The plan would be for the European Union to impose the tariffs should the UK Government attempt to gain a commercial advantage by lowering regulatory standards.
And the move, which could scupper any plans Theresa May’s administration may have to secure a beneficial trade deal, would see any attempt by the UK to reduce regulatory costs to British business in one area, counteracted by Brussels imposing tariffs British business in another area.
In effect this would mean any attempt by the UK to, say, give an advantage to the banking sector, would be met by a tariff being imposed on, possibly, agricultural produce.
The move comes after pro-Brexit ministers Michael Gove and Boris Johnson suggested the UK could overhaul regulations in some sectors after leaving the bloc “to give the UK big advantages over EU members” in a letter to Prime Minister Theresa May.
Reuters/EPAThe EU could add a 'punishment clause' into any future trade deal with the UK
A senior Conservative told the Guardian: “Brexiteers within the Cabinet, and within the party, are pushing for divergence, and see it as a priority for the end state.”
The shadow trade secretary, Barry Gardiner, said: “Clearly the EU does not trust the assurances that UK ministers have given about maintaining social, environmental and workplace rights and standards. They think the UK is likely to pursue a deregulatory race to the bottom.
“Such a punishment clause as the EU appears to be contemplating would be hard to reconcile with the rules based system of the World Trade Organisation (WTO) to which both we and the EU are committed.”
The EU plans would indicate the EU’s chief negotiator Michel Barnier is going to take a tough line with the UK once the Brexit talks move on to discussing a possible trade deal and indicates the bloc is determined to protect its economic interests.
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According to multiple EU sources, the Guardian says a range of options