Priorities for ‘Global Britain’ by Sam Lowe
When the UK leaves the EU on January 31st 2020, it will enter the final phase of a process leading to the erection of trade barriers with its most important trading partner. Rather than charging headlong into a trade agreement with the US, Britain’s priorities should be stabilising relationships with existing trade partners and regaining their trust. Meanwhile, it should develop a clearer idea of what it wants its freshly independent trade policy to achieve, and why. In the coming years the UK will need to convince trade partners that it has a constructive role to play in an era where openness to trade is on the wane. At the same time, it must be honest about its limited ability to shape the global trade agenda. The UK’s trade relationship with the EU remains its most economically important one. Yet the UK’s desire for full control over domestic regulation and trade policy significantly limits the potential scope of the EU-UK relationship. At best, the EU and UK are on course to conclude a free trade agreement (FTA) that removes all tariffs and quotas, but creates significant new administrative and regulatory barriers to trade in both goods and services. Assuming the government is set on diverging from EU rules in the services sector, a more pragmatic approach would see the UK attempt to negotiate a relationship akin to Switzerland’s, which is de facto within the EU’s single market for goods. Whether the EU would countenance such a request remains uncertain, however. While the UK has made good progress on replicating EU trade agreements ready
for Brexit, there is still much to do. Some agreements will need to be renegotiated in their entirety due to partner countries refusing to roll them over – for example, the EU’s FTAs with Canada and Japan. Of the agreements yet to be rolled-over, the one with Turkey – which is in a customs union with the EU – is particularly tricky. The UK cannot remain in a customs union with Turkey unless it is also in a customs union with the EU, which the British government has ruled out. The UK can negotiate an FTA with Turkey as long as it also concludes one with the EU, but without a customs union trade will flow less freely than before. FTAs with Australia, New Zealand and Canada are good to have, but replacing the EUJapan agreement should be the UK’s priority. Japan is the third biggest investor in the UK (after the US and EU), but its companies and