ANALYSIS: Britain likely to struggle to forge new trade pacts while still tied to EU
For two years, ever since Britain voted to leave the European Union and set off on an uncharted course, the captains steering Brexit have been trumpeting the future glories of “Global Britain,” a swashbuckling, entrepreneurial adventure leading to lucrative free-trade deals around the world.
The Brexit boosters envisioned a 21st-century Empire 2.0, with “a proud island nation” trading with allies in the “Anglosphere” - Canada, Australia, New Zealand and, the best prize of all, the United States.
Not so fast, it turns out.
In yet another remarkable reversal for Prime Minister Theresa May, members of her own Conservative Party are expressing doubt that her withdrawal agreement with the EU allows Britain to quickly - or possibly ever - strike bespoke free-trade deals outside the European orbit.
Former trade negotiators on both sides of the Atlantic generally agree that it will be tough for Britain to forge new trade pacts while still tethered to EU rules and regulations.
And President Donald Trump thinks the same thing.
May’s advisers were floored to hear him declare last week that the Brexit agreement “sounds like a great deal for the EU” - implying that it wasn’t for Britain.
Trump said, “I think we have to take a look at seriously whether or not the U.K. is allowed to trade because right now, if you look at the deal, they may not be able to trade with us, and that wouldn’t be a good thing.”
It is worth stressing: To many Brexit boosters, the entire point of leaving the EU was to increase trade with the United States.
Britain is among the largest export markets for U.S. goods. According to Britain’s Office for National Statistics, British exports to the United States are worth $125 billion a year to Britain’s economy - more than twice the value of goods to any other country.
Parliament this week started an extraordinary five-day debate over May’s Brexit deal, with an up-or-down vote set for Tuesday.
The numbers do not look good for May.
In the first two days of speechmaking, 87 members of Parliament rose to speak - many of them said they will vote against the deal.
On Thursday, Chancellor of the Exchequer Philip Hammond said the lawmakers were deluded if they thought they could reject May’s deal and get a better one from Brussels.
May put the looming vote in stark terms, distilled into three choices: Approve her deal; opt for a chaotic “no deal” Brexit, which would cause major economic disruption; or forget about Brexit altogether.
Of course, Brexit opponents say there other options, including chucking both May and her deal and holding a second referendum on whether to leave the EU.
May has insisted that her half-in and half-out “honorable compromise” on Brexit will allow her negotiators to strike new trade deals.
May told Parliament that it was “clear we will have an independent trade policy, and the government would be able to negotiate trade deals around the rest of the world” during the transition period after Brexit - which could be two, three or four years.
But trade experts reject that assertion.
Bill Reinsch, a former head of the National Foreign Trade Council who is with the Center for Strategic and International Studies in Washington, said, “Much as it pains me to say Trump may be right about something, he’s got a point.”
“Negotiating a free-trade agreement with the U.K. and U.S. will inevitably force the UK to choose which standards they want adhere to,” Reinsch said. “The EU, with which it has the most trade? Or the US, with which it has the second-most trade?”
“This is a much more complicated issue than everyone assumed,” he said. “Nothing will stop Britain from casting their lot with the U.S. But there will be consequences. Because the stuff they are sending to Europe now, without inspection and restrictions, will be subject not only to EU tariffs . . . but also to EU health, safety and environmental standards. They’re not going to get a free pass because they’re not in the EU anymore.”
Downing Street insists that Britain and the United States are already in talks. Trade negotiators scoff at this, politely. They say that talking is fine but that countries outside the EU will not be able to sign deals with Britain until it establishes its future trade regime with the EU. If that isn’t finalized by the end of the transition period, then, under May’s deal, Britain will enter into a customs arrangement to ensure there is no hard border between Northern Ireland, which is part of Britain, and EU member Ireland. Brexiteers worry this would mean that Britain would be yoked to the EU permanently.
Andrew Cahn, a former head of what was then UK Trade & Investment, a government department, said the United States and other countries are waiting to see what the future Britain-EU trading relationship will look like.
“The withdrawal treaty is a masterpiece of indecision,” Cahn said. “All it does is to say, this is how we are leaving. It’s settling the tab, but it isn’t saying what the future will be.”
Hammering out a trade deal with the EU could take years, said David Henig, director of the U.K. Trade Policy Project.
“Six years is about average for an EU trade deal,” he said, adding, “The EU is not a quick negotiator at the best of times.”
Britain is scheduled to leave the EU at the end of March. But Henig said trade negotiators from other countries are not assuming that things will move quickly after that.
“Trade negotiators are telling me, ‘We will open talks on April 1st,’ “ he said, “and then they say, ‘We will defer them on April the 2nd until we actually know what you’re going to do.’ (The Washington Post)
