Brexiters’ trade dreams going up in smoke

by Sam Ashworth-Hayes | 10.10.2017

Nearly two-thirds of our trade is with the EU or countries it has deals with. Not only does Brexit jeopardise this privileged access. In much of the rest of world, we will be at the back of the queue for trade deals. The government’s incredibly thin white paper on trade, published yesterday, shows it has no plan to stop trade going backwards and damaging our prosperity in the process.

Brexiters told us that once we were freed from the EU, we’d sign our own bumper crop of trade deals which would kick in on the day we leave. The best that Liam Fox, the international trade secretary, could offer last week’s Tory conference was that we would copy and paste 40 of the deals the EU already has when we quit.

The biggest chunk of our trade, 49%, is with the EU. The Brexiters are running a huge risk with this. Whatever deal we do won’t be as good as what we’ve currently got. Another 2% of our trade is done with places like the Isle of Man, Gibraltar and Aruba – pockets of member-states’ territory that the EU has given varying degrees of market access to.

A further 12% takes place with the 66 countries the EU has trade deals with, such as South Korea, Switzerland, Mexico and Canada. That last deal came partially into force only in September.

If Fox can replicate all these deals, he will have limited the downside on an important but still smallish chunk of our trade. But he’ll need to get cracking. He has so far visited only two of the 66 countries (or three if you include Canada), despite making 17 foreign trips since taking up his job, according to Open Britain. What’s more, even if he is successful, he won’t have got us anything we don’t already have.

What about the rest of the world, accounting for 37% of our trade? Could Fox pull a rabbit out of his hat there? Sadly not.

Chart showing UK trade destinations

After all, the EU is negotiating or has agreed mandates to negotiate with countries such as Japan, Australia and New Zealand that are worth another 8% of our trade. We’re not going to get ahead of the queue with these countries. At best, we’ll be a Johnny-come-lately copying and pasting those deals too.

The EU could soon have deals with countries accounting for 71% of our trade. That leaves little room for Fox to swash and/or buckle his way to a brighter future.

No Trump cards

Of the remaining 29%, just over half is with the US. Brexiters used to hope that by sucking up to Donald Trump, they’d get a sweet trade deal with America. But it’s rapidly becoming clear that the US is keener on doing a deal with the EU than with us.

What’s more, when America does turn its attention to us, it will drive a hard bargain. It will want to thrust chlorine-washed chicken down our throats and force the NHS to pay more for US-made drugs. We’ve already seen Trump threatening punitive tariffs on Bombardier, which employs thousands of people in Northern Ireland, despite Theresa May’s desperate pleas.

The US has also joined several other countries in complaining about a deal we’ve cut with the EU to divide the current quotas we have for agricultural imports after Brexit. Trump wants us to open up our market to US food even before we talk about special deals. You can hear the Brexiters whining: “But you were supposed to be our friend!”

Well, what about China? Including Hong Kong, it’s half of our remaining trade, a full 7%. Quite apart from the fact that our trade with the EU is seven times as large, why did we ever think Beijing would prioritise us? Now we hear that May is having to delay a trade trip to China because Beijing thinks a rival visit by Trump is more important.

Ok, then, what about the rest? Well, the biggest three trade partners are the United Arab Emirates, Russia and Saudi Arabia. In the Arab countries’ cases, a huge chunk of our trade is arms sales, which the EU isn’t involved in anyway.

So that leaves Moscow. But how are we going to ramp up trade with Russia at the same time that we’re imposing sanctions on the Kremlin for annexing Crimea?

The Brexiters promised us global Britain. It’s another of their dreams that’s going up in smoke.

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    Edited by Hugo Dixon