Analysis: UK trade may struggle to stand still after EU exit

Thu May 16, 2013 9:10am EDT
 
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By Tom Miles

GENEVA (Reuters) - As British Prime Minister David Cameron struggles to accommodate eurosceptics in his own party, trade experts warn that quitting the European Union would force Britain not just to rework trade relations with the EU, but also with the EU's trade partners and probably the World Trade Organization.

Moreover, it would struggle to maintain the same level of trading rights it now enjoys, they say, including those that benefit London's financial centre, a major contributor to the national economy and a significant exporter.

Cameron has pledged an in-out referendum in 2017, and opinion polls suggest the public is inclined towards the exit, which would leave Britain in need of a deal to ensure exports to the EU are not hit with EU import tariffs, which averaged 5.3 percent in 2011, and 13.9 percent in agriculture.

"I don't see any advantage in doing it," said Roderick Abbott, a Briton who served as deputy director-general of both the WTO and the European Commission's trade department.

"Could we negotiate a free trade area with the EU? It would be feasible, but you have to be sure that's what the other side wants. Having said 'we want to shut the door and stop paying into your budget', can we then say 'please give us free trade for free?'"

About half of Britain's goods exports and over a third of its services exports go to the EU, about 234 billion pounds ($356 billion) in 2011. Imports were 261 billion pounds.

Without a good deal, Britain could find itself in a worse position than competing exporters, such as Norway, Switzerland, South Africa, South Korea and many others, which have preferential trade agreements with the EU.

Those agreements gradually eliminate tariffs on goods traded between the two sides. A WTO study shows virtually all South Korea's exports to the EU will be duty-free by 2016.   Continued...

 
British Prime Minister David Cameron speaks during a news conference at the United Nations headquarters in New York May 15, 2013. REUTERS/Brendan McDermid