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Six reasons why Tories won’t reach their free trade target

by Nick Kent | 29.11.2019

Boris Johnson’s election manifesto claims the Tories will reach free trade agreements covering 80% of our trade within three years, following an EU agreement with ones with the US, Australia, New Zealand and Japan. Here are six reasons why this won’t happen.

1. The UK’s largest trading relationship (45% of our exports and 53% of our imports) is with the EU. Other countries will want to know what kind of agreement we have with the EU before they negotiate with us. Why? Because the deal with the EU will set benchmarks in areas such as agri-food, industrial standards and financial services that other countries will need to know before they can agree terms with the UK. We don’t know how long the talks will take with the EU but few expect them to be concluded by December 2020 (as Johnson claims they will), least of all the EU’s negotiators.

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2. This is why Johnson’s promise to negotiate with other countries in parallel with the EU talks won’t work. What he is really proposing is “talks about talks”, when countries essentially decide what will be on the agenda when they really start negotiating.  

3. Trade agreement talks invariably end up being about agriculture. Most developed countries subsidise their farmers and find it politically difficult to cut those subsidies in order to reach trade agreements. Other countries will want to know how much subsidy we are paying to our farmers and what tariffs we will adopt on agricultural products – and that takes us back to the agreement with the EU, our largest customer for agri-food products. Note that one of the most sensitive groups of farmers will be those in Northern Ireland, who under Johnson’s deal will still be trading under EU terms in Ireland but worry that they will no longer receive the same Common Agricultural Policy subsidies as their neighbours do. 

4.The US is a difficult country to negotiate with. Even if Donald Trump is not re-elected next November, Congress will want food and pharma on the agenda. The US is desperate for the UK to buy its agricultural products and could get rough if the UK either says no to lower standards or has promised the EU it will stick to higher European food standards. Jeremy Corbyn may have over-egged the threat to the NHS in the leaked US trade-talks papers but they do confirm that the US wants the NHS to pay higher prices for US-made drugs. America wants this because NHS drug prices are widely used as a benchmark by other countries.

And then there is the Trump factor, for however long he’s in office; he’s an unreliable partner to negotiate with. One minute he is your friend, the next he’s threatening to destroy your economy – just ask Turkey’s President Erdogan. Trump has accused other countries of “extorting” lower prices from US drug companies and he has ordered his trade representative to make stopping such practices a priority.

5. We are at a major point of change in the global economy; the digital revolution is changing trade like it is changing everything else. The EU, US and China all want to be the rule makers in trade, including in newly developing digital goods and services. Outside the EU, the UK will have less influence over standards and will find itself marginalised while the big blocs have their regulatory cat-fights. 

6. Finally, there isn’t enough time. To reach agreement with the EU will be difficult enough in three years, let alone one. Any deals done with other countries in so short a period are likely to be at best insignificant or at worst damaging because Johnson would have to sell Britain short in order to get a quick agreement.

Edited by Bill Emmott

Categories: Brexit

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