Engage Gulf interests to show naysayers painless trade deals are possible

Brian Monteith
Source: Getty

This week sees David Davis attempt to get the Brexit negotiations on to the serious stuff that really matters to Britain: what our trading relationship with the EU – that will impact on our jobs and prosperity – will be.

In the real world, where deals are already happening, the listing of oil giant Saudi Aramco, and the Gulf Cooperation Council coming to London later in the year, present an opportunity to show what is possible following Brexit, and should be woven into the government’s strategy.

The EU negotiators have other concerns of course. They have said we are definitely departing, leaving the door only slightly ajar for us to stay in – but at terms that will be worse than what we had suffered for the previous 40-odd years.

They have made it clear that unless we accept freedom of movement (controlling our borders), the jurisdiction of the European Court of Justice (controlling our laws), accepting their directives (controlling our taxes) and maintaining their protectionist tariffs (controlling our trade) then we will be outside of the Single Market and Customs Union.

Read more: The UK and EU can’t afford to delay trade talks

As these were the central reasons for Britain to take back control of its destiny, the Brexit negotiations have boiled down to just two issues: what the cost of any current and future liabilities we share is (and what is due), and what the detail of any free trade deal will be.

The EU wants to screw the UK for as much money as we will bear and for as long as possible, while the UK simply wants to know what the trading arrangements will be, preferably on terms as close to what we currently enjoy. By publishing a plethora of position papers in the last week, Davis is hoping to get the EU to move beyond its money grabbing demands and on to what all UK (and EU) businesses and workers with a stake in exports need to know – how will the future work?

Before the General Election Theresa May’s government had said the UK was prepared to operate under World Trade Organisation rules – just as the US, Japan and China do – meaning “no deal would be better than a bad deal”. This scared many business leaders who could not contemplate trading without EU rules and regulations. There was much talk of a “cliff edge” and the need for a “transition” period.

The first law of negotiating is being willing to walk away without a deal, but after the General Election the UK government has had to change tact and play down such brinkmanship. In the position papers we can see Davis is attempting a more cunning game, signalling concessions on transitional arrangements that will suit business but do not, thus far, undermine Brexit meaning Brexit.

If he can get agreement, then most people will see that as a solid achievement, and business leaders will be happy. But if the EU rejects such fair-handedness, then its attempt to punish Britain for having the audacity to leave will be exposed. Support for leaving without a deal is then more likely to become stronger, and the government could gain in authority and credibility.

Davis can do more, however, by demonstrating how new global trade deals – only possible after a full Brexit – will be substantial and quick. One such opportunity is to make particular effort around the Gulf Cooperative Council meeting in London later this year. It is the first meeting of the GCC outside the Gulf and signals the confidence and intentions of the Arabian states in doing more business with Britain.

Read more: Gulf states are seeking a speedy trade deal with the UK post-Brexit

Worth over £30bn, the GCC is our largest export market after the US, Germany and Switzerland. International Trade Secretary Liam Fox has already identified 31 big-ticket exporting opportunities spanning hydrocarbons, defence, infrastructure, science, and the creative industries. We need to pull out all the stops to set up the correct diplomatic and commercial support to establish the GCC trade deal that the EU has failed to make in twenty years of discussions.

While New York remains the favourite to handle the listing of Saudi Aramco, London is still in with a chance and should not yet give up. If the City were to win it would be a feather in its cap. But were it to lose, the consolation would be the confirmation of how the real competition is not from Paris or Frankfurt, but New York – and that Brexit will not change that.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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