Pur­suit of a ‘Global Bri­tain’ faces trade-offs be­tween am­bi­tion and po­lit­i­cal re­al­i­ties

The Daily Telegraph - Business - - Special report: Future of the economy -

Rush to sign deals be­yond EU may prove a bal­anc­ing act for UK’s ne­go­ti­at­ing team, writes Lizzy Bur­den

The “Global Bri­tain” project is march­ing on. Ear­lier this month, the UK agreed a his­toric trade deal with Ja­pan, with only the finer de­tails left to be tied up. A sec­ond round of trade talks with Aus­tralia gets un­der way this week. And dis­cus­sions with Canada are back on the ta­ble.

Progress is eas­ier on free trade agree­ments (FTAs) that are more a mat­ter of “copy­ing and past­ing” those al­ready ne­go­ti­ated be­tween third­party coun­tries and the Euro­pean Union, but ex­perts stress this is no rea­son to underestim­ate the ben­e­fits of rollovers.

“In a world where there’s in­creas­ing eco­nomic na­tion­al­ism, the value of lock­ing in ex­ist­ing mar­ket ac­cess shouldn’t be taken for granted,” says Stephen Booth of the Pol­icy Ex­change think tank.

Even a “phase one” tran­si­tional ar­range­ment with Ot­tawa, for ex­am­ple, would help to pre­serve the trad­ing re­la­tion­ship carved out in the EU-Canada Com­pre­hen­sive Eco­nomic and Trade Agree­ment.

Goldy Hy­der, pres­i­dent and chief ex­ec­u­tive of the Busi­ness Coun­cil of Canada, says: “We need to know what Jan 1 2021 is go­ing to look like be­fore this year ex­pires.

“We just want to make sure there’s a clear path for­ward.”

Like­wise, a deal with Ja­pan would give busi­nesses con­ti­nu­ity in the face of all the Covid-19 un­cer­tainty, ac­cord­ing to Mi­nako Morita-Jaeger, a fel­low at the UK Trade Pol­icy Ob­ser­va­tory at the Univer­sity of Sus­sex.

She ad­mits, how­ever, that its sig­nif­i­cance would be more po­lit­i­cal: “Ja­pan is a good show­case as the world’s third-largest econ­omy. It demon­strates the UK’s ca­pac­ity to strike a trade deal as an in­de­pen­dent coun­try with non-EU coun­tries.”

But she is scep­ti­cal of Trade Sec­re­tary Liz Truss’s tri­umphant claims to have ne­go­ti­ated a bet­ter deal for the UK than Brus­sels had won from Tokyo.

One par­tic­u­lar source of dis­ap­point­ment was the seem­ing lack of a com­pre­hen­sive chap­ter on in­vest­ment, which Morita-Jaeger says is “com­pletely miss­ing from the agree­ment, in my read­ing of the press re­leases from both sides”.

Another worry is the com­pro­mise on agri­cul­ture. The UK will be left only with the scraps of the EU’s quo­tas for re­duced tar­iffs on items such as stil­ton cheese.

Nick von Westen­holz, di­rec­tor of EU exit and in­ter­na­tional trade at the Na­tional Farm­ers Union, says: “The con­cern is that, over time, as the EU and UK in­crease their ex­ports to Ja­pan, the tar­iff rate quo­tas start fill­ing up year on year.”

Other deals that start with­out an EU blueprint are harder to ne­go­ti­ate. Sources close to dis­cus­sions with the United States, hav­ing al­ready thought a deal was im­pos­si­ble be­fore the Novem­ber pres­i­den­tial elec­tion, now say one is un­likely at all, with Wash­ing­ton too dis­tracted by the pan­demic and the pres­i­dent’s author­ity to ne­go­ti­ate trade deals up for re­newal next July.

“Once mo­men­tum goes, it may never re­turn,” they lament, cit­ing three years of talks on the Transat­lantic Trade and In­vest­ment Part­ner­ship, which ended in 2016 with­out con­clu­sion.

An an­nounce­ment of a chap­ter on small and medium-sized en­ter­prises, which was ex­pected weeks ago, came to noth­ing. The Brexit trade talks aren’t help­ing.

Mick Mul­vaney, US pres­i­dent Don­ald Trump’s spe­cial en­voy to North­ern Ire­land, cau­tioned against cre­at­ing a “hard bor­der by ac­ci­dent” on the is­land of Ire­land via the re­cently tabled In­ter­nal Mar­ket Bill.

Demo­crat can­di­date Joe Bi­den said that if he won the White House, there would be no US trade deal un­less Bri­tain hon­oured the Good Fri­day Agree­ment.

Agri­cul­ture has been another seem­ingly in­tractable stum­bling block, with US farm­ing lobby groups call­ing for a chap­ter on food stan­dards to be writ­ten into a deal.

How­ever, Truss in­sists they are “off the ta­ble” – an is­sue for the in­de­pen­dent Food Stan­dards Agency.

Re­gret­tably for all ob­servers of trade, the is­sue of hor­mone-fed beef is likely to rear its head in Bri­tain’s talks with all other coun­tries that do not al­ready have a deal with the EU, such as Aus­tralia and New Zealand.

“The UK will be un­der more pres­sure to bring its at­ti­tude in line with the global cen­tre of grav­ity – away from the EU’s pre­cau­tion­ary prin­ci­ple that you ban things be­cause they might be dan­ger­ous and more in line with the World Trade Or­gan­i­sa­tion’s prin­ci­ple that you can’t ban things just be­cause you don’t like the way they’re pro­duced,” Booth says.

None­the­less, El­iz­a­beth Ames, chair of the Aus­tralia In­sti­tute at King’s Col­lege Lon­don and a for­mer Aus­tralian trade ne­go­tia­tor from 2009 to 2015, claims Bri­tain need not worry about Aus­tralian food stan­dards or an on­slaught of the coun­try’s beef, lamb and wheat.

“Aus­tralia al­ready strug­gles to keep up with the de­mand from east Asia for its prod­ucts and it takes a long time to set up a lo­gis­tics chain to ex­port agri­cul­tural prod­ucts safely,” she con­tin­ues.

“Aus­tralia also has lots of space so there’s more free an­i­mal rear­ing and the Aus­tralian pub­lic doesn’t have the tol­er­ance for the sorts of farm­ing prac­tices you see more in the US.”

She sees an Aus­tralian deal com­pleted by the mid­dle of next year.

Speak­ing to MPs along­side Booth tomorrow, she will ar­gue that ser­vices and dig­i­tal trade – in­stead of agri­cul­ture – should be cen­tralised in the on­go­ing cam­paign for a Global Bri­tain.

“There’s a real op­por­tu­nity for the UK to go fur­ther in its ser­vices chap­ters with Aus­tralia than it has in other agree­ments – on reg­u­la­tory align­ment, mu­tual recog­ni­tion of qual­i­fi­ca­tions and visa con­di­tions for skilled work­ers to move be­tween the two coun­tries,” she ar­gues.

“The best way for the UK to demon­strate to coun­tries that are part of the CPTPP (Com­pre­hen­sive and Pro­gres­sive Agree­ment for Tran­sPa­cific Part­ner­ship) that it can re­ally be a full par­tic­i­pant in the agree­ment is to make these very high-qual­ity bi­lat­eral deals – with Ja­pan, Aus­tralia and New Zealand – on dig­i­tal trade, ser­vices and in­tel­lec­tual prop­erty.”

How­ever, no mat­ter how well the Global Bri­tain project ad­vances in the com­ing months, “all trade deals pale in sig­nif­i­cance com­pared to the vol­ume of trade we do with the EU”, Von Westen­holz notes.

He, like most busi­ness lead­ers, would rather have trade deals ne­go­ti­ated well than rushed to val­i­date Brexit.

The Govern­ment has set an am­bi­tion to se­cure FTAs with coun­tries cov­er­ing 80pc of UK trade within the next three years.

“There was this en­thu­si­asm for do­ing quick deals all over the place, which made us very wor­ried,” Von Westen­holz says.

“As we’re see­ing with the US and oth­ers, is­sues come to the fore that are dif­fi­cult to re­solve and need time, and in the worst-case sce­nario, the two sides may not come to a deal.”

For the Depart­ment for In­ter­na­tional Trade’s new army of ne­go­tia­tors shap­ing the UK’s trade for­tunes for the first time in 47 years, some busy – and po­ten­tially tur­bu­lent – days lie ahead.

‘In a world of in­creas­ing eco­nomic na­tion­al­ism, the value of lock­ing in ex­ist­ing ac­cess shouldn’t be taken for granted’

‘There was this en­thu­si­asm for do­ing quick deals all over the place, which made us very wor­ried’

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.