Dmitry is right. Maybe it has not been explained often and simply enough why there won't be frictionless trade - even with a trade agreement. So let me try to do this: WHAT IT TAKES TO HAVE FRICTIONLESS TRADE - AND WHY WE WON'T HAVE IT WITH THE EU EVEN WITH A TRADE DEAL (thread) https://twitter.com/DmitryOpines/status/1309069590979399680

Europe wanted a common market, a market with "frictionless trade" ever since the Treaties of Rome. But it turned out such a market was hard to get. Where did the "frictions" come from?

First of all there's the thing that everyone thinks of: Tariffs. A long time ago (before taxes took off) that was how states financed themselves. Tariffs on goods. And that was the main barrier to trade.

The EU (well, the EEC at the time) decided to get rid of that. All tariffs between member states would be made illegal. And members would have the same external tariff rather than each setting their own. This is a "Customs Unions".

The Customs Union took a couple of years to establish. It was a success, but even so: there was still a need for borders. Why? Because of barriers to trade that are not tariffs. They are called non-tariff barriers. We are not a creative bunch.

(And yes, I am leaving out quotas and TRQs. Sorry. I'll try to keep it simple). What are these non-tariff barriers? Mainly: rules and regulations. Let's start with goods. Rules come in in thousands of ways.

Take food safety - what stuff can go into food. Or standards: what does a plug have to look like. Or labels: have you noticed how all goods in the UK are labelled in English? That's a barrier to trade. Some are so common you won't have noticed...

For example: milk in the UK is color-coded. Green top. Blue top. That's useful, isn't it? Well, not the case in other countries - and this is a barrier to trade. In Belgium margarine had to be packaged in a certain way so that consumers don't think it's butter. Etc.

Now all of these rules are different from country to country. And what you get in-between is a border. So that countries can make sure that their rules are complied with. The EU struggled long and hard with the issue.

You might have heard about "alternative arrangements" and the question how we can make sure we won't have a border. Well, that question is not new. In 1985 a White Paper con Completing the Internal Market dealt with it. Here's the link https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:51985DC0310&from=EN

The questions seem awfully familiar. And yes, I am sort of surprised that the paper did not come up more often in the debate (yes, yes, I tweeted about it at the time)

(And yes, the paper was drafted by an Englishman). So how did the EU approach this border issue? At first it tried to do it by way of harmonizing all those pesky rules. But that turned out to be tough. Because member states resisted. So...

The tool of choice became what the current debate calls "mutual recognition of rules". It is based on what the "four market freedoms" of the EU. Free movement of goods, services, capital and people. We'll stick with goods here. How does it work?

Basically EU law says that a good from another member state can enter freely. If you want to impose your regulation that is a barrier to trade - say particular packaging or something - you need to justify that, it needs to have a permissibly purpose and be proportionate.

That rule is one of EU law, so it is "directly applicable" and has "primacy". What does that mean? Say you export shoes from Italy to France. Say France says shoes need to be sold in round boxes for a reason nobody understands. Your goods are blocked. What do you do?

You go to a French court. You say "free movement". The French court will look at the French law ("you need round packaging"), but will apply EU law directly and with primacy. If the French law is not adequately justify, it will have to disapply the French law. The result?

Your good is free to enter the French market, even though it did not comply with the French requirement. Barrier gone. But you see WHY it is gone. Direct application. Primacy of EU law. Court. - That is the "mutual recognition of rules" route. Or harmonization.

It is this complete package, none as "Customs Union" plus "Internal Market" (comprising the four freedoms and harmonization) that made frictionless trade possible. A Free Trade Agreement does not do any of these things. So you'll have friction.

At the core of frictionless trade is the notion that there's some rules, something, that says "that regulation that you just passed on goods / services etc. - well, we regard that as a mere barrier to trade. It can be disregarded". That is tough. But that means there's trade-offs

If you do not want such an instance, you will not have frictionless trade. If you want frictionless trade, you will need to agree to rules that prevent you from doing certain things.

Where do we stand? The government has provided badly needed clarity in many respects: 1) no customs union and 2) no internal market. This is NOT and ask. The consequence is that there will be a border and friction - even if we reach an FTA - and we need to prepare for that.

And yes. I left out even more complex and contested things that are needed to make borders disappear. How do you deal with VAT? What about movement of people?