Open Europe: Priorities for the new Department for International Trade post-Brexit
27 July 2016
Prime Minister Theresa May has made it clear that international trade will be a key priority of her government. Open Europe’s Raoul Ruparel puts forward his thoughts on what tasks should the UK prioritise.
Key points
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UK-EU negotiations top priority – not entirely separable from negotiations with other countries, as the closer tied in the UK is with EU, the less flexibility it will have in trade deals with others.
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FTAs via the EU mean a further 14% (on top of 49% with the EU) of UK trade takes place of preferential terms. Securing these should be a priority.
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Within these Switzerland (3% of total UK trade) and Norway (2.6%) are of particular importance. A quick way to secure these would be for the UK to join the European Free Trade Area. This might also allow the UK to join up with some of EFTA’s trade deals such as with Canada – though the UK may eventually want to negotiate its own more in depth agreements.
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Setting a baseline of tariffs, quotas and subsidies agreed with the WTO will be a crucial early step. Hard to negotiate any FTAs unless countries know on what terms the UK will trade with the rest of the world.
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The WTO process is not as simple as assumed and will require support from all 162 members. Simplest for the UK would be to adopt its proportionate share of the EU’s ‘schedule of commitments’ at the WTO. To smooth this along the UK should appoint an Ambassador to the WTO.
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In terms of new FTAs, the UK should prioritise the likes of US, China, India and Brazil.
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Taking a separated approach to FTAs would make sense. The UK should seek to strike quick, goods focused deals with high tariff nations (China and India) which can be revisited later for services integration. Any deal with the US will rely on services, particularly financial services harmonisation, and as such will take longer. Despite cultural similarities, in regulation terms the UK and the US remain quite different.
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Be patient – rebalancing will take time; many large developing economies do not yet have significant demand for imports of services, and financial services in particular. But this is likely to change in future. [...]
What should the UK’s trade priorities be?
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Negotiate UK-EU deal (both withdrawal agreement and trade agreement)
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Secure current FTAs (30+ agreements with 60+countries)
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Implement UK specific WTO schedule of commitments (tariffs, quotas, subsidies etc.)
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Begin negotiations with other states on FTAs
Full article on Open Europe
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