No such thing as 'frictionless' trade, Barnier warns UK

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"Frictionless" trade with the European Union in a post-Brexit Britain is "not possible", warned Michel Barnier, the EU's chief Brexit negotiator.

London's "red lines" for a future trade relationship meant Britain was definitely leaving the single market and the customs union, while only membership of both permitted the current "frictionless" trading arrangements, said Barnier in an address at an EU business forum in Brussels on Thursday.

Barnier said he was unsure the EU's refusal to grant single market access piecemeal and insistence on control of standards in the single market "have been fully understood across the Channel".

The European Union's chief Brexit negotiator Michel Barnier addresses the European Economic and Social Committee plenary session in Brussels, Belgium, July 6, 2017. /Reuters Photo

"I have heard some people in the UK argue that one can leave the single market and keep all of its benefits – that is not possible," he said. "I have heard some people in the UK argue that one can leave the single market and build a customs union to achieve 'frictionless trade' – that is not possible."

Stressing that time was tight for a deal by the time Britain will be automatically out of the EU on March 30, 2019, Barnier said he was ready to handle a failure of talks and "no deal", but that would be damaging, especially to Britain, and he saw "no reasonable justification" for it.

"A fair deal is far better than no deal," Barnier said, turning around a phrase popularised by British Prime Minister Theresa May that no deal is better than a bad deal.

He called for rapid agreement on priority issues, in talks which begun last month, to build a "climate of trust" so that trade negotiations could begin as soon as possible.

But in urging businesses to prepare for Brexit now, he stressed that whatever deal was done would carry "significant consequences".

VCG Photo

"A trading relationship with a country that does not belong to the European Union obviously involves friction," Barnier said.

He cited disruption to cross-border traders processing value-added tax (VAT) and a need for all EU imports of animals and animal products to be tested at borders.

Those issues are of particular concern in Ireland, where farming businesses on either side of the new UK-EU border on the island fear disruption.

Barnier repeated EU's willingness to make a priority of agreeing border issues on Ireland, where leaders on all sides fear a "hard" frontier could undermine the fragile peace in the British province of Northern Ireland.

As an example of manufacturers with cross-border supply chains which would be disrupted by Brexit, Barnier cited the Welsh operations of Airbus, which drew skilled staff from across the EU and relied on EU rules to ease shipments of its aircraft wings to assembly lines in France and Germany.

(Source: Reuters)

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