Along with ending free movement of people, it was the reddest of Theresa May’s red lines: post-Brexit Britain should be able to strike its own trade deals.

The prime minister contended that to respect the 2016 referendum result the UK must have “new opportunities to trade with the rest of the world” and, for the sake of these future trade deals, she ruled out Labour proposals for a permanent customs union with the EU.

But the argument is far from over. A proposal for a permanent customs union with the EU fell just six votes short of a majority last week when MPs voted on their preferred Brexit outcome.

For years a niche subject for campaigners, wonks and eurosceptics, trade policy has become a big issue in British political life. One former prime minister told a private audience recently that if he had been asked about the EU customs union during his time in office, he would not have known what they were talking about.

The customs union means that EU countries apply the same tariffs to imported goods from the rest of the world. Trade deals are negotiated by Brussels on behalf of the (currently) 28 members, although governments agree the mandate and approve the final deal. The EU has trade deals covering 69 countries, including Canada and South Korea, which the UK is struggling to roll over to bilateral agreements.

Proponents of an independent UK trade policy, such as the international trade secretary, Liam Fox, say Britain must forge its own deals if it is to take advantage of the world’s fast-growing economies. “Free to trade with the whole world” was one of the five promises of the Vote Leave manifesto of 2016.

The government’s own forecasts show that a UK-US trade deal would boost the British economy by 0.2% in the long run, while deals with Asia – including China and India – the Gulf, Australia and New Zealand, would add up to 0.4%.



Supporters of the UK striking its own trade deals have never explained why Germany manages to export more than three times the value in goods to China than Britain while also being in the EU customs union.

Meanwhile, Japanese trade negotiators have said they will demand better terms from the UK than it gets from the EU, and Australia poured cold water on the UK’s hopes to join the Trans-Pacific Partnership, due to its distant location.

British scepticism of European trade policy has a long history. Arguments about New Zealand butter raged during the 1975 referendum. Eurosceptics on the right and left have blamed the European project for dumping cheap food on developing countries.

Daniel Hannan, a long-term advocate of an independent trade policy, said he had not changed his mind.

“The idea that we can’t improve the trade deals that we have through the EU is preposterous,” said the long-serving Conservative MEP. The UK would be able “to liberalise much further” in trade deals with the rest of the world, he said, rejecting suggestions that dropping tariffs could wipe out British manufacturing. “There has never been a country that has got poorer as a result of dropping its trade barriers.”

Polls suggest the public like the idea of an independent trade policy, although few have been done. Almost half of people (49%) surveyed by Ipsos Mori in March 2018 thought the British economy would be better off in five to 10 years if the UK negotiated its own trade deals, even if that meant putting up barriers with Europe. In contrast, 36% favoured maintaining trade with the EU.

Anthony Wells, the director of political research at YouGov, said: “If we ask people, they say they’d like Britain to be able to make its own trade deals, [but] I doubt it is really a driving force – it’s just an example of a wider concern. It is the principle of being able to make our own rules and laws that leave supporters care about.”

A YouGov survey last July found that independent trade policy was voters’ joint fourth Brexit priority, behind control over immigration, and ending EU rules and budget payments.

Trade experts say deals get more contentious once they become real.

“It is one of those things that sounds great but when it actually comes down to it trade has always been controversial because people always want something from you,” said David Henig, who was heavily involved in negotiations on an EU-US trade deal.

“New Zealand want to sell more lamb and Australia certainly want to sell us more lamb. That’s not going to go down very well in Wales or Scotland.”

David Martin, a Labour MEP and senior member of the European parliament’s trade committee, said EU trade deals already lowered tariffs, opened up public procurement and ensured protection for speciality food and drink. “What is it that the advocates of an independent trade policy think an independent trade policy could deliver that the EU doesn’t?”

He predicted resistance from MPs to a future UK-US trade deal if it would result in a flood of cheap American chicken and beef that undercut British farmers. “I am not sure that our farmers – and I know it is a bit cliched – want to throw their doors open to hormone beef from the United States … Because the volume of that beef could wipe out many of our farmers.”

He predicted that, as a country of 66 million people facing much larger blocs, the UK would struggle to get its own way in trade talks. “The truth in trade negotiations is size really does matter.”