We mustn’t fall for Project Fear II, says John Baron MP

Last week’s meeting of EU national leaders has focused minds on the Brexit negotiations and the nature of our future relationship with the EU. Their decision that ‘insufficient progress’ had been made on the somewhat arbitrary issues of the Irish border, citizens’ rights and the ‘divorce bill’ for formal trade talks to begin was expected, meaning the psychodrama of when such talks will begin continues.

In reality, though the hard-bitten ideologues in the EU Commission may resent it, it seems the dam is breaking when it comes to commencing trade negotiations. Recent announcements that the German and Swedish governments are embarking upon scoping work for the parameters of an EU-UK trade deal mirror similar noises coming from the Danes and the Dutch, and reflect the growing assertiveness of the elected leaders – the ones who know they will have to carry the can with their electorates for the consequences if our trade is significantly affected. Given our large trade deficit with the EU, I remain hopeful that common sense will prevail.

This view is bolstered by the post-summit announcement that the EU will begin internal talks about an EU-UK trade deal – clearly preparing the ground for formal trade negotiations to begin after the next summit in December. Again the hand of elected representatives can be seen in this: many EU capitals are becoming increasingly frustrated at the negotiating straitjacket the EU has so far woven for Barnier and his team, and recognise the British Government’s point that we are reaching the limits of what is achievable under the current arrangements – in any negotiation, it is impossible to agree financial terms before the wider terms of the agreement is known.

However, we should not become so myopic to the importance of a trade deal that we overlook the fact that, whilst an agreement is desirable, it is not necessary. Indeed, to rightly quote the Prime Minister, ‘no deal’ would be better than a ‘bad deal’, and it is good news that this time the Government is now making proper contingency plans for this eventuality. Hopefully we will not be caught on the hop again, as we were immediately after the EU referendum last year.

Falling back on World Trade Organisation rules and tariffs need not hold any terrors – many countries use them to trade easily and profitably with the EU, and there is no reason why Britain should be an exception. Indeed, they are the same measures British firms currently use to trade with companies in non-EU countries. If no deal is struck by the time we leave the EU in 2019, I can certainly foresee a scenario in which we use WTO rules for a period whilst a comprehensive free-trade agreement is completed.

We should be wary of listening to those voices issuing dire warnings of what will happen in a ‘no deal’ setting, especially in the Labour Party which would apparently accept any deal, at any price, offered by the EU. These warnings also often stem from big business, which would prefer nothing to change, and equally invariably come from those who were supportive of our membership of the ERM, the Euro, and remaining in the EU. Given the worst predictions of ‘Project Fear I’ have been shown to be largely unfounded, there is every reason to be sceptical of ‘Project Fear II’.

Business, however, appears to have successfully persuaded the Government of the need for a two-year ‘implementation period’ after March 2019. I question whether this is really necessary, given businesses have already had ample warning that we will be leaving both the Single Market and the Customs Union. Furthermore, such a period risks indefinitely postponing our exit from the EU, as one delay to leaving can very easily lead to another. The Prime Minister made clear in her Florence speech that such a period would be strictly time-limited, and many MPs, including myself, will be watching this very closely.

4.82 avg. rating (95% score) - 22 votes