No-deal Brexit would harm UK, warn leading world business federations

https://www.theguardian.com/politics/2019/sep/03/no-deal-brexit-would-harm-uk-warn-leading-world-business-federations

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A group of the world’s leading business organisations, including from the US, Japan and Australia, have warned the UK that a no-deal Brexit would damage its reputation with some of its biggest trading partners.

In an open letter signed by some of the biggest lobby groups in the western world, representing more than 4m companies from eight countries, the organisations said they had “grave concerns” about the rising chance of a no-deal departure on 31 October.

The organisations said such a scenario would “create substantial disruption for businesses, workers, farmers and regulators” in the UK and the countries they were representing.

“Such disruptions are bound to affect jobs, consumer choices, and the cost of goods and services,” the lobby groups wrote.

Coming as political chaos in Westminster over Brexit escalates this week, with less than two months before the article 50 deadline, the letter was signed by the US Chamber of Commerce and leading industrial groups in Canada, Australia, New Zealand, Japan, South Korea, Brazil and Egypt.

Supporters of no deal have consistently pushed for the UK to leave the EU in order to embrace new trading relationships elsewhere around the world – in a vision for a “global Britain” that would tap into fast-growing markets, including with firms represented by lobby groups in the letter.

In a blow to their argument, the organisations warned the UK that abruptly reneging on its treaty obligations with the EU “sends concerning signals to others considering bilateral agreements in the future”.

Boris Johnson has attempted to show that the UK would be able to quickly agree new trade deals outside the EU after Brexit, including with the US. Donald Trump has said that Washington is moving rapidly towards signing a “very big trade deal, bigger than we’ve ever had”, once the UK is freed from the “anchor” of the EU around its “ankle”.

MPs opposed to no deal have warned that the UK would probably struggle to strike new trade deals after leaving the EU any time soon, saying that talks typically take years to conclude and that some nations would seek to extract a heavy price to allow the UK greater access to their markets.

Critics have warned that nations such as the US could demand more relaxed regulations for food standards. Malaysia’s prime minister, Mahathir Mohamad, has said that Britain would have a historic opportunity to strike a trade deal – provided restrictions on imports of palm oil imposed by the EU are relaxed.

Economists have also warned that new trade deals would be unlikely to offset the impact of curtailing access to the EU, which is Britain’s biggest single trading partner accounting for about half of all exports and imports.

Sounding the alarm over the UK’s future international status, the lobby groups warned that firms in their countries invested about £48.1bn in the UK in 2017 – helping to support jobs and growth across the country.

The organisations wrote: “Firms would be forced to make decisions about supply chains and investments in the UK without knowing what the future terms of trade will be. They will also need to evaluate the legal, contractual and geographic changes needed to ensure their continued ability to serve customers in the UK and across Europe.”

The lobby groups urged Johnson to swiftly conclude a deal with Brussels that included a “meaningful transition period” to an “ambitious agreement” over the future trading relationships between the UK and the EU.

“We deeply value our economic relationship with the UK given its favorable business climate, characterised by transparency, regulatory stability, respect for the rule of law, and a longstanding commitment to international collaboration,” the groups said.