What can we conclude from Michael Gove’s performance at the Lords EU Select Committee yesterday? A few thoughts: /1
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The UK govt really is bonkers enough to prioritise its craving for regulatory sovereignty over the health of the economy, and would accept tariffs on its exports if that was the price to be paid. You better believe it. (And so had the EU…) /2
At some point soon, the EU will have no option but to take UK govt at its word and draw up plans to reintroduce tariffs - to counter the risk of UK gaining a competitive advantage. /3
Remember that both sides have the option of making use of TRQs to allow limited quantities of bilateral trade to continue at zero or reduced tariffs – if full MFN tariffs are seen as being too damaging. /4
That calculation will probably be based on strategy of keeping tariffs high in sectors where UK is judged to be most likely to deregulate. /5
Encouraging news for French farmers, who will lobby Barnier as hard as they can to get tariffs reintroduced on UK lamb, beef and cheese /6
UK will also have to draw up its own tariff proposal – if only to ensure that it doesn’t lose leverage. It will be a painful and time-consuming process. A counter-intuitive move for a self-styled defender of free trade /7
Tariff collection will be one more 'little' thing to do for the people charged with monitoring trade between GB and NI. EU will double down on its demands for representation in Belfast if its own resources (i.e. EU tariff revenues) are at stake /8
In any case, the core Brexit question is about to move centre-stage – just what is regulatory sovereignty worth to the UK? How much of an economic blow will UK public opinion be prepared to swallow as a price for ‘taking back control’? /ends
