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The UK economy is only ~20% goods-based [1].

~85% [2] of the global market (PPP) sits outside of the EU (excluding the UK), and this share is growing.

Only 5-8% [3] of UK businesses export to the EU.

When negotiating trade deals with non-EU countries with goods-based economies, acceptance of equivalent but different goods standards will be important.

The direct benefit of the ongoing harmonisation appears to correspond to only 20% (the goods bit) of the UK economy?

What is the argument, therefore, for committing to ongoing regulatory alignment for goods between the UK and EU, given the missed opportunities such as:

  • world trade - both in neogotiating cheaper imports, more competitive exports and in leverage for service-based deals - particularly given the relatively small size of the EU
  • developing tailored domestic regulatory standards for the large majority of businesses that do not export to the EU, increasing domestic and global competitiveness

References

[1] https://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom

[2] https://fullfact.org/europe/eu-has-shrunk-percentage-world-economy/

[3] https://fullfact.org/europe/how-many-businesses-export-eu/

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  • I do not understand the significance of the "numbers" of businesses. Perhaps it would provide more clarification to report the share of exporting businesses vs. non-exporting ones. – Martin Jul 19 '18 at 14:56
  • I think the significance of the number of businesses is that any change to trade policy affecting goods will directly affect only a small fraction of the businesses in the UK. – 52d6c6af Jul 19 '18 at 15:21
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    @Ben But a key issue with simply counting the number of businesses is if the 95% of businesses which don't export to the EU have a revenue of £500, while the 5% which do have a revenue of £500 million. I don't expect that to be true, but it wouldn't show in your figures. – origimbo Jul 19 '18 at 15:56
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    The accounting in terms of businesses instead of say the percentage of business revenue ignores the fact that there's going to be a power-law distribution for businesses by size. Larger business also employ more people. – Fizz Jul 19 '18 at 21:55
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Without common standards, goods that are to be transferred between the UK and the EU need to be checked at the border, to ensure that they match the relevant destination’s standards. (On the other hand, if the standards are shared, that is unnecessary: Everything legal for trade in one area is also OK in the other.)

The problem with that is the land border between the Republic of Ireland (EU) and Northern Ireland (UK), in particular. Setting up border checks there is highly undesirable for political reasons. There are also (less important) practical issues at the other borders, such as possible delays and missing parking space for lorries waiting to be checked by customs.

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  • Thank you. So this is mainly or solely an Irish border -driven decision? – 52d6c6af Jul 19 '18 at 16:06
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    @Ben Not precisely. Many large UK exporters would prefer the certainty of frictionless trade with the EU to the higher risk option of regulatory divergence. europe.autonews.com/article/20180209/ANE/180209764/… – origimbo Jul 19 '18 at 16:30
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    @Ben: I would say the Irish border is the most important factor. Everything else could be covered with less than full alignment (e.g., only for certain types of goods). – chirlu Jul 19 '18 at 17:41
  • @origimbo: that's actually a good additional answer. – Fizz Jul 19 '18 at 21:59

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