Don’t believe those claiming we can’t swiftly negotiate a UK-EU trade deal next year

Don’t believe those claiming we can’t swiftly negotiate a UK-EU trade deal next year

Predictably there are those already sneering at the Prime Minister’s ambition to complete a Free Trade Agreement with the European Union by the end of the implementation period and establish an independent trade policy for the United Kingdom. They cite the length of time it has taken for previous FTAs to be negotiated (especially with the EU) as their precedent. They still live in the hope of creating sufficient uncertainty to make British people change their minds about leaving the European Union.

Talking to voters up and down the country, there seems to be overwhelming evidence that the British public want to make Brexit happen – but we can be sure that even if the Government is given a resounding majority then this campaign will continue unabated. Leaving aside their motives, mainly that they don’t want Brexit to happen at all, they should pay more attention to the details already outlined between the UK and the EU before they make their over-pessimistic pronouncements.

Most Free Trade Agreements seek to remove tariffs and related barriers in order to facilitate and expedite trade in goods, a process that can be lengthy if particularly protectionist barriers have to be dismantled. Months, if not years, are spent trying to understand the details of the prospective trading partners regulatory and legal systems before detailed discussions are put in place on how to dismantle them.

This is not the case in relation to the UK and the European Union. Not only do we have a tariff- and quota-free environment today, but the Political Declaration that sets out the roadmap to the future relationship specifically states that “a free trade agreement (should) ensure no tariffs, fees, charges or quantitative restrictions across all sectors”.

In other words, we are already beginning our negotiation on trade in goods where others conclude theirs. It is self-evident that this is likely to dramatically reduce the amount of time required for any agreement. Of course, the European Union present a tariff-free approach as a concession to the United Kingdom when it is self-evidently nothing of the sort as, with a huge trade surplus with the UK, the EU will be anxious to ensure that their exports do not become less competitive as a result of the imposition of any tariffs, fees or quotas.

The vast bulk of the future discussions will be around the issue of regulatory alignment and access to the Single Market. Clearly, any concept of “dynamic alignment” will be completely out of the question as it would require the United Kingdom to automatically import any changes in the EU rules without us having a say on drawing them up. This would make a mockery of leaving the EU and “taking control”.

Then there is the nature of alignment itself and it is an argument that mirrors the wider debate about global trade policy. At the WTO summit in Buenos Aires, it became extremely clear that while the EU saw the creation of a level playing field in trade as being underpinned by identical regulations (what the EU has traditionally called harmonisation), the rest of the world wants to see an expansion of the concept of equivalence. This essentially means ensuring that standards and outcomes are similar but without rigid rules on how this should come about.

It will be a similar debate between Britain and the EU. The concept of equivalence is a much more conservative approach and allows the market to determine more efficient routes to the same outcome rather than a predetermined and highly legalistic approach. Of course, the EU will resist British attempts to push the concept of equivalence as it would set a precedent for others trading with the EU market and diminish the power of EU lawmakers in setting global trading rules – but it would be very much in line with global trends and what appears to be the likely direction of the overwhelming number of global trading partners.

In other words, this will be a very different trade negotiation from anything that has gone before, where the obstacles are much more about politics than technical trade issues. This does not mean that they will be easy, but it is only a matter of months since we were told that the EU could not agree to any changes in the Withdrawal Agreement that did not include the Irish backstop and here we are without it.

As we leave the EU, Britain must ensure that we continue to have good access to the European market which still represents 44% of Britain’s exports of goods and services while at the same time leaving us free to expand our market access into the faster growing parts of the world economy. This is not an impossible task, but will require us to understand the trends in global trade and commerce more widely rather than obsess about the continuity of what has been a highly prescriptive relationship on trade over the past four decades.