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03 March 2020

Financial Times: Waiting for the golden age of Brexit trade deals

The UK government continues to emit an overpowering fog of promises about non-European agreements, writes Tony Barber.

Despite the EU’s prominence in British trade, Prime Minister Boris Johnson’s government plans to detach the UK as far as possible from continental Europe in terms of regulatory standards and legal frameworks.

The other side of this coin is the pursuit of deals with the US, China and other large non-European economies.

Some, such as Japan, already have extensive trade and investment ties with the UK. But Japanese business executives sound gloomy.[...]

Like others in Asia, executives in Tokyo say they cannot set precise goals for a UK trade deal until they know the details of London’s post-Brexit relationship with the EU.

Professor Rana Mitter, a leading authority on modern China, said few countries had a comprehensive trade accord with Beijing. Those that do — Australia is an example — usually have products, such as minerals or advanced machinery, that make a deal attractive to the Chinese.

“The UK doesn’t have one obvious sector that China sees as of compelling benefit to its own interests, so a deal is unlikely to be agreed quickly,” said Prof Mitter.

On the other hand, some Chinese specialists say a trade deal would make the UK more dependent on China, and so London might become more willing to speak up for Beijing’s interests in international forums. 

For the Johnson government, the larger point is that the dynamics of world trade have changed since Mr Davis’s insouciant optimism of 2016. President Donald Trump is not only committed to an “America first” trade policy but wants its allies, including the UK, to join it in taking a tough line against China for national security reasons.

Other frictions are emerging over London’s plans for taxes on digital services, the Trump administration’s threats to impose tariffs on car imports and the UK’s quiet support for the Iranian nuclear deal, which Mr Trump abhors.

Moreover, a close look at the US negotiating objectives for a trade deal indicates that Washington has its eyes on drawing London into its regulatory orbit.

Full article on Financial Times (subscription required)

© Financial Times

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