The British Prime Minister, Theresa May, has confirmed that the UK will leave the EU single market but seek market access in specific industries such as the motor industry and aerospace, according to an article in the Financial Times. Furthermore, Mrs May confirmed that the UK will pull out of the EU customs union but retain a customs agreement. The defining feature of a customs union is a common external tariff against other economies allowing goods to circulate freely through the EU without the need for customs checks.
Various concerns as to how these plans will work in practice have, needless to say, been raised which include the following:
– whilst no World Trade Organisation (WTO) member country has ever sought to block an agreement, the WTO rules prohibit bilateral or regional agreements that do not cover “all trade”.
– Directors from many UK-based car manufacturers expressed concerns that border security will place enormous power in the hands of port officials and security guards.
– fragmenting the single market will stir obstructionist politics in countries with other important industries left out of arrangements.
The most likely outcome is that the UK will opt for a broad free-trade agreement with the EU which could cut tariffs to zero but would still have to make customs and rules of origin checks.
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