According to a new report, securing a trade deal with the EU after Britain leaves the bloc is “desirable but not essential”.
The Institute of Economic Affairs (IEA) published a comprehensive review of trade policy for a Brexited Britain.
Defaulting to World Trade Organisation rules would not be a “disaster”, the report said, despite warnings from businesses and politicians saying otherwise.
“Many people believe that disaster will befall us if we do not forge a deal with the EU,” says the IEA’s research director, Jamie Whyte.
“In fact, we could unilaterally eliminate all import tariffs, which would give us most of the benefits of trade, and export to the EU under the umbrella of the WTO rules.
“Then we can seek free-trade deals with all major trading partners, including the EU.”
The report states that the main concern for Britain ‘going forward’ should be to promote the interests of UK consumers, not producers. (Going forward = from now on)
“It is in the interests of UK consumers and UK importers generally to buy as cheaply as possible, which implies that tariffs are a form of self-harm. The UK should therefore commit to a policy of unilateral free trade with the rest of the world, thereby eliminating all barriers to imports, and it should do so regardless of whether other countries impose tariffs on their imports from the UK or not,” the report said.
“The UK’s best post- Brexit trade policy should therefore be to trade as freely as possible with the rest of the world,” it added.
If a bad deal is offered by the EU then the UK should default to WTO rules for its relationship with Europe and secure free trade agreements with other major trading partners such as the US, Canada and Australia.
“The UK bargaining position with the EU on trade issues is then simple. The UK should be willing to seek a trade deal with EU provided that such a deal leads to greater free trade, but it should make it clear that it regards no trade deal as better than a bad one.”