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Europe Trade Czar Warns of ‘Tariffs on Day 1’ After Hard Brexit

European Trade Czar Warns of ‘Tariffs on Day 1’ After Brexit

(Bloomberg) -- The European Union’s top trade official warned that the U.K.’s impending exit from the bloc risks being “chaotic’’ with some of the EU’s other member states still not prepared for the practical realities of a no-deal Brexit that may be just three weeks away.

In an interview with Bloomberg News, Cecilia Malmstrom, the EU’s trade commissioner, expressed frustration with the continuing domestic political uncertainty in the U.K. over Brexit where even a last-ditch deal negotiated with the EU would still have to face a parliamentary vote. “It has been a quite turbulent process,’’ she said.

Europe Trade Czar Warns of ‘Tariffs on Day 1’ After Hard Brexit

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Malmstrom, who was speaking during a visit to Washington on Wednesday, said she didn’t have much confidence that a deal could be negotiated in the coming weeks to avoid a major disruption to the EU-U.K. trading relationship. “I think no one is confident on anything,’’ she said.

She also warned that not all of the EU’s remaining members were ready for the bureaucratic realities of a hard Brexit, which would see the EU immediately start charging tariffs on British goods for the first time in decades.

“There will be tariffs imposed as from Day 1 if there is a hard Brexit,” Malmstrom said. “There will be tariffs on the WTO basis and some of them will be very high. It will damage our economy and it will damage the British economy.”

Brexit Reality

EU officials had been touring the bloc in recent months to ascertain just how ready the EU’s 27 remaining member states were for Brexit, Malmstrom said. And while some had invested in their customs infrastructure to prepare the reality was that “some are more prepared than others,’’ she said.

“I think it would be pretty chaotic,’’ Malmstrom said of the day after a hard Brexit, warning of “long queues’’ at border posts and particularly the tunnel link between Dover and Calais, in France.

“I really hope that this will not happen, that there will be a transition period and that during that period we can prepare all the kinds of future arrangements we need to have,’’ she said. “There are whole lists of things in which we need to cooperate with our British friends, including on trade.”

British officials have been scrambling to renegotiate the terms of a withdrawal agreement with the EU ahead of a vote in Parliament next week. But it is unclear whether any deal will pass: The House of Commons earlier this year rejected Prime Minister Theresa May’s withdrawal plan in the biggest defeat for a U.K. government in over a century.

May on Friday is expected to seek to shift the blame to the EU, warning European partners that the outcome of a historic vote on her Brexit deal next week is in its hands, as signs emerged that the two sides are at least trying to make progress toward a deal.

The EU made a new offer to May’s government on Thursday in a bid to break the Brexit impasse, though it falls short of what Britain has demanded, people familiar with the EU side of the negotiations said.

--With assistance from Ian Wishart and Jessica Shankleman.

To contact the reporters on this story: Shawn Donnan in Washington at sdonnan@bloomberg.net;Jenny Leonard in Washington at jleonard67@bloomberg.net;Brendan Murray in Washington at brmurray@bloomberg.net

To contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, Sarah McGregor, Robert Jameson

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