Herbert Asquith once quipped that the War Office kept three sets of figures for every eventuality: one to mislead the public, one to mislead the Cabinet, and a third to mislead itself. 

As I sit down to discuss the future of Britain’s trade relations with the EU, I wonder how apposite that remark might be in describing government policy on Brexit.

The frustration for anybody interested in the Brexit process is the absence of any detailed proposals. Nearly a year after the vote to leave the EU, we have little more than a decision to leave the single market and to seek a new trade deal. What form might that deal take?

The person to ask is David Campbell-Bannerman – a long-standing Eurosceptic, one-time deputy leader of UKIP, and current Conservative MEP. He has sat on the European Parliament's Committee on International Trade (INTA) for over seven years. If anyone can elucidate the (probable) future of the UK’s trade relations with the EU, he can.

“I believe we can have a very similar deal to Canada - a SuperCETA, or CETA+. CETA [a landmark trade agreement signed in February 2017] gives Canada 99% access to the single market with no freedom of movement and no access fee. That’s a very good deal; hopefully we can get 100% access and better terms.”

“I’m very confident that we will get there,” he explains. “The Chairman of INTA, a German, has said that he wants a Canada-type deal and I asked the EU Commissioner for Trade, Cecilia Malmström the same thing. She said, "Yes, why not? It’s a good role model but let’s negotiate it quicker.”

“If you’re a member of a golf club, and you end your membership, you are not still expected to pay for extensions to the club-house."

David Campbell-Bannerman

I ask him whether reports of punitive exit costs are simply scare-mongering, then.

“In terms of front-up costs, I see no basis for large payments,” he replies. “If you’re a member of a golf club, and you end your membership, you are not still expected to pay for extensions to the club-house. Payments are dependent on our membership, which is ending. And if we can’t do a fair deal, then Britain will walk away and go to WTO rules.”

I was waiting for that line. Isn’t going to WTO rules ‘crashing out of Europe’?

“No! There’s no crashing!” he laughs. “The reality is that six out of ten of the EU’s biggest trade partners do business on WTO rules. That includes China, from whom we import €300 billion of goods every year without a trade agreement. It’s all done under WTO rules. America exports more to the EU than we do and doesn’t have an agreement; so does Russia and Japan.”

“So, yes, we would pay tariffs. But that would be compensated by the money we no longer send to the EU, which is about £12 billion net a year. £7 billion of that could be used to compensate tariff-paying exporters. There is a cost to it but we are in a strong position. We can walk away to WTO rules at any time; it’s a guaranteed deal.”

This is a recourse to the familiar 'no deal is better than a bad deal' argument.  I put it to him that there would be serious economic consequences if tariffs were introduced, at least in short term.

“There is an economic argument for tariffs, which I don’t share. But in the short term? Maybe.”

David Campbell-Bannerman

“Well, only one quarter of sectors have any tariffs under WTO rules,” he begins. “Certain sectors are hit very hard. But there are ways in which you can legitimately compensate corporations for additional tariffs.”

“I suspect this is what is written in the Nissan letter, because Nissan depends on the EU market far more than other car manufacturers. So the letter will probably say: "We can’t pay you directly Mr. Nissan, but we can pay for research and development and regional grants."  It will take a bit of adjustment. But we ought to remember that the value of tariffs is much reduced in today’s world, after many agreements.”

These are all very fair points. However, I remain concerned about the scale of that “adjustment”. How can we be sure that businesses will “adjust” smoothly?

This is obviously an argument Campbell-Bannerman has heard before. “Look, we’re the fifth biggest economy in the world,” he begins. “That’s very valuable. We’re in the G7, G20, IMF; we’re the fastest growing G7 economy. Economically, we’re in a very powerful position. We shouldn’t be complacent, some sectors will be hit hard -”

“Agriculture?” I interject.

“Well, you can directly compensate agriculture; there’s massive subsidies in place already. But if we plan for the exit, if wouldn’t be a shock. The government would have to give settlements to various companies. It would involve a cost but, on account of our massive net contribution, we’ll still be better off even with tariffs.”

Campbell-Bannerman then points out that tariffs are reciprocal; under WTO rules, the EU would “pay approximately £13 billion in tariffs” to the British government. “I’m not a protectionist, I’m pro-free trade. But that money would be quite substantial.  The problem is, of course, that the extra costs would be passed on to the British consumer.”  

Amatey Doku: Looking forward, looking back

This is the strange paradox of Brexit-era Britain. Theresa May has heralded Britain’s manifest destiny to become “the most passionate, enthusiastic and convinced advocate of free trade” in the world. However, she is currently seeking re-election on the basis of leaving the largest and most successful free trade group in history.  

Fervent supporters of free trade are now having to acknowledge Britain’s potential exposure to tariffs, if we don’t get a deal. As Campbell-Bannerman says: “there is an economic argument for tariffs, which I don’t share. But in the short term? Maybe.” A paradox to the point of contradiction?

As I draw the interview to a close, I am reminded of another famous Asquith quote, which he used repeatedly in speeches of 1910: “We had better wait and see.”