Continued Single Market membership is the best approach

September 16, 2017 9:15 AM
By Marko Scepanovic, Chair of Crawley Liberal Democrats

Brexit negotiations have begun, but how much do we know about the basics of international trade? Looking at the tweets from some MP's, it seems not a lot. And that's worrying, considering the post-Brexit trade deal will be fundamental to the UK's successes.

Tariffs are taxes companies pay when they import goods. As a member of the EU, we are automatically part of the Single Market, and so no tariffs are paid for imports from the 30 other countries who are also members of the Single Market. Tariffs continue to exist with other countries, and levels depend on whether a trade deal exists.

Once we leave the EU, if we choose to stop being members of the Single Market, we will need to negotiate tariff free access with the EU either for all sectors and products, or specific ones. Should we not get tariff free access on every sector or product, on those we don't, World Trade Organisation rules apply.

The WTO is an international organisation for which every country is a member. Its rules set standards for trade across the globe; it has its own court where countries can sue one another for breaches in rules. The most important part of the WTO is its Schedules, which set tariff levels for trade between countries who do not have trade deals with one another.

But if we are free, surely we can set low tariffs on the EU without a trade deal? Wrong, because of the WTO's rule on 'Most Favoured Nation'. These rules mean that the UK cannot set more advantageous tariff rules on one country that it hasn't got a trade deal with it, above others.

Therefore, if without a trade deal, we set tariffs at 2% on all EU trade, that then has to apply to goods we import from other countries without a trade deal also. It means 2% tariffs on goods from India, China, New Zealand etc.

This leads to a huge problem, namely an influx of cheap goods into the UK. This may sound great for consumers, but it'll destroy our industries. Huge quantities of cheap lamb from New Zealand and grains such as wheat from Canada will hurt our farming sector. The steel crisis in Wales and the North from 2014 will return as cheap steel from China will flood the UK markets. Scotch whiskey made in Scotland will be decimated by cheaper versions from India.

The Single Market is the most advanced trade deal in the world, covering almost every sector and product, and so Liberal Democrats believe membership of the Single Market should continue once we leave the EU itself. Labour and the Conservatives are arguing for a 'comprehensive deal', but this is weaker and more costly to businesses and the UK overall than Single Market membership.