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Trade experts offer alternative that would allow May to tear up 'common rule book'

The report was co-authored by Shanker Singham, an ex US trade adviser - Matt Crossick
The report was co-authored by Shanker Singham, an ex US trade adviser - Matt Crossick

Theresa May's plan to follow EU rules after Brexit will "box the UK into a corner", trade experts have warned, as they publish an alternative "roadmap" to a trade deal with Brussels.

A new report by the Institute of Economic Affairs think tank states that the Prime Minister's proposal for a "common rulebook" on the production of goods and agricultural products would force the country to become a "rule taker without any representation during the process of rulemaking".

Instead, experts led by Shanker Singham, a former US trade adviser, propose that the Government negotiate a system of "mutual recognition" by the UK and EU of each other's sets of standards.

The report is likely to be backed by leading Brexiteers, including David Davis, the former Brexit Secretary, as it echoes Theresa May's earlier approach to detaching from EU rules, before her new white paper, published last week, advocated the controversial "common rulebook".

The paper, due to be published on Monday, cites Theresa May's Mansion House speech in March, in which she proposed that the UK's post-Brexit regulations would "achieve the same outcomes" as EU law, but need not be identical. 

Steve Baker: 'If we wreck Brexit then we will get the Corbyn cataclysm'
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The report, by the IEA's international trade and competition unit, states that the UK is in unique position to negotiate a trade agreement with the EU because its regulations are already "identical or fully recognised", as a result of its membership of the bloc.

"The UK should therefore seek maximum mutual recognition on day one, and equivalence mechanisms in the EU that allow this where they do not exist already," the authors state.

"Any differences after this that result from the parties changing their laws and regulations should be managed by permitting the withdrawal of recognition where the change results in the parties’ regulatory goals not being met.

"Negotiating this with the EU will be challenging, but this is too important a principle to abandon. If the EU will not accept it, it will be further isolated in a world where regulatory recognition and good regulatory practice is increasingly the preferred pathway to lowering trade barriers."

The report adds: "Pro-competitive regulation is essential for the UK economy, and the vital first step is regulatory autonomy. The idea that the UK Government would decide in advance to be tied to whatever future regulation the other party produces, without UK representation in its institutions, would be extremely unusual. It would threaten our competitiveness, and our democracy."

The report cites a series of examples of EU regulations that harm UK manufacturers.

"Energy tests for vacuum cleaners were required by the EU Commission to be performed in such a way to give an advantage to German manufacturers over Dyson’s more efficient bagless designs," it states, as one example.

"EU law does not permit Dyson to display supplementary information about its own tests alongside the officially required (flawed) EU energy tests."

Ministers have insisted that the absence of an identical set of rules would result in a hard border between Northern Ireland and the Republic, for goods checks.

Theresa May's plan was signed off by the Cabinet at Chequers - Credit:  Joel Rouse/Crown Copyright/ PA
Theresa May's plan was signed off by the Cabinet at Chequers Credit: Joel Rouse/Crown Copyright/ PA

Mrs May's aides describe the common rulebook as "a necessary compromise to get the EU to engage" in the Government's proposal.

But the report states that an open border can be maintained with a system of mutual recognition of standards.

Yesterday, Liam Fox, the pro-Leave International Trade Secretary, defended Mrs May's plan, telling the BBC's Today programme: "The standards would be the same. That therefore removes the need for inspection at the border. But in terms of market access the United Kingdom would have a great deal of freedom," he said.

Dr Fox said the UK would still be free to set its own customs tariffs and negotiate free trade agreements.  He added: "We are making a realistic and positive offer to the European Union. I hope we will get their support because what we need to have is a people's Brexit, not a bureaucrat's Brexit," he said.

"We now need to think about the well-being of people across Europe, about their prosperity, their jobs, their security, and not about the abstractions of the bureaucrats of Brussels.

"I think most people in Britain will think this is that this is a fair, pragmatic and reasonable approach."