Should Brexit Trade Deal Fail, UK’s Upper House Warns On Growth

According to a new report prepared and released from the House of Lords, if politicians can’t do a deal to avoid the costs of leaving the EU customs union, growth in Britain will be damaged.

According to 2016 figures from the Office for National Statistics, with almost £357 billion ($431 bn) of goods flowing between the two each year, the European Union is Britain’s largest trading partner internationally.

And now a study researching how Brexit will affect the U.K.’s trade with the European Union was published in the form of a report by the EU External Affairs Sub-Committee, chaired by Baroness Verma.

If the U.K. is to succeed in its commitment to pushing growth in the regions where manufacturing and agriculture are prevalent, avoiding barriers to trade will be essential, the report found out.

“The manufacturing and primary commodities sectors are integrated into efficient EU-wide supply chains.

“Supplies and components may cross the Channel multiple times during production, and tariffs on UK-EU trade in goods could be imposed every time, increasing costs.

“Many UK businesses cannot easily substitute their imports from the EU, or find alternative export destinations,” the report stated.

Increased administrative costs for U.K. firms as well as possible delays to deliveries would be the potential results of the U.K. leaving the EU customs union, concluded the study.

Negotiators may not have time to secure free trade agreements by the time Brexit becomes official, Baroness Verma added in an accompanying press release.

“Agreeing a free trade agreement within two years is inherently ambitious, so the Government must try to agree a transitional arrangement with the EU,” she said.

Also a source of concern for many British businesses were issues such as labelling requirements, additional inspections or anti-dumping duties and these ar considered to by non-tariff barriers to trade, Baroness Verma said.

“Non-tariff barriers can pose as significant or greater barrier to trade as tariffs, and would be more difficult to resolve in a free trade agreement. Witnesses from industry said this is a pressing concern.”

By allowing some regulations to remain under the control of Brussels, the British government as well as some of the companies may benefit, the report stated.

“There may be significant benefits in the UK continuing to participate, where possible, in EU agencies such as the European Medicines Agency and the European Aviation Safety Agency.

“The Government should clarify whether it would accept being subject to some form of oversight and dispute resolution to so do,” it suggested.

And to deal with the additional costs and loopholes that will arise from future EU-U.K. trade, Whitehall, Britain’s civil service hub, would need more resources, the Lords report also claimed.

(Adapted from CNBC)

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