Better Idea of post Brexit Scenario Emerges with Change of Guard in Britain

A clearer picture has emerged of what the negotiations between the European Union and the U.K. could look like and what a so-called could Brexit mean for the country after fresh new faces arrived at the nucleus of British politics.

A new department as Secretary of State for Exiting the European Union would be headed by staunch “Brexiteer” David Davis. Being responsible for government negotiations on Europe and NATO enlargement, the veteran Conservative politician was foreign office minister in 1994.

All the cards have been kept close to her chest and played with caution by the new Prime Minister Theresa May so far. She has refrained from even guaranteeing the future of non-EU citizens that are currently residing in the U.K. even as she has loosely iterated that a “Brexit means Brexit”. Instead, she has concentrated on major social reforms that have become a by-product of the referendum and has only hinted that she will wait until the end of the year to trigger Article 50 – which begins the two-year process of exit negotiations.

But more forthcoming views have been expressed by Davis.

“The ideal outcome, is continued tariff-free access (to the EU’s single market). Once the European nations realize that we are not going to budge on control of our borders, they will want to talk, in their own interest. There may be some complexities about rules of origin and narrowly-based regulatory compliance for exports into the EU, but that is all manageable,” he said in an opinion piece for the news blog ConservativeHome on Monday.

Davis seems the UK to focus a little more on exports rather than domestic consumption. But as countries like France and Italy don’t want to fuel Euroskeptic campaigns in their own countries, negotiations are likely to be tough. For example, access of the UK to the EU’s treasured single market is intended to be kept by Davis. But since immigration was seen as a key reason many voted to leave the European Union, this will be politically difficult as it would likely mean keeping the free movement of people.

A little time before triggering Article 50 needs to be taken by the government, Davis also believes like May. In the intermittent time period, inputs from major unions from sectors like farming and financial services and input from Scottish, Welsh, and Northern Irish governments should be taken and assimilated to make possible a proper design of a negotiating strategy, he believes.

“We should work out what we do in the improbable event of the EU taking a dog in the manger attitude to single market tariff free access, and insist on WTO rules and levies, including 10 percent levies on car exports,” Davis added in his blog post.

If UK is kicked out into the World Trade Organization (WTO) wilderness, the British government will be in receipt of over £2 billion ($2.6 billion) of levies on EU cars alone and this presents an alternative for Davis. He therefore adds that support to the indigenous car industry using this cash would be possible easily.

“WTO rules would not allow us to explicitly offset the levies charged, but we could do a great deal to support the industry if we wanted to,” he said.

“Such a package would naturally be designed to favor British consumers and British industry. Which of course is another reason that the EU will not force this outcome, particularly if we publicize it heavily in a pre-negotiation white paper (a U.K. government proposal),” he added.

(Adapted from CNBC)



Categories: Economy & Finance, Uncategorized

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