It seems from this article, in The Telegraph of all places (HERE), that the trade deal the government has in mind is simply impossible. Mrs May has said on numerous occasions she wants a deal that goes much further than the CETA with Canada, offering frictionless access to the internal market and covering services as well. Legal and trade experts think this is an illusion and for what seems to me very sound reasons.
CETA and other FTAs contain "most favoured nation" clauses which means the EU cannot offer us better terms than Canada, or other nations with which the EU has an FTA, without offering the same improved terms to them - without being able to demand anything in return. And since trade deals are always mixed, meaning competence is shared between the EU and the member states, so national parliaments will need to unanimously agree and we saw the trouble that Wallonia caused with CETA.
The article says:
Trade experts say the only way to avoid triggering these MFN clauses is if Britain’s deal with the EU meets a set of core conditions: it must create an “internal market” [i.e the Norway model already ruled out] with free flows of goods, services, capital, and people, and must have equivalent legislation.
And negotiating to "grandfather" the EU's existing FTAs with other states also looks fraught:
Even if Korea offered the UK the same terms that it has now, problems would still arise. British-built cars, for example, currently have tariff-free access to Korea because they meet the 55pc threshold of components originating from the EU. After Brexit only the British components would count, and the average UK car falls short at 41pc. Most British vehicle exports to Korea would face an 8pc tariff until the supply-chain was radically altered.
Hae-Won Jun from the Korea National Diplomatic Academy said the Koreans will drive a harder bargain with the UK than they did with the EU-Korea deal simply because of relative economic power. “The UK outside the EU will be a ‘second tier’ player, considerably weaker than the ‘big three’, the US, the EU, and China. Global Britain does not look quite as attractive from Seoul as it might seem from London,” she said.
This all comes about because nobody examined all the myriad problems either in detail or in most cases not at all. As the article goes on:
Britain’s pursuit of the ‘Canada plus, plus, plus’ option assumes that the obstacles are chiefly political, and that Brussels will find some way to finesse legal headaches. This is a recipe for a painful awakening next year. By then businesses will have been forced to trigger contingency plans and to shift operations abroad.
It is hard to see a way around the problem. Even the most ardent Brexiteers surely can't argue that the EU should massively expand access to their market just to accommodate us?
If this is confirmed, and I assume we will know early next year, always provided the talks get that far, when scoping begins on the future relationship, it will show just how weak our position is. We are a mid ranking nation and no more. That will become ever clearer as the negotiations progress.
