|
 There is no precedent for an economy as big as Britain's leaving a
trade bloc, and the rival campaigns paint contrasting pictures of
what quitting the EU might mean for its trade.
Below are some of the main issues around the potential risks or
benefits for British trade of a so-called Brexit.
TRADE WITH EU - HOW MUCH RISK?
Britain's most important trade partnership is with the EU's single
market, the world's biggest trade area.
Campaigners seeking to keep Britain in the EU say it would be in a
weak negotiating position if it left and then sought to hammer out a
trade agreement with its former partners, something many "out"
campaigners say they want.
Government figures show 12.6 percent of Britain's economic output is
linked to exports to the EU's 27 other members, for whom only 3.1
percent of output is linked to exports to Britain.
Pascal Lamy, a former head of the World Trade Organisation, said a
post-Brexit Britain would probably have to resort to raising its
import tariffs on EU and other countries' goods or restricting
access to its market in services in order to gain some muscle for
trade talks that could last as long as a decade.
"Britain would have to say, 'Sorry, consumers, but you have to pay
more'. It's just crazy," said Lamy, an ex-EU trade chief.
In return for a trade deal, the EU would want Britain to make
contributions into its budget and to keep on allowing EU citizens to
work on its soil -- two big concerns for the Brexit camp. It could
also face a long battle to ensure its banking industry did not face
hurdles doing business in Europe.
"Out" campaigners say the EU would probably be reluctant to reward a
breakaway Britain with a trade deal but would not want to impede its
firms from selling into the world's fifth-biggest economy by raising
tariffs or imposing tough new regulations.
They say the boot would even be on Britain's foot because, in value
terms, EU exports of goods and services to Britain were worth 289
billion pounds in 2014, substantially more than Britain's 230
billion pounds of exports the other way.
"Commercial imperatives are very powerful, much more powerful than
politicians," William Dartmouth, deputy chairman of the UK
Independence Party (UKIP), said.
If a deal could not be reached and WTO-compliant tariffs were
imposed on trade between Britain and the EU, they would be low
enough not to impede business, Dartmouth predicted.
Tariffs agreed by the EU with the WTO for imports from countries
outside the bloc stand at below 5 percent on over a third of factory
goods but have been abolished on about 30 percent more; the EU has a
nearly 10 percent tariff on cars, a big British export.
A breakaway Britain would also need to renegotiate its WTO
membership terms with all WTO members, including some with which
Britain has frosty relations such as Russia and Argentina.
TRADE WITH REST OF WORLD
The Brexit camp says the EU moves too slowly on trade and Britain on
its own would strike deals more quickly.
The big prizes would be agreements with heavyweights such as the
United States, India and China, none of which have full trade pact
with the EU to date.
But others warn that Britain, with a population of 60 million
people, would go into talks in a weaker position on its own than as
part of the 500-million strong EU.
[to top of second column] |
"It's not a question of being smart or not. At the end of the day it
depends on how much clout you have," said Arancha Gonzalez, head of
the International Trade Centre, a joint agency of the United Nations
and the WTO.
A 2013 trade deal between Switzerland and China, which some Brexit
supporters say shows what Britain might achieve on its own, got rid
of tariffs on 99.8 percent of Chinese exports to Switzerland
immediately compared with 77.3 percent of Swiss exports to China,
rising to nearly 90 percent by 2028.
Fredrik Erixon, at think tank ECIPE in Brussels, said a UK-China
deal could provide big gains for British exporters and investors but
might come at the cost of Britain providing China with privileged
status as an investor or more political support.
Simon Evenett, a trade professor at St Gallen University in
Switzerland, said Britain might be able to do a deal quickly with
Brazil because it does not share the concerns of other EU countries
about Brazil's ambitions to export more farm goods.
But he said India could repeat a demand it made in trade talks with
the EU -- namely that more of its skilled workers be given work
visas, touching on a sensitive issue for many Brexit supporters for
whom high levels of immigration are a concern.
As for the United States, its top trade official said last year
Washington's focus was on deals with regional groups not individual
nations.
And as well as seeking to open up new markets, a post-Brexit Britain
would face the challenge of regaining the preferential trade access
it currently has with over 50 countries under EU deals, ranging from
Mexico to Egypt and Ukraine.
WHO WILL NEGOTIATE FOR BRITAIN?
The European Commission has exclusive competence to forge trade
deals on behalf of the bloc. If Britain left, it would have to
create its own negotiating team able to handle the wide range of
complex issues immediately on the agenda.
Only a few of the 55 British officials in the European Commission's
trade department actually work on trade deals.
"Britain's trade negotiators would need technical and legal
experience, which is accumulated over many years, and they would be
stretched by the need to negotiate simultaneously on multiple
fronts," said Gregor Irwin, chief economist at Global Counsel, a
think tank led by Britain's former EU trade chief Peter Mandelson.
"No country has ever tried to do this before."
But Matthew Elliott, chief executive of Vote Leave, a pro-Brexit
campaign group, said more than 1,700 British government staff
currently work on trade policy and the country would also be able to
use private-sector expertise.
"The idea that we are too weak to even strike our own trade deals
shows how willing the pro-EU lobby is to do down Britain," he said.
(Writing by William Schomberg; Additional reporting by Phil
Blenkinsop in Brussels and Tom Miles in Geneva; editing by Mark
John)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
