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The Sunday Express has learnt that the Government is looking at options on how to respond if Brussels goes through with threats made this week to punish Britain over plans to override the Brexit Withdrawal Agreement. A Whitehall source has confirmed that “a trade war is a concern” and that the government is “considering all options” but only if the EU initiates the hostilities.
This could mean that German car makers such as BMW and Mercedes, Italian fashion houses like Gucci, French wine including Champagne and Irish beef could all have access to the British market impeded.
The row concerns the Internal Market Bill which the government is putting before Parliament this week and which would alter the withdrawal agreement.
It addresses the part of the withdrawal agreement aimed at preventing a hard border between Northern Ireland and the Republic.
If the bill became law it would give ministers power to modify rules over the movement of goods between Britain and Northern Ireland that would come into force if the UK and EU are unable to strike a trade deal.
The government says this means of protecting the “integrity” of the UK, but the EU has threatened legal action.
The move comes as the Sunday Express has learnt that senior Tory MPs are preparing to join other leading Brexiteers in demanding that the controversial Withdrawal Agreement is “torn up” altogether.
The members of the European Research Group and Brexit Party members are expected to call on the Prime Minister to repeal the agreement and take it out of law.
It is also understood that the ERG has allies in the cabinet for the move to ditch the WA with patience running out with Brussels after four years of negotiations.
A senior Tory behind the plan said: “The problem is that we have seen the EU can misuse the Withdrawal Agreement and at the moment it still stands if we walk away from trade talks.”
The revelation about preparations for a potential trade war comes after a week where Brussels issued open threats to Britain over Boris Johnson’s plans to introduce the Internal Market Bill into Parliament.
This had followed behind the doors threat by Michel Barnier’s negotiation team to “disrupt the supply of food to Northern Ireland” using the Withdrawal Agreement signed in January unless the UK signed up to its demands of following EU regulations and being allowed access to fishing waters.
With talks on the brink of collapse, it is understood that senior figures in Mr Johnson’s administration have calculated that a tariff war will be far more damaging to the EU than Britain.
The Sunday Express was pointed to a report published by the European Parliament in 2017 which highlighted an economic catastrophe for the EU’s agriculture sector.
It noted: “A return to WTO rules would imply significantly less agri-food trade between the EU and UK in both directions (around minus 62 percent). Some EU exports almost completely collapse, like those of Rice, White meat, Sugar, Dairy and Red meat (more than – 90 percent in trade).”
Worst hit would be farmers in Ireland, Holland and France, the report claimed, but it added: “Brexit could be an opportunity for the UK’s agri-food sectors as a whole.”
According to 2018 figures more than half of Ireland’s beef is sold to Britain and is worth more than £1 billion annually to the Irish economy.
Meanwhile, Britain is the second biggest import market for French wine in a market worth £1.3 billion and is the biggest importer of champagne at around 27 million bottles a year.
The EU’s biggest import to the UK is motor vehicles worth £48.5 billion in 2018 (18.2 percent of EU imports) with the German carmakers including BMW and Mercedes most vulnerable.
Also in the top 10 EU exports to Britain are clothing and accessories mainly luxury brands which were worth £7.1 billion in 2018, 2.7 percent of the market.
It is understood that the rapidly concluded trade deal with Japan has given Britain “renewed confidence” because any extra expense caused by tariffs on EU products will be offset by goods from countries the UK has trade deals with around the rest of the world.
Deals with the US, Australia and New Zealand have made significant progress.
Northern Ireland Secretary Brandon Lewis said in the Commons last week that the bill would break international law in a “specific and limited way”.
But Cabinet Office minister Michael Gove yesterday told Times Radio that Britain would not be breaking international law.
He said: “The legal position was outlined by the attorney general this week and the position we’ve taken is entirely consistent with the rule of law. It’s important to consider what it is we’re seeking to do.
“It does boil down to certain simple principles but the overall thing that it’s important to recognise is that we’re not seeking to move away from implementing the Withdrawal Agreement, nor are we trying to move away from implementing the Northern Ireland protocol. We’re spending hundreds and millions of pounds implementing the Northern Ireland protocol.”
Meanwhile, sources close to Lord Frost’s UK negotiating team said that they are “baffled” by the EU’s double standards when it comes to demands from Britain and its claims that the UK is “not engaging across all areas” .
A source said: “We have spoken with the EU, for over six months, across all areas. We have proposed level playing field guarantees appropriate to a free trade agreement, including with guarantees on non regression.”
The source added: “The EU seems to define engagement as accepting their position. They need a rethink.”
On what the EU calls state aid, the source insisted that Britain has always been clear it won’t have a regime like the EU’s.
“We need the right to decide what’s best for an independent nation,” the source said.
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