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4 reasons why negotiating new trade deals won’t be easy after Brexit

4 reasons why negotiating new trade deals won’t be easy after Brexit

Free from the shackles of the European Union, we are going to rapidly negotiate intergalactic trade agreements. Or so says our new Minister in charge of Brexit, David Davis. Back here on Earth, our Secretary of State for International Trade, Liam Fox, has promised soon to be realised free trade agreements with pretty much everyone. The message to the world is clear: we are a buccaneering, free trading nation on the hunt for new business. We want it all. And we want it now.

But negotiating a spate of new trade agreements really isn’t that easy.

Here’s four reasons as to why:

Capacity

As many have noted, the UK government does not currently have the institutional expertise, or people, required to negotiate complex trade agreements. Not only that, it doesn’t even have a strategy. International trade is largely about sequencing – what you offer, who you offer it to, and in which order. Without the staff, and without a plan, we’re not getting a substantive trade agreement with anyone anytime soon.

Legal issues

As it stands, EU rules prevent the UK from formally negotiating new trade agreements until we have left. There is much uncertainty as to what it is allowed once we’ve officially triggered divorce proceedings (Article 50), but the EU could certainly make it difficult for us, if it so chose. David Davis acknowledges that the rules likely prevent the UK negotiating new deals prior to exit, but is reported as saying: “What are they going to do?”

We will find out soon enough. 

Uncertainty around World Trade Organisation membership

The UK does not exist as a distinct entity within the WTO Framework; our current status is intertwined with the EU’s. Therefore, we – and other countries – do not know what our unique baselines are when it comes to market access for foreign goods and services. Until we clarify our generic trade offer to the rest of the world, it is nigh on impossible to offer a potential trading partner preferential terms.

Resolving our WTO status, and potentially having to go through an accession process, will likely take a very long time indeed.

Uncertainty regarding relationship with EU

Trade agreements are no longer simply about removing import taxes on each other’s goods. For better or worse, they increasingly delve into the regulatory sphere, prioritising the removal of so called behind the border barriers by, for example, mutually recognising each other’s regulatory approaches and standards and streamlining approval processes.

Until we have clarified our relationship with the EU – and specifically whether and on what terms we remain a member of the European single market – it remains unclear what power the UK has to act unilaterally in these areas.

It is of course possible that we do something rash, and cobble together a couple of tokenistic trade agreements in the near(ish) future. Something shiny to frame and put on the mantelpiece. But a trade agreement is not a good thing solely by virtue of its own existence. Australia found this out the hard way when political pressure resulted in it hastily signing a trade agreement with the US so bad that the Australian negotiators refused to recommend it to Parliament.

If done properly, this is going to take years, perhaps decades. As well it should.

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