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The UK is prepared to accept potentially huge extra costs for businesses exporting to the EU as a price worth paying for taking full control of laws from Brussels, Michael Gove has said.
The Cabinet Office minister suggested the UK could “show leg” and drop its demand for a zero tariff, zero quota trade deal as a concession to unblock Brexit negotiations.
The talks so far are foundering because the government is refusing to accept EU demands for a so-called “level playing field” which would see the UK align standards with Brussels in areas including workers’ rights and the environment.
Gove, who is playing a key role on Brexit, said the UK would not compromise in this area and would rather accept tariffs on exports to the EU as the price for full control of its laws.
The admission could have huge implications for businesses in the UK if the EU stuck to standard World Trade Organisation rules.
For instance, under WTO rules cars exported to the EU would be taxed at 10% while agricultural products would be significantly higher, rising to an average of more than 35% for dairy products, according to the BBC.
“if that’s the price we have to pay, then there we go”
Gove’s admission that the UK could end up with a Canada-style (CETA) free trade deal complete with tariffs is likely to cause concerns among businesses already struggling with the impact of coronavirus.
The Tory minister told the Lords EU committee: “It is the case that we seek a zero tariff, zero quota arrangement.
“Were it to be the case that the EU were to say ‘we don’t think we can give you that unless you sign up to all our level playing field (LPF) arrangements’.
“And we said ‘okay we’re not signing up to those LPF arrangements, we will have non-regression clauses and agreements so you can be sure about our standards’.
“But if it is the case we end up like CETA, with tariffs on a small number of goods we will regret that, think it’s a missed opportunity, but if that’s the price we have to pay, then there we go.
“It’s just for instance an area where we’d say we’re prepared to modify our ask because of the importance we maintain over regulatory autonomy.
“It may be that the EU doesn’t regard that as worthwhile or helpful but it’s one of the ways in which we’d be prepared to show leg.”
The UK and EU have until the end of the transition period on December 31 to strike a trade deal or revert to effective WTO rules.
Both sides are looking for substantial progress ahead of a high-level meeting to take stock of negotiations next month.