Australia & New Zealand, Brexit & UK trade, Free comment, UK-EU negotiations

Comment: Does the UK have a trade policy strategy?

Britain has a long list of trade issues to tackle in the coming months, from starting talks with Australia, New Zealand and the US to taking its own seat at the World Trade Organization. But the UK’s programme doesn’t rest on any solid strategy, argues David Henig.

 

Under current plans, the UK will start negotiating free trade agreements with Australia, New Zealand and the US in 11 months. Britain should also take an independent seat at the World Trade Organization and retain membership of the WTO’s Government Procurement Agreement. By then, it should also be clear that EU FTAs continue to apply to the UK through a Brexit implementation period.

 

Alongside negotiating a new arrangement with the EU, that’s quite a programme of work. But if we look in detail, the programme doesn’t seem to rest on any solid strategy.

 

For a recent ECIPE paper, I defined six pillars upon which we can measure a country or bloc’s trade policy. Measuring the UK against these pillars found, not surprisingly, a large degree of immaturity. Taking this assessment further, how does Britain compare with the EU?

 

The first of the pillars is consensus – politically, geographically and socially – on trade policy. Clearly, the EU consensus was shaken severely during the Transatlantic Trade and Investment Partnership negotiations, to the extent of endangering the bloc’s trade deal with Canada. Yet DG Trade and Cecilia Malmström personally have sought to rebuild it with the European Parliament, member states and many interest groups, and agreements with Japan, Singapore and Mexico look likely to enter into force in the coming months.

 

No consensus, little rationale

 

The UK, meanwhile, seems to have learned little from the TTIP debates, given its plan to start talks with the US without first trying to build a consensus for this. Certainly, it is hard to see the Labour Party doing anything other than vociferously opposing negotiations, and civil society groups are already preparing their campaigns. Britain hopes to start negotiations with Australia and New Zealand at the same time.

 

But there is little rationale as to why these are the targets. The second pillar, clarity, evaluates whether a country has clear, beneficial and deliverable objectives from trade policy and individual agreements. For the EU, we can see those clear objectives in the recent flurry of trade activity, with the protection of geographical indications and spreading the investment court system being two key examples.

 

This does, of course, suggest that if the British government were to consider its objectives in further detail, the US, Australia and New Zealand might no longer be the priorities.

 

Transparency and accountability is the next pillar, and another where UK thinking appears immature. As yet, there are few serious proposals for consulting Parliament, devolved authorities or stakeholders, and indeed little information given to any of them. There has been no serious consideration given to either an independent body such as Australia’s Productivity Commission, or an assessment like the European Commission’s Sustainability Impact Assessment. The EU has established processes in all these areas and strengthened stakeholder consultation mechanisms during and after TTIP.

 

EU, UK lag on fairness

 

There is more work for both the EU and the UK to do on the next pillar, fairness, which covers both domestic issues of equal treatment for businesses and other interests of all sizes, and international matters, in terms of development. Both score well on the development side, with the British government having made an uncharacteristically early decision on maintaining unilateral preference schemes after leaving the EU.

 

Both, however, must work to ensure trade policy adequately reflects issues faced by smaller companies. The EU’s Market Access Database is a good base, but proposed chapters on small and medium-sized enterprises don’t make up for the structural imbalances where large companies are far more likely to have their issues prioritised. The UK government has said little about this matter.

 

The fifth pillar, future focus, is the one where the EU arguably scores worst, with trade deal focus on ‘old’ issues such as agriculture, and criticism as to whether its approach on data in trade accords could damage services trade.

 

Britain should have the opportunity to think afresh. Yet the early signs are not encouraging. While referencing services, there has been no firm suggestion as to how the UK’s trade policy could deliver gains in this area, and minor debates over passport printing agreements and fish suggest the country is not, in fact, going to be immune from old-fashioned protectionism.

 

The final pillar, implementation, is all about the plan to deliver trade policy. The current commission’s term will soon end, and EU talks with Australia and New Zealand will be a first step for the next group of commissioners. Meanwhile, the UK has a list of agreements to negotiate, but without any clear indication of timing or how this will be balanced against ongoing EU talks and other activity.

 

The UK’s position can then best be described as both immature and secretive, where the EU’s has recently evolved after the TTIP shock. The real question for the UK will be whether there is space for much evolution given the intensity of the ongoing debates about future EU relations. If the debates don’t happen in the next year, we can expect British trade policy to remain uncertain into 2019.

 

David Henig (@DavidHenigUKis the director of the UK Trade Policy Project at the European Centre for the International Political Economy. He formerly worked for the UK government, including three and a half years on TTIP.

 

 

Opinion pieces published on Borderlex are those of their authors only.

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