Glenn Vaughan, chief executive of British Chambers of Commerce EU & Belgium, talks about future European Union-United Kingdom trade relationships with Borderlex’s Iana Dreyer. ‘No deal’ cannot be allowed to happen, he says, and Britain will be stronger on the international stage the more it stays aligned with the EU.
An agreement between the EU and Britain is taking shape. Do you believe there will be a ‘deal’?
There must be a deal. There must be a withdrawal agreement and an orderly exit of the UK that paves the way for a transition period.
If there were not to be a deal, we would immediately have to talk about how we are going to organise ourselves. We will have to come up with the list of all things that need to be arranged, such as air travel.
Getting a deal at a summit this month is step one. But while this is necessary it is not sufficient.
There remains the question of the further steps that need to be taken to ratify the deal. The European Parliament has been very engaged in the Article 50 discussion process. The chair of the Brexit committee, Guy Verhofstadt, will continue to have things to say about the negotiations and the deal, but I would expect ratification in the EU to be possible and relatively straightforward.
The issue is the lack of any clear majority in the House of Commons for any proposed deal solution. The government will want the so-called ‘meaningful vote’ in Commons to happen quickly. They will not want an extended time of political debate.
Even if there is an endorsement in that meaningful vote, that doesn’t mean that the further steps in the House of Commons or indeed the House of Lords will not add some potential roadblocks. There are ways in which the process could all fall apart, even next February or March in the parliament in London.
How close can the EU and the United Kingdom remain as partners after March 2019 as Britain starts trade talks with the United States and other countries, including high-growth emerging markets?
Whatever happens, our long-term future is in Europe. Our connections, our political, social and economic interests are much more closely aligned with Europe than they are with anybody else.
Whilst we are building our interests in those markets, so many of our interests will remain in Europe. We need to collaborate with partners in Europe to have influence in those markets.
A European Economic Area or Norway-style arrangement and a customs union with the EU would clearly be the most desirable route for most of the business community. Not for everyone – some have business models that give them a comparative advantage from slightly different arrangements. But for the big majority, this is the case.
We have much more to lose quickly in a poor future arrangement with the EU than we are going to gain from even the most amazing US free trade agreement. Treating the US as an alternative to the EU relationship just doesn’t make sense. If we were to have a good deal with the EU and a deal with the US, then yes, that would be great.
In many of areas of trade policy, our interests will continue to be the same as that of other EU member states. The kind of things we would want to see coming out of trade agreements are similar to what the EU wants: opening of markets and promoting issues such as labour and environmental standards. It’s undoubted that the closest [societies] to what we are European.
We will inevitably work together with the EU in future, and we as the UK will be stronger on the international stage the more aligned we are with the EU.
Negotiators will only have approximately two years to find an agreement on the future relationship after March 2019. Can they make it?
I have concerns about that. In 2019, there will be European Parliament elections, and then a new European Commission will be chosen. People say that no real negotiations will be possible until next October.
We really cannot afford to go slow on those negotiations on the future deal after March.
There are loads of technical discussions to be had, and the EU and the UK should get on with these regardless of the political calendar.
The parties should get on with negotiations on the future agreement quickly, rather than leave us to go towards another ‘cliff edge’ in two years’ time.
The negotiators won’t be able to offer certainty for business. Even though we crave certainty, we know that is not available, but they need to rebuild clarity and confidence, brick by brick, through those negotiations. That ought to be a clear objective in the structuring of those negotiations.
The focus should be to have clarity on the regulatory framework. Agreeing import tariffs ought to be straightforward. But the negotiators should be clear about the big areas of the regulatory framework that will shape the future relationship.
Among the possible sectors where clarity should be sought there is chemicals policy. We ought to be able to agree very quickly how this relationship is going to work and know early how it will look like. The same applies to food policy, life sciences or pharmaceuticals. These are critical things that we have to get right. It’s a no-brainer that we need to agree on those things quickly.
What the UK appears to be ready to accept in terms of continuing to abide by the EU rule-book is really not that far away from being a member of the EEA. The difficulty of getting this agreement would be considerably simpler if the UK government were able to overcome some ideological purity, notably on free movement. Britain’s proposed new immigration framework, which ties liberalising the visa and immigration regime towards nationals whose government offers preferential trade access to the UK, could land us somewhere that could look a lot like free movement with the EU.
British Chamber of Commerce EU & Belgium represents 200 companies that employ 1.5 million people in the UK and as many in the EU27.