With Britain gearing up to leave the European Union, Westminster is in the midst of a trade frenzy. New departments are being formed, ministers appointed, and the search for trade negotiators is set to span hemispheres.
The trio of Leave campaigners that will play a leading role in untangling the UK from Europe – Boris Johnson as foreign secretary, “Brexit secretary” David Davis and the new international trade secretary Liam Fox – are keen to talk to any country willing to listen about a trade deal with the UK.
With exports to non-EU countries accounting for more than half of everything the UK sells overseas, it’s easy to see why ministers want to hit the ground running.
Legally, the UK shouldn’t be talking trade deals until it is no longer a member of the EU, but that hasn’t stopped the Whitehall machine revving into action. “What are they going to do about it?” Davis asked over the weekend, as he outlined plans to have a number of deals ready to come into force as soon as the UK official breaks ties with Europe.
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Countries outside the EU fall into two categories as far as trade is concerned: The 58 we currently have some kind of deal with through the EU, like Canada, Switzerland and South Korea, and those who have no preferential access, including our biggest export client, the US.
With so many countries, relatively little time and scant negotiating resources, “the question is how to prioritise,” Dan Ikenson, head of trade studies at the US-based Cato Institute told City A.M..
“The focus should be entirely on getting as good as agreement as possible with the EU, and then replicating those special trading agreements,” thinks Frederik Erixon, founder of the European Centre for International Political Economy (ECIPE).
But, it takes two to tango, and the nations on the other side of the table may have different ideas.
“Many countries will take a wait-and-see attitude to see how negotiations between the UK and the EU will proceed,” said Zsolt Darvas, a senior fellow at Brussels think tank Bruegel.
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Big deals should come first according to Darvas, who said: “I would advise going for some big trading partners … because that’s what really matters.”
Cato’s Ikenson agreed: “Priority should be placed on securing a deal with the US … The UK should plan for accession to the Trans-Pacific Partnership [the giant trade deal agreed between the US, Japan and a host of smaller countries earlier this year],”
However, not everyone believes deals are necessary. The Economists for Brexit Group has called on Theresa May to unilaterally abolish tariffs and embrace free trade without striking time-consuming deals, treaties and agreements.
“Unilateral liberalisation would be the quickest and easiest policy reform to adopt, and it would pay dividends quickly. The advantages to UK exporters [in lower prices and the possibility to attract investment] would be considerable,” Ikenson said.
It would also get round the need for more negotiators.