May’s new chief Europe negotiator David Davis lays out plans to take us out of EU

BREXIT gives us many tools to deal with the very serious economic challenges we face in the coming decades.

First, leaving the EU gives us back control of our trade policy — and the opportunity to maximise returns from free trade.

6

Because any deals currently settled are obtained by finding a 28-nation compromise, the EU is clumsy at negotiating. That is why we have deals with only two of our top ten non-EU trading partners.

First order of business is to put that right. As statements from the US, Australia, China and India show, these countries are as keen to knock down trade barriers as we are.

6

Single countries, with ability to be flexible and focussed, negotiate trade deals far more quickly than trade blocs. South Korea negotiated a deal with the US in a single year. The EU takes more than six years to negotiate trade deals.

I expect the new Prime Minister to trigger a round of global trade deals with all our most favoured partners — and the negotiation of most within between 12 and 24 months.

6

Within two years, before the negotiation with the EU is likely to be complete, we can negotiate a free trade area massively larger than the EU.

Deals with the US and China alone will give us a trade area almost twice the size of the EU — and of course, we will also be seeking deals with many others.

We should continue lessening tax burden

This will provide massive markets for our exports and cut costs for our manufacturing industries.

Take our car manufacturers. Electronics in today’s cars exceed 25 per cent of total vehicle value. And the vast majority of the world’s electronic components are manufactured in Asia. Many of these face tariffs, increasing cost. Elimination of such tariffs will decrease the cost of manufacturing a car in the UK, increasing our industry’s global competitiveness.

The same will happen across other industries as tariffs come down and the cost of doing business with the UK is reduced. The new trade agreements will come into force at the point of exit from the EU but be fully negotiated and understood well before then. That means foreign investment by companies keen to take advantage of these deals will grow in the next two years.

6

At home, we should be expanding export support arrangements for companies too small to have their own export departments but who wish to sell into these newly opened up marketplaces — an 0800 number that a small specialist manufacturer in the North of England, say, could call for practical help in Shanghai and Sao Paulo, Cape Town and Calcutta.

Regulation already in place will stay, for the moment, but the flood of new regulation from Europe will be halted.

RELATED STORIES

Trevor Kavanagh

Theresa May's master stroke is to pick a Cabinet that can deliver on the promise of Brexit

'DEFINITE TOSSERS'

Cher slams Boris Johnson after Brexiteer is named Foreign Secretary by new British PM

'FROMAGE NOT FARAGE'

Nigel Farage heckled by man with megaphone during live TV interview

BREXIT TRADE FOCUS

Trade agreements impacted by Brexit will be examined in new Cabinet position

We can then look at structuring our regulatory environment so it helps business, rather than hinders. At the moment all businesses in the UK must comply with EU regulation, even if they export nothing to the EU. Instead, we should look to match regulation for companies to their primary export markets.

I am not talking about employment regulation. Britain has a relatively flexible workforce and, so long as employment law stays reasonably stable, it should not be a problem for business. There is also a political, perhaps sentimental, point. The great British industrial working classes voted overwhelmingly for Brexit. I am not at all attracted by the idea of rewarding them by cutting their rights.

6

We should also continue lessening the tax burden. In particular, taxes that have a harmful effect on growth.

This Conservative Government has done good work in this area, with corporate tax cut from almost 30 per cent to 20 and plans to cut it to 15.

This will make the UK a more attractive business destination — and tax gained from companies moving their operations to the UK, through the people they employ and the sales they generate, will more than offset any reduced corporate tax take.

This leaves the question of Single Market access. The ideal outcome is continued tariff-free access. Once the European nations realise we will not budge on control of our borders, they will want to talk, in their own interests. But what if they are irrational, as so many Remain-supporting commentators asserted they would be in the run-up to the Referendum?

This is one of the reasons for taking a little time before triggering Article 50. The negotiating strategy has to be properly designed, with serious consultation.
Constitutional propriety requires us to consult with the Scots, Welsh and Northern Irish governments.

We will have a more dynamic economy

Common sense implies we should consult with stakeholders like the City, Confederation of British Industry, Trades Union Congress, small business bodies, the National Farmers Union, universities and research foundations.

None should have any sort of veto but we should try to accommodate their concerns, so long as it does not compromise the main aim. This whole process should be completed to allow triggering of Article 50 before or by the start of next year.

So how will this all look if we get it right? We will have a more dynamic economy, trading throughout the world.

Our businesses will have greater global opportunities and be more competitive.

6

There will be lower prices in the shops once we are outside the Common External Tariff. There will be higher wages for the poorest, an immigration system that allows us to control numbers. We will have control of our laws, our lives not hampered by needless regulations.

Brexit favours an export-based growth strategy and that should be what we embrace.

In summary, we need a brisk but measured approach to Brexit. This would involve concluding consultations and laying out the detailed plans in the next few months.

As the free trade round and associated economic policies progress, we should see increased foreign investment and domestic capital expenditure to take advantage of the opportunities created.

Some of the economic benefits of Brexit will materialise even before the probable formal departure from the EU, in around December 2018.

Economic estimates are subject to the vagaries of the world economy, but this approach should allow us to present to the British electorate in 2020 the early fruits of a successful, global, trade-based economic strategy as we build our place in the world.

_{● This article appeared on on July 11, two days before Mr Davis was appointed Brexit Secretary.}