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Financial Times: Hammond critical of WTO option for Brexit Britain

Date: 16 12 2016

Hammond critical of WTO option for Brexit Britain

Chancellor risks wrath of Eurosceptic colleagues as he battles for ‘soft Brexit’

Philip Hammond has risked the wrath of Eurosceptic colleagues by warning against a situation where the UK has to use its membership of the World Trade Organisation for access to European markets after Brexit.

The chancellor said during a trip to South Korea that the WTO option would not be “the most favoured outcome” after Britain leaves the EU.

“I hope that we would be able to agree with our European partners tariff-free access but on a reciprocal basis,” he told reporters in Seoul.

Mr Hammond is increasingly seen as the most vocal proponent within the cabinet of a so-called “soft Brexit”, apparently ignoring Theresa May’s calls for “no running commentary” on Britain’s negotiating position.

In recent days the chancellor has said that “thoughtful politicians” were open to a transitional deal; that the UK should pay to maintain access to the single market; and that new immigration controls might be moderated.

His latest comments will be welcomed by those business leaders concerned that an abrupt departure from the single market would mean much higher tariffs under WTO rules.

But they will infuriate hardline Tory Eurosceptics who have argued that the UK should be prepared to quit the single market altogether — if necessary — to get the best deal.

Leave Means Leave, a group pushing for a “hard Brexit”, argues Britain must be open to leaving the EU without a trade rule, relying on WTO rules in the short term — while negotiating fresh deals. The group includes senior Conservative figures such as Lord Lamont, Owen Paterson and Theresa Villiers.

David Davis, Brexit secretary, has claimed that exit talks and a new trade deal with the bloc can be agreed within two years — at least on a provisional basis.

But Sir Ivan Rogers, Britain’s ambassador to the EU, has privately told ministers that a new trade deal could take up to a decade. That timeline, however, is not quite comparable with Mr Davis’s because it would include ratification by EU member states.

Mr Hammond told reporters in Seoul that 10 years was too pessimistic: “I don’t expect that it will take as long as that.”

Stephan Mayer, home affairs spokesman of German leader Angela Merkel, suggested that the UK could retain access to the market after Brexit if it continues to contribute to the EU.

He told the BBC Radio 4 Today programme that it was “a little bit naive” to think a trade deal would be easy to conclude within the two-year period. “I think it is very ambitious to finish these negotiations within two years,” he said.

Mrs May, who attended a summit of European leaders on Thursday, said she wanted an early agreement on the status of Britons living on the continent and EU citizens in the UK, according to comments by Enda Kenny, the Irish prime minister.

Mr Mayer said Germany understood and sympathised with the UK position on the issue. “More than one million British citizens live in the other 27 member states so that is a very decisive issue for the UK government and certainly the other way around, more than 300,000 German citizens for instance are living in the UK, so I think we have the same interests,” he said.

European leaders only spent 20 minutes discussing Brexit at their meeting in Brussels on Thursday evening, from which Mrs May was excluded.

December 16th, 2016: Financial Times