Britain proposes to temporarily keep a “remain” policy
By admin August 15, 2017

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On August 14, Britain submitted a proposal to the European Union (EU) to maintain the existing customs union for an interim period after Brexit. This is a measure taken to reduce boarder chaos and restore faith in trade investments.

The government has put up a case that this policy is necessary considering the diminishing business investments. The Guardian reports that, “The threat of cumbersome new customs checks is one of the key issues causing anxiety among businesses and senior ministers.” Businesses are fearful of new trade policies and economic reconstruction if any deal with the EU doesn’t work out. Prime Minister Theresea May has famously stated that “no deal is better than a bad deal.”

British Ministers have stated that the country will look to new trade deals with non-EU member countries immediately after the split. Under EU law, members are not allowed to make solo arrangements with other countries. May’s statement along with claims from the Exchequer indicate that the UK is willing, and might be forced in a position, to lower tariffs from 20 percent to 15 percent or less to remain competitive.

It is unlikely that EU leaders will look favorably to this plan, especially if the requested interim period is lengthy. Since the initiation of Brexit, major leaders like Chancellor Angela Merkel made it clear that they will not allow the United Kingdom to reap the benefits of EU policy without taking any responsibility. It is likely that the Union will respond by accepting the arrangement only if the UK accepts restrictions on trade like tariff limits and constraints to new trade.

Critics are skeptical that this policy will be the guide to a smooth Brexit transition. “The only way to guarantee ‘free and frictionless’ trade with the EU is to stay in the customs union and single market,” says Vince Cable, the Liberal Democrat leader. Furthermore, the proposal is a signal that UK ministers do not have enough time to strike a deal before 2019.

Meanwhile, Brexit policies and transitions have yet to be established. This has taken a toll on leading industries in the UK, especially banking. “Businesses cannot see through this haze of uncertainty and are struggling to look further than the end of the next quarter in terms of their decision making,” states the director of business at Institute of Chartered Accountants in England and Wales Business Confidence Monitor. The way that businesses can continue working with clients abroad is unclear, which has lead companies like Lloyds insurance to open a subsidiary location in Europe.

The one industry that may have a promising future, even in the event of a hard Brexit, is pharmaceuticals. Although the government will need to seek new ways to acquire funds for research—the UK was the largest recipient of research funding in the EU—breaking away from EU policy would allow for clinical trials of novel drugs.

While this flexibility can lead to great developments, Britain mustn’t forget about the loss of talent and opportunities that comes with tighter boarders.

Further Reading:

Theresa May seeks interim EU deal to avoid Brexit trade chaos

Brexit: Britain to propose keeping customs rules for ‘interim period’ to avert border chaos

UK Says It May Seek ‘Temporary’ Customs Union With EU

Britain Asks for Interim Customs Deal With EU, New Trade Deals Post-Brexit

Businesses limit investment as confidence slides

UK trade deficit widens despite strong industrial output figures; US stocks follow Europe into the red

Philip Hammond and Liam Fox in post-Brexit deal call

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