UK manufacturers urge PM May to opt for Brexit trade deal

The Dollar Business Bureau

British manufacturers on Monday urged Prime Minister Theresa May to relinquish her threat that she might pull out of the European Union without a new trade deal, underscoring that they would be the biggest loser of the trade barriers with the EU.

May is scheduled to trigger the two-year Brexit process on March 29. She has warned the other 27 Europe Union members that no deal is better than a bad deal.

"The idea of being able to walk away empty-handed might be a negotiating tactic, but it would in reality deliver a risky and expensive blow," said Terry Scuoler, chief executive of EEF, Britain's manufacturing lobby.

"The rhetoric from the UK government needs to focus instead on achieving a deal that will work for the UK and the EU," he said.

May has conceded that the UK must exit from the EU's single market and customs union in order to take control over immigration.

In the absence of a trade deal between Britain and the EU post-Brexit, Britain would have to follow World Trade Organization rules and tariffs.
The EEF said post-Brexit British manufacturing exports such as cars, chemicals and machinery, may attract tariffs averaging 5.3%. It will also invite other risks such as obstacles to trade through customs procedures and higher compliance costs.

Britain exports more than half of its manufacturing products to the EU. Many British factories are dependent on goods and parts crisscrossing the bloc during production, thus exposing them to any increase in trade barriers. Manufacturing contributes about 10% share to the Britain's economy. UK companies, especially in the banking industry are equally worried about their future access to the EU's single market.

The EEF urged May to hold a close consultation on Britain’s Brexit strategy and said the country should allow a transitional period to ease into its new relationship with the EU.

Britain's Brexit minister David Davis said that since last year's referendum, the UK government has not assessed the economic impact of leaving the bloc without a new trade deal.

Meanwhile, British economic think tanks have also backed the British government's plan to leave the EU customs union, saying that it will put the UK in a better position to strike better trade deals with other countries.

"The UK and the EU should aim for full customs cooperation as part of a comprehensive free trade agreement. This is perfectly achievable, and the EU already holds customs facilitation agreements with other trade partners, including Switzerland and Canada," Open Europe policy analyst Aarti Shankar said."