Britain faces harsh truths about post-Brexit trade

Free trade promotes prosperity. But free trade deals produce losers as well as winners. They are often unpopular with electorates. Such agreements typically take years to negotiate. Opening up markets can require layers of new regulation in order to align national rules. It is nearly half a century since Britain last negotiated its own trading arrangements.

Such complexities, and the absence of experienced trade negotiators, have never much troubled Britain’s Brexiters. Once the UK cast off the shackles of the EU, they declared, fast-growing economies from around the world would join a queue to strike bilateral trade deals. As for the economic relationship with the EU27, leading cabinet Brexiter Michael Gove promised that Britain would hold “all the cards”.

All the evidence since the 2016 referendum has been in the opposite direction. Leaving the single market by definition is a big step in the direction of protectionism. Were Britain to fall out in a chaotic Brexit, it would lose not just privileged access to its most important market but also to the more than 60 third countries covered by special arrangements with the EU.

Brussels has been expanding these preferential deals. The recent EU pact with Canada has been followed by the conclusion of an accord with Japan. Some of these countries have expressed interest in signing agreements with the UK. But thus far the government has succeeded in negotiating nothing more than a set of contingency arrangements with Switzerland and a handful of other nations. This is scarcely a trade policy.

Partners beyond Europe will be willing to negotiate detailed trade deals only when they see the shape of Britain’s future relationship with the EU. Japan has also made public what to non-Brexiters always seemed obvious. As a smaller market than the EU27, Britain cannot expect to win concessions comparable to those secured by Brussels. This is not just a question of tariffs. The US has indicated that it would expect post-Brexit Britain to soften EU rules on food standards. US officials want access for American producers of “chlorinated” chicken and hormone-treated beef. The domestic politics will be just as tough. The government will face unpopular choices it has avoided since joining the EU. As the minister responsible for the environment and agriculture, Mr Gove is now discovering this for himself.

READ  UK consumer spending drops over a third during lockdown

Mr Gove has taken the side of the farm lobby in an angry dispute within the cabinet about future tariffs on agricultural products. The UK Treasury wants to open the doors to the cheaper food on world markets. Farmers want to keep EU-style subsidies. The US, Australia, New Zealand and Canada want better access to the UK food market as part of any eventual trade deals.

The hope is that common sense and the interests of consumers eventually prevail over those of the farmers’ lobby. But this will be only the first such collision. There will be trade-offs between manufacturing and agriculture, and manufacturing and services. There will also be awkward choices within each sector. Many trading partners want more liberal immigration rules for their citizens in return for offering better terms for UK business.

On its present trajectory, the Britain emerging from this process will be significantly less, not more, open to the world — losing market access in Europe and striking trade deals elsewhere less favourable than it now enjoys. The nation will be poorer as a consequence. The Brexiters’ promise of an open, dynamic “global Britain” already has a distinctly hollow ring. But then this is only one of many broken pledges.



Please enter your comment!
Please enter your name here