 50, triggering the formal two-year Brexit process.

But the Committee warned that the Government's "no deal is better than a bad deal" stance is unsubstantiated "without an economic impact assessment of 'no deal' and without evidence that steps are being taken to mitigate the damaging effect of such an outcome."

It said that the Government should conduct a thorough assessment of the economic, legal, and other implications of leaving the EU without a deal in place.

The Committee added that such a scenario would see the UK having to default to World Trade Organisation (WTO) rules.

"Falling back on WTO terms would mean not just a return to tariffs, but the reappearance of non-tariff barriers," said Benn.

The report also questioned whether the aim of securing a free trade deal within the two-year exit timetable was realistic, given the longer consultation period needed for all similar international agreements.

TAGS: tax | export duty | tariffs | World Trade Organisation (WTO) | United Kingdom | agreements | import duty | trade | European Union (EU) | Europe

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