London | Reuters — Britain could join a formal trade alliance with the United States, Canada and Mexico if the European Union refuses to clinch a post-Brexit trade deal, the Daily Telegraph newspaper reported on Tuesday.
The newspaper said British ministers were looking at joining the North American Free Trade Agreement (NAFTA) as part of planning for the possibility of Britain leaving the EU in March 2019 without a trade deal. It gave no sources for the report.
“As we prepare to leave the EU, we will seek to transition all existing EU trade arrangements to ensure that the U.K. maintains the greatest amount of certainty, continuity and stability in our trade and investment relationships,” a spokesman for the Department for International Trade said.
When asked for comment on the Telegraph report, the spokesman said: “We are confident that we will find a deal that works for Britain and Europe too. But it is our responsibility as a government to prepare for every eventuality, and that is what we are doing.”
Britain is currently negotiating the terms of its divorce from the EU though Prime Minister Theresa May is pushing to move onto discussions about a major free trade deal with the world’s biggest trading bloc.
With the clock ticking down towards Brexit day in 2019, British ministers are exploring the options if the world’s fifth largest economy drops out of the EU without a clear trade deal.
Besides aiming to clinch a U.S. trade deal or forming some new trade grouping, some British supporters of Brexit have pondered joining an existing trade alliance such as NAFTA.
But U.S. President Donald Trump has warned he may terminate the 1994 NAFTA deal because he says it does not serve U.S. economic interests.
If Britain did join NAFTA, manufacturers wanting to export to the EU and North America would have to produce goods in accordance with the two separate sets of rules, according to trade analysts.
Britain, whose regulation has been within the EU’s orbit for over 40 years, would also have to shift toward the North American model for services, goods, competition policy and data protection.
The EU is Britain’s biggest single export market, accounting for about 50 per cent of goods exports in August. The United States was the single biggest destination for British exports, accounting for 14 percent in August.
— Reporting for Reuters by Guy Faulconbridge.Tagged Brexit, Britain, EU, European Union, NAFTA, North American Free Trade Agreement