One of Liam Fox’s trade envoys has quit in protest that the government’s no-deal Brexit policy threatens the demise of an existing trade deal with Canada worth £800m.
Andrew Percy attacked the “cack-handed” move to scrap or slash tariffs on almost all imports if the UK crashes out of the EU – blaming it for Ottawa’s refusal to “roll over” its existing deal with the EU.
The Conservative MP felt “patronised” by the international trade secretary when he warned him the announcement would backfire, The Independent understands, walking away after almost two years in the Canada role.
The resignation is major embarrassment for Mr Fox, who has pledged to “replicate” all 40 trade agreements the UK enjoys as an EU member, to avoid any “disruption of trade” if Brexit goes ahead.
The controversy will also dog Boris Johnson if he wins the Tory leadership race and carries out his threat of a no-deal Brexit.
An ally of Mr Percy told The Independent: “Andrew warned them back in March, as soon as the UK’s no-deal tariffs were published, that it would mean the Canadians would not go for rolling over the Ceta [Comprehensive Economic and Trade Agreement] deal.
“He could see they were getting 95 per cent of what they wanted if a no-deal happened, that the tariffs were better than what is in Ceta – so why would they rush to sign up to what the UK wanted?
“He said it was such a cack-handed approach, but he was patronised by a couple of ministers – including Liam Fox – and told that everything was going to be fine.”
It was revealed at the start of July that Canada was resisting the UK’s pressure to carry over the Ceta, one of the biggest of the 40 deals.
It was immediately seen as a major blow to Britain’s hopes of avoiding damage to trade with the key market if – as Mr Johnson has threatened – there is a crash-out Brexit on 31 October.
A study for the government found that losing the Ceta deal would deliver an £800m blow to GDP by 2030, both from direct trade lost and from “diversion” to the EU – which would still have the agreement.
Canada made clear its resistance to a rollover after the UK announced, in March, that tariffs would be axed “temporarily” on 87 per cent of imports, after a no-deal Brexit.
The move was designed to stop shoppers being hit by soaraway prices, but the threat to UK jobs from undercutting was branded “a sledgehammer for our economy” by the CBI.
Canada’s government noted the proposal would “provide all WTO [World Trade Organisation] partners, including Canada, with duty-free access for 95 per cent of tariff lines”.
And a spokesperson warned: “Post-Brexit, any future trade arrangement between Canada and the UK would be influenced by the terms of the withdrawal agreed between the UK and the EU, as well as any unilateral UK approaches.”
Barry Gardiner, Labour’s shadow trade secretary, warned the episode exposed the “ideological bluster” behind Mr Fox’s approach to trade policy.
“He has now been proven to have less understanding of how international trade works than one of his own backbenchers,” Mr Gardiner said.
“Andrew Percy’s resignation, claiming he was patronised and ignored when he was clearly ‘telling it like it is’, is sadly typical of the arrogance Liam Fox displays to everyone who disagrees with him.”
Mr Percy declined to go into detail about the reasons for his resignation, but said he had concluded there was no longer “any value” in carrying on.
He was appointed as Theresa May opened Ceta talks with Justin Trudeau, the Canadian prime minister, on a visit in 2017, having lived and taught in the country.
The MP for Brigg and Goole, in Yorkshire, said: “I really enjoyed the role, but I don’t believe a new prime minister should inherit people in a role like that – it should be for them to decide if they want people to continue.
“Secondly, for various reasons, I don’t think I was adding any value over the last six or nine months, so I didn’t see any point in keeping the post for the sake of it.”
The friend of the ex-envoy said, of his warnings to Mr Fox: “He was told ‘we know how to do trade deals’, but how do we know when the UK hasn’t done one for 40 years?
“In contrast, Canada has negotiated a trade deal with the EU and the US. These are the people who know how to do trade negotiations.”
Mr Fox has hailed the importance of the 27 envoys, appointing two more in recent days to “support the UK’s ambitious trade and investment agenda in global markets”.
A Department for International Trade spokesperson declined to comment on a “political resignation”, but said: “The UK and Canadian prime ministers agreed to ensure a seamless transition of Ceta and we remain committed to doing so.
“We are continuing to work on securing continuity with other countries. Last month, we agreed in principle to transition our agreement with Korea and a continuity trade agreement was signed with six Central American countries.
“Once the Korea agreement is signed, we will have agreements with countries covering 64 per cent of our trade for which we are seeking continuity.”