Friday saw the conclusion of the first round of EU-UK talks on a new trade and wider partnership with more than 100 UK negotiators in Brussels. With the final form of the UK’s departure from the EU is still far from clear, this underlines how much is yet to be agreed, despite the Government’s claim that Brexit is already now ‘done’.
Indeed, far from the UK’s exit having been concluded, the last few days was really about ‘getting Brexit started’ in earnest.
For all that the nation’s withdrawal from the EU on January 31 was a seminal moment in post-war history, Brexit is far from being a single, isolated event, but instead a much broader process of negotiations (a catch-all term used here for formal diplomatic discussions and wider debates about Brexit) between and within the UK about their respective futures.
This is not just with leading developed nations like the United States, Australia, Canada and New Zealand, but also major emerging markets like China, India and also the Gulf Cooperation Council states given the range of issues in play
So even with a Brexit withdrawal deal now ratified, there are multiple scenarios still possible: from a disorderly exit this year, through to the outside possibility of the transition being extended and a deep, comprehensive deal being concluded later in the 2020s.
Turning to this week, at the start of what could be the most complex peace-time dialogue ever undertaken by the parties, the mood music is currently darkening over a potential deal.
While there is overlap between the starting positions of Brussels and London, the time frames are very tight with the Johnson Government asserting that it will walk away from trade talks in June unless there is a “broad outline” of a comprehensive deal capable of being “rapidly finalised” by September.
While at least an interim UK-EU deal may still be the most likely outcome this year, there is a now growing chance of talks collapsing. To this end, the UK Government said this week that it has re-commenced preparations to end the transition period for no trade deal on World Trade Organisation terms.
One of the reasons that the talks this year may not go as well as hoped is the overstretch in the UK Government, right now, on the trade negotiation side. The responsibility for this area of policy has long been transferred by EU states to Brussels, and London is therefore behind the curve on this issue and making up ground after almost five decades in the European club.
US-UK trade agreement
Moreover, at the same time that UK policymakers are focused on an EU deal, they also are looking to agree trade deals with many non-European countries too. Take the example of a potential agreement with the United States which is the focus of much attention in London this week too.
The UK government declared last week, in a 180-page negotiating position for the talks, that a post-Brexit trade deal is a big priority. Yet, London’s own analysis indicates that the such an agreement will boost the nation’s economy by a puny 0.16 per cent over the next decade and a half.
Inevitably, this has led to concerns being expressed that the benefits of transatlantic deal have been much exaggerated. For instance, Liberal Democrat International Trade spokesperson Sarah Olney said last week that a US-UK deal “will not come close to outweighing what we expect to lose from leaving the EU”.
Another key challenge for London with the potential new UK-US trade deal is that it may not now be possible to secure ratification before the end of Trump’s current four-year term given that the administration, in an election-year, is losing traction in Congress which would also need to vote on a deal. This means that a new agreement will likely be kicked out to 2021 when there could be a new president.
Even if Trump is re-elected, there are a growing range of issues where he appears at significant odds with Johnson over issues such as Huawei, a proposed UK digital tax, and climate change. Moreover, while there are key areas ripe for agreement between the two nations in such a US-UK pact, including lowering or eliminating tariffs on goods, there are potential disagreements too, not least given the current president’s rhetorical commitment to “America First”.
Great global trading nation
What the challenges around the US deal underlines is that, keen as Johnson is to rediscover the UK’s heritage “as a great global trading nation” post-Brexit, this is not a straightforward agenda to realise in practice.
This is not just with leading developed nations like the United States, Australia, Canada and New Zealand, but also major emerging markets like China, India and also the Gulf Cooperation Council states given the range of issues in play.
This underlines the major trade challenges now facing London, not least on Brexit given the remaining complexity of the debate. The final form of the UK’s departure from the EU remains far from clear and there is a still very significant possibility of a disorderly exit given Johnson’s current red lines around the transition period ending in December.
The stakes in play therefore remain huge and historic, not just for the United Kingdom, but also the EU which could be damaged by a such a disorderly Brexit.
Delivering a smoother departure needs clear, coherent, and careful strategy and thinking on all sides so that London, Brussels and the EU-27 can move toward a new constructive partnership that can hopefully bring significant benefits for both at a time of geopolitical flux.
— Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics