Two years after the Brexit referendum, and just nine months before the UK is due to formally leave the EU, the Government has still not decided on the tariff regime we intend to run as an independent nation.
Within the EU we have been required to collect the Common External tariff and hand over the proceeds to the European Commission. When we leave we will decide for ourselves what tariffs to charge, or not charge as the case may be.
Arguments have been made for replicating the EUs tariff regime, and for abolishing all tariffs in favour of global free trade.
Tim Martin, the heroically pro-Brexit proprietor of the Wetherspoons pub chain, makes a powerful case in the Sun today to scrap all tariffs on Brexit day, March 29, 2019. As Martin says, free trade never made anyone poorer.
The one argument I can see against this is that if we unilaterally abolish tariffs, while our economy will benefit from cheaper imports, what incentive will other counties have to reduce their tariffs on our goods? We want to negotiate bilateral free trade deals, and if we already allow unrestricted access to our own markets, other countries (assuming they don’t recognise the benefits of cheaper imports to their own economies, or under political pressure from their own producers) may choose to keep their own trade barriers.
To counter that eventuality, I propose that the UK should announce a zero tariff regime for a fixed period of time, say two or three years. During that time we will retain the right to take measures against dumping, but otherwise everyone in the world will have free access to our markets. The benefits to ourselves and to other countries will be immediate, and will be particularly valuable to poorer counties who are now hit hard by the EUs tariffs on food products.
During that time we will negotiate free trade deals with as many countries as possible, making it clear their is no guarantee of continuing free trade if we do not get a deal.
I predict that countries that are already reaping the benefits of our open markets will be very reluctant to return to a tariff regime, and will be willing to open up their own markets in return.