31 May 2016

Financial Times: Britain lacks the skills to go solo on trade deals

Hiring 475 new overseas negotiators will take more than good luck, writes Miriam González Durántez, co-chair of the international trade and government regulation practice at Dechert, a law firm.

[...] Because the European Commission has taken the lead in trade negotiations since the 1970s, the UK simply does not have people with the right technical knowledge. [...]

The outcome is that the UK benefits from 80 or so EU trade bilateral and regional agreements, either already in force or being formalised. Negotiations are under way, too, with more than 15 countries, from the US to Brazil and Japan. The agreements provide EU companies with access to these countries’ markets on more favourable terms than those secured by World Trade Organisation membership. They cover myriad provisions, from origin denominations to phytosanitary rule — all carefully crafted to ensure UK companies face as few obstacles as possible.

It is a long process: given that trade agreements have grown increasingly sophisticated, concluding negotiations in five years is a real achievement. Typically about 20 commission negotiators backed by 25-40 technical experts are involved. That may sound a lot but EU negotiators are known for their quality and manage with fewer people than most nations or trading blocs.

If the UK leaves the EU, the government will need to renegotiate these agreements for itself. Non-EU countries have given UK companies access to their markets in exchange for their companies having access to the 500m customers in the EU. Since the UK market on offer after a Brexit will be only 67m consumers, it is only natural that those nations will want to renegotiate; Brexit would represent a breach of contract.

In addition, the government will need to play catch-up on the negotiations under way between the EU and countries such as the US, India or Brazil. Even if all those countries agree to start from the basis of the current texts rather than from scratch, the UK will need about 500 negotiators working intensely for a decade at least.

The only UK officials with the skills to negotiate trade deals at present are with the commission itself. Even if we repatriated them all, we would struggle to put together a team of more than 25 people with the practical experience needed. Hiring (and then co-ordinating) 475 negotiators of other nationalities will require more than good luck.

The UK would also need politicians who understand how trade talks work so that sticking points can be resolved at a higher level when needed. As far as I know, no member of the government has led any international trade negotiations. The fact that Michael Gove, the justice secretary, widely considered one of the brightest of the Brexit camp, thinks the relationship between the EU and the UK can mirror the one between the EU and Albania demonstrates the enormity of the challenge.

Business people are often shocked to hear all this would be needed, not to im­prove market access conditions for UK companies, but simply to keep things as they are. No wonder they find it hard to understand why the government is exposing the country to such risk.

Full article on Financial Times (subscription required)

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