...explains the current political posturing as the UK and EU both attempt to gain the upper hand in negotiations on the post-Brexit trade agreement
“At the start trade talks, the EU and UK look set on a collision course. The EU has ruled out a Canada-style free trade agreement on the basis that it would give the UK competitive advantage. This is a matter of trust. The EU believes the UK is looking to undercut its trading ‘partners’ by dismantling EU regulations and fully exploiting the historical access it has to European markets. The UK meanwhile wants to be treated just like any other sovereign country wanting to do a deal with the EU. Now the UK is officially out of the EU, the government’s starting point is that the country’s forty-seven years of membership should be forgotten. However, a standard free trade agreement designed to extend and nurture trade on a win-win basis, is not what this is about. The UK wants to maintain existing market privileges without the obligations of membership. The EU is determined this won’t happen. To get frictionless access to the single market without following the EU rulebook, alongside doing new bilateral deals with the likes of the US, is a non-starter. However, for the EU to suggest that the UK might have to align with EU rules if it wants to benefit from single market access, is seen as an attack on the new understanding of sovereignty and independence that Brexit represents. In exchange for free trade the EU will force the UK to continue to have ‘unreasonable’ responsibilities in areas such as workers’ rights, state aid and environmental protections. This is so concerning that the government must be prepared to walk away and risk a no-deal. Yet, it is not clear what really is at stake for the UK in not doing a deal with the EU. The Thatcherite ideology of deregulation that drove Tory hostility to the EU in the past looks dated in a context where there have been few barriers to being exploited in the gig economy. Indeed, much of the regulatory regime of the single market was backed, if not designed, by UK policy makers to deregulate national economies. In a host of areas, it’s not clear why the UK would have a fundamental opposition to the EU rulebook.
Yet, it is precisely because it’s the EU rulebook that the UK has a problem. The UK’s position only makes sense when looked at from the perspective of lingua Brexit with its Cummings’ mantra of ‘take back control’, and it is this performance of independence and sovereignty that now must take precedence in the trade talks. The question remains at what cost. In 2018, EU countries account for 49.1% of UK trade and seven EU countries were amongst the UK’s top 10 trading partners. There are currently no significant trade deals on the immediate horizon that could compensate for the economic losses from the imposition of trade barriers with the EU. The advantages of a deal with the US remains uncertain with some estimates putting them as low as a 0.2% contribution to GDP over 15 years. In fact, the US is already the UK’s largest trading partner and it’s not clear what further barriers could come down without the UK making significant moves to adopt the US’s regulatory regime. Outside the EU and desperate for new deals, the UK is easy prey for the US and China. But this is the real choice for the UK in a world of powerful regional economic blocs, not independence but who do you want to be dependent on?”
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