Some in the UK argue that the UK can leave the border open after Brexit, charging no tariffs and making no inspections, and dare the European Union to be the first to put up customs posts. Would this actually work?
No. If it did not charge tariffs on imports from the EU, a post-Brexit UK would break the rules of the World Trade Organization, which operates on a "most-favoured nation" (MFN) principle of equal treatment.
This can be overridden by bilateral, or regional trade agreement. But it will take years for the UK to agree a trade deal with the EU: the UK cannot simply pre-empt it by holding tariffs at zero from the off.
Widespread litigation
If it does discriminate in this way, it will be vulnerable to widespread litigation in the WTO at a time when the UK is attempting to regularise its position in a body where it has been represented up to now by the EU.
The UK needs the goodwill of other WTO members in the tricky question of splitting the EU’s existing commitments on food import quotas. If it began by significantly breaching WTO law, it is not going to get other countries on side.
Of course, the UK could give every country Most Favoured Nation status. Domestically, however, that would be disastrous. British farmers shelter behind EU tariffs that can rise to more than 50 per cent for beef and lamb.
Sweeping them away would lead to mass bankruptcies as cheaper Brazilian and Australian produce flooded in. Manufacturing tariffs are lower, but even here there would be serious repercussions. – Copyright The Financial Times Limited 2017