You're not understanding that this isn't about trade between companies, it's about trade agreements between states. If SK has a default tariff of 30% on aero, but has negotiated a 10% tariff rate for the first £10Bn/yr with the EU - that puts the UK companies at a disadvantage.
An SK company buying the aero parts is going to be choosing between EU parts at a 10% tariff or UK parts at 30%. Which are they going to choose?
Of course, the UK would want to rack up an say they want a trade agreement too. They want, let's say 5% tariffs on aero parts. SK may say they want a reciprocal 5% tariff on mobile phones (it's 10% with the EU, but they have the leverage so they can argue for a better agreement)
The UK doesn't make mobile phones (that I know of) so it'll happily agree to that deal. "Hold on", says the EU, "we have it written into our EU-SK agreement that you can't offer a third country a better deal..."
"We don't care about the mobile phones, they can be tariff free for all we care, but you can't offer a 5% tariff on aero parts to a 3rd country. Either we get the same 5% tariff, or you've broken the agreement and our tariff on mobile phones goes back up to 25%".
SK now has to choose between having to break its deal with the EU (not going to happen), lowering its tariffs on EU aero parts to 5% (from which it makes a fair chunk of money), or telling the UK the best it's going to get is 10% on aero just like the EU.
The last option is *far* more likely - the thing is, because the UK is smaller than the EU and, let's face it, will be desperate to set up trade agreements as soon as possible, it still insist that the UK impose the lower 5% tariff on mobiles in exchange for the agreement.
The fact that the EU economy is an order of magnitude bigger than the UK's means that the EU will always have the leverage to get the better agreements while the UK can, if it negotiates well, get equal but not better.
On a nation-nation scale, trade agreements can seem pretty abstract. Bi-lateral trade agreements are often confused with company-company trade deals where company A in country A agrees to buy something from company B in country B. They're very different.
Unless there's some sort of embargo, companies can buy stuff from companies in other countries whatever bi-lateral trade agreements between the two nations are in place (if any). The difference is how much the purchasing company will have to pay in import tariffs.
The UK lowering the tariffs to zero on *everything* it imports is going to achieve jack shit because other countries will want to sell us stuff regardless - it's the UK companies having to pay the import tariffs that it affects.
If tariffs are lowered to zero, does that mean that stuff will be cheaper? Temporarily, maybe - but, not only will government find it suddenly has lost an important revenue stream, local industries suddenly find that they can't compete in their own domestic market, but also...
... with a sudden swing in the trade deficit the value currency will fall. This means the £ will be worth less, and that means that the imported good will cost more. Soon, cheaper imports will become the same price as they were, shortly followed by becoming more expensive.
In addition, when the UK starts to go out there asking the rest of the world to sign FTA agreements, they'll be told to piss off because the UK has nothing left to offer - they have already given the away zero tariffs in exchange for nothing.
In the rest of the world, UK exports will be charged at full tariff rates, making them far more expensive than both domestic product and then products from countries with which they have bi-lateral trade agreements with.
This is simple application of basic trade theory. When you see eedjits like Minford, Redwood, Fox, and that haunted pencil Mogg recommending this idea you have to wonder where they bought their degrees from.
(Apologies - it was unwise to use South Korea as the example country as they have an FTA in place with the EU which also includes stuff relating to non-tariff barriers. The thread assumes a EU-3rdCountry-UK relationship based on normal bi-lateral agreements)
(Also, in light of the above apology, I have realised that it is actually more difficult than I though for the UK to roll over any existing agreements the EU has since the deals it has arranged include easing of non-tariff barriers, not just an FTA...)
(Non-tariff barriers are much harder to roll over as they include things like alignment of standards, recognition of certifications, transparency of regulations, etc. In many cases, the UK has been relying on EU regulatory bodies and will have to create them from scratch, so...)
It also means that the UK being able to change its standards and/or rules to make itself more competitive won't help it much - the EU is basically effectively locking down a global standard by baking in alignment into it's trade agreements.
It's no good the UK having the freedom to change its rules and standards if the countries it wants to trade with already follow EU standards. The only countries it will help the UK get agreements with will be the US and China.
And it gets worse! Lowering its standards to please the US & China may effectively prevent it from trade with the EU and its block (unless companies start operating a two-tier system which will more than wipe out any advantage it may have had from a trade deal)
