Dash for deals threatens march of the makers
Firms want new trade agreements – but not at any price
BRITAIN’S manufacturers would reject any plan to open up the country to unrestricted foreign trade, fearing it could wipe out their businesses, an industry body is warning.
The Engineering Employers’ Federation is to poll its members on which countries they would support the UK striking a trade deal with. The organisation, whose members employ 2.6 million workers across the country, said it was in favour of trade deals, but not at any price.
‘Unrestricted trade would be a no-no, particularly around steel. That would be very difficult for manufacturers,’ an EEF spokesman told The Mail on Sunday this weekend.
The EEF’s concern comes as Vote Leave campaigners were last week trumpeting the deals the UK could do around the world. Chinese newspapers reported last week that a deal with the UK could be ‘fast-tracked’ amid frustration at attempts to negotiate a deal with the European Union. There were also suggestions the UK could join a deal between 12 countries, including the US and Japan. The Trans Pacific Partnership was signed in February, but has yet to come into force. However, such deals could alarm many UK businesses, particularly those already fighting the dumping of Chinese steel in the UK market. ‘The difficulties come from the state support and subsidies the Chinese give to their manufacturing base,’ the EEF spokesman said.
Trade experts also warn that any Chinese deal could disrupt attempts to secure a good deal with Britain’s biggest trading partner – the EU.
Stephen Woolcock, at the London School of Economics, said: ‘You have to think about the sequence of agreements. If the UK were to negotiate a tariff-free agreement with China, then negotiate with the EU it could cause problems. The EU would insist on rules to ensure Chinese products didn’t enter Europe duty free.’
He added that any deal could disappoint those who voted Leave in the referendum believing the EU to be ‘the first step in globalisation’. He said: ‘There was unhappiness in the North of England and West Midlands about the lack of jobs and downward pressure on wages.
‘If the UK negotiates a free trade agreement with China, competition would be much more intense.’
Some economists backing Brexit have advocated unrestricted free trade, in which the UK unilaterally offers tariff-free access to its markets. Patrick Minford, at Cardiff University, has argued this would boost economic activity, increasing gross domestic product by 4 per cent, but at the expense of Britain’s manufacturing sector – which he concedes would be ‘eliminated’.
Remain campaigners in the run-up to the referendum argued the UK was woefully unprepared to do trade deals with the rest of the world.
The UK has not negotiated a single trade deal since it joined the European Economic Community back in 1974. That means Whitehall and regulators may have to bring in foreign trade specialists at a time when it would be expected to be closing its borders to more migrant workers.
Leave campaigners have argued that it will be possible to secure access to the European single market while limiting the free movement of people into the UK – a claim that senior EU officials, commissioners and European heads of government have poured cold water on.
Norway, which is in the European Economic Area, has full access to the single market but must accept the free movement of EU citizens.
London Stock Exchange boss Xavier Rolet has said 100,000 City jobs could be lost if City firms do not have unfettered access to the single market.
A more radical option would see the UK pull out of such Europe-wide deals and trade with the EU under World Trade Organisation rules.
Critics warn that while WTO rules specify relatively low tariffs for trade between countries, they do not deal with regulatory rules on potentially harmful products. These can cost exporters 20 per cent of the value of their goods – with the figures even higher for food.