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10 February 2020

Bloomberg: Boris Johnson wants to be a free trade grandmaster

Britain is aiming for quick trade deals with the U.S., the EU, Japan, New Zealand and Australia. None of these gambits is likely to yield a great victory, writes Therese Raphael.

More than four decades have passed since Britain last negotiated a trade deal, but it now plans to hold up to five sets of trade talks simultaneously. The guiding philosophy, Prime Minister Johnson said last week, is an abiding belief in the value of free trade, which Britain plans to use its negotiations to promote.

Free trade agreements are Johnson’s most pressing foreign policy objective. But they don’t come easily. Negotiating a single deal takes sustained political will from both sides, a deep bench of expert negotiators, a coherent strategy, detailed consultation with various stakeholders, time (usually several years or more) — and luck.

While negotiating tandem deals isn’t unknown, it’s even more complicated. “South Korea and Chile ran talks with the U.S. and European Union simultaneously; one negotiator involved described it to me as a nightmare,” recounts David Henig, director of the U.K. Trade Policy Project and a former British trade official. The complexities reflect the resources required to run tandem negotiations, but also the need to keep track of which discussion lines have moved with which party and to keep things simple for regulators. It can’t help when two of the parties are trade elephants like the EU and the U.S., who themselves are at odds with each other over a host of trade issues.

Johnson wants free trade deals with the EU and the Americans, to be concluded before the end of this year; but he’s also negotiating deals with Japan, Australia and New Zealand. He referred to the plan (in what may be his first known instance of understatement) as “the great multidimensional game of chess.”

That game was launched last week and now his pieces are fanning out across the board, or boards, at breakneck pace. On Monday, Johnson set out his objectives for the EU talks, asking for a comprehensive deal but rejecting the demand that Britain adopt a host of European rules and regulations. [...]

The real prize is agreement with the Americans. This is not primarily a matter of economics. The upside to the British economy from such a deal would be modest — adding about 0.2% of GDP in the long-term — but it would be a hugely symbolic achievement for Johnson.

While some hope the U.S. talks will put pressure on the EU to make concessions, that seems like a long shot; and one that carries risks. If a U.S. deal gets bogged down, any pressure on the EU side is gone. Worse, if the Americans press demands that are politically toxic – anything around the National Health Service, food standards or animal welfare, for example – Johnson may find public patience wears thin.

It’s not clear that a quick U.S. deal can go much beyond tokenism. “I really struggle to come up with too many forms of market access that you could potentially offer the U.S. that would hurt the EU more than it would hurt the U.K. not having a good deal [with the EU],” says Dmitry Grozoubinski, a former Australian trade negotiator and founder of Geneva-based consultancy ExplainTrade. [...]

That will get awkward eventually: The EU and the U.S. both like to hug trade partners close. Britain’s outgoing U.S. ambassador Kim Darroch told the Guardian last month that he expects the Americans to push aggressively to open up Britain’s agriculture and health care sectors to U.S. exporters. He thinks the U.K. probably won’t get much in return.

“A U.S.-U.K. trade deal is likely at some point, but it will not be easy, and it is unlikely to make up for what has been lost with the EU,” Simon Lester, a trade expert at the libertarian Cato Institute, says. “The Trump administration has mostly gone in the direction of protectionism rather than free trade. They may be willing to liberalize a little bit with the U.K., but so far they have not been willing to do too much in other negotiations.” [...]

And this may also be about a future blame game. For all the fanfare, Johnson’s trade crusades probably won’t yield great victories; and the public may lose faith in the effort. As Emmanuel Macron has found in France, it doesn’t take much for a honeymoon to end.

Full article on Bloomberg

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