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Analysis

Bridging the Brexit trade gap must be taken seriously

by Luke Lythgoe | 29.08.2017

The third round of Brexit negotiations has not begun promisingly. The EU’s chief negotiator, Michel Barnier, thinks the UK’s bargaining position – outlined in several position papers over recent weeks – still lacks clarity, without which talks on a bilateral trade deal are unlikely to begin in October as the British hope.

“The sooner we remove the ambiguity, the sooner we will be in a position to discuss the future relationship and a transitional period,” said Barnier. “We must start negotiating seriously.”

The UK government seems deaf to the warning, with Brexit secretary David Davis insisting both sides had to show “flexibility and imagination”. Meanwhile, the spat is being exacerbated in the pro-Brexit press, with the Telegraph reporting senior British sources saying Barnier is “unhelpful” and “stuck with a headache of his own making” thanks to his position on the UK’s so-called ‘divorce’ bill.

So much for a post-Brexit EU-UK trade deal being “one of the easiest in human history”, as Trade Secretary Liam Fox claimed last month. His argument is based on both sides already enjoying zero tariffs and the same regulatory framework. But, as the withdrawal negotiations are already proving, this is as much a political pact as an economic one.

The absence of an EU deal could harm the UK’s trade with non-EU countries too. New research by the Open Britain campaign suggests the UK could be shut out of at least 19 current agreements between the EU and US. These include the Open Skies accord allowing free competition between European and US airlines, the elimination of duties on European whiskies and other alcohol, and food safety and animal welfare standards on pork and beef. The UK must either negotiate to stay part of the EU’s current arrangements or strike new bilateral deals with the US before the Brexit deadline.

The forging of new trade agreements with non-EU countries is also facing setbacks. Take Theresa May’s visit this week to Tokyo, where Japanese officials – currently busy completing a trade deal with Brussels – say they will not rush into free trade talks with Britain, despite having made more positive sounds in June. This follows Fox’s trip to America in July, where his attempts to capitalise on a Donald Trump’s desire for a quick bilateral trade deal was buried by the press under a mountain of chlorine-washed chickens.

While the Tories continue to indulge in free trade fancy, Labour is approaching the issue more sensibly. Over the weekend, shadow Brexit secretary Keir Starmer said the party would seek “maximum certainty and stability” for businesses and jobs by keeping the UK in the EU’s single market throughout a transitional period which would be “as short as possible, but as long as is necessary”. The policy was welcomed by pro-Europeans while causing dismay among Labour MPs in seats that voted for Brexit last June. But it is the responsibility of these very MPs to convince their constituents of what Starmer calls the “harsh realities” and “grown-up acknowledgement” of a disorderly Brexit.

Labour aren’t conducting these negotiations. But a well-sold policy of putting jobs and the economy first would heap significant pressure on the government, perhaps enough to make it reconsider its dogmatic trudge towards the cliff-edge in March 2019. The logical extension of putting jobs and the economy first, of course, is knocking Brexit on the head altogether.

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Edited by Alan Wheatley