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Doubts raised over possibility of direct UK-China trade deal

By HARVEY MORRIS | China Daily UK | Updated: 2016-11-01 18:18

Hints that the British government might opt to remain within a tariff-free customs union with Europe after it leaves the European Union are raising doubts about its ability to forge an eventual free-trade agreement independently with economies such as China.

Change Britain, a lobby group that is pushing for a so-called hard Brexit, said over the weekend that countries such as China are queuing up to do trade deals with Britain once it is out of the EU. But, the group said, Britain can only capitalize on this if it quits the EU customs union.

Continued membership of the customs union, which includes non-EU partners such as Turkey, would prevent the UK from striking its own free-trade deals with third parties.

Speculation about the customs union option was raised after the government gave undisclosed assurances to Japan's Nissan car company that persuaded it to announce last week that it would continue to invest in its plants in England's North East.

Greg Clark, the business minister who secured the agreement after a visit to Japan last month, revealed in a broadcast interview at the weekend that he had assured Nissan that the UK wanted to ensure its homemade vehicles continued to enjoy tariff-free access to Europe.

Clark's was the fullest account so far of the Nissan deal, which the government had until then declined to disclose to Parliament. The government's reticence about disclosing its hand reflects a desire not to give anything away in advance to its EU negotiating partners, but also to avoid widening a rift in Cabinet between supports of "hard" and "soft" Brexit.

Clark would not reveal whether the deal included a pledge to remain within the customs union. However, some politicians, economists and commentators have insisted it is the only way to interpret Nissan's agreement.

Vince Cable, a former business secretary, said the deal with Nissan indicated Theresa May's government had promised it would be staying in the customs union. Writing in Monday's Financial Times, economics columnist Wolfgang Munchau wrote that it made no sense for Nissan to build new models in Britain unless the country remained in the customs union and the single market.

China's Ambassador to the UK Liu Xiaoming said last month that Brexit had not dampened the eagerness of Chinese firms to invest in the UK.

"On the contrary, it opens the door for the possibility of exploring a higher level of financial, trade and investment arrangements," he said at a London conference.

The Change Britain group, which is supported by British Foreign Secretary Boris Johnson and former Conservative leadership challenger Michael Gove, said 14 countries, including China, have publicly indicated they want free-trade deals with the UK.

The group says the UK is better placed to make such deals on its own, rather than through the 28-nation EU, which only reached a trade deal with Canada last week after seven years of bargaining.

Harvey Morris is a senior media consultant for China Daily UK.

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