Why Britain's vision for post-Brexit trade deals is probably an illusion

Opinion piece (Business Insider)
Sam Lowe
05 April 2018
  • Many Brexit-backers argue leaving the EU and moving away from European standards will make Britain a powerhouse of global trade.
  • Australia is keen for a quick trade deal with Britain, according to reports this week.
  • However, potential partners like Australia and the US are likely to make politically unacceptable demands in trade negotiations with Britain, trade expert Sam Lowe writes for Business Insider.
  • Britain will soon realise it is more "European" than it thought, Lowe says. 

Is the United Kingdom actually a global bastion of free trade and liberalism? The honest answer is that we just don’t know yet. The UK talks a good game within the EU, but — safe in the knowledge that it can always blame the French — it has never had its stated convictions truly put to the test.

Brexit brings with it an opportunity to find out once and for all. From March 29, 2019, we will be able to negotiate and sign new trade agreements (if not implement them until the proposed transition period ends.) 'Global Britain,' if it exists, is finally ready for lift off.

Already we hear reports that Australia is keen for a quick trade deal. The Australian High Commissioner to the UK has gone as far as to urge the UK to rule out a future UK-EU customs union so as to facilitate such an agreement.

This makes sense from an Australian point of view. Their exports to the UK face some significant barriers. Yet, in return, all that an already very economically open Australia really has to offer the UK is the trade agreement itself – a participation trophy, of sorts. It is in Australia’s interest to swoop while the politics of Brexit are conducive, because otherwise a more measured British government might stop and ask itself: "What with everything else on our plate, what’s the point?"

Yet, even if negotiations are to go ahead, it won’t all be plain sailing. Among other things, the Australians will ask the UK to remove its tariffs on cane sugar and red meat, address regulatory barriers and provide more visas for Australian business people. These demands won’t prove uncontroversial.

Those normally most well-inclined toward liberal trade policies tended to vote remain, not leave, and will certainly grumble about any new, Brexit-linked, trade deal that precludes a UK-EU customs union, and continued close alignment with the EU.

Additionally, British farmers will view any deal with Australia as a precursor to a systemic opening of UK agriculture markets to the rest of the world, and the US in particular. When newspaper headlines proclaim that Australia will demand the UK accept hormone beef as a condition of any trade agreement — an issue traditionally associated with the US — it does nothing to allay suspicions that friendly Australia is a Trojan horse for Trump and industrialised American agriculture. We don't yet know the real strength of the UK farming lobby, but if trade negotiations between the two countries do begin in earnest, I suspect we will find out soon enough.

The UK will also be negotiating knowing, in its heart of hearts, that Australia has its eyes on a bigger prize. Just as the EU negotiated a deal with Korea before it turned to Japan, countries will now use the UK as a stalking horse for their future trade negotiations with the massive market across the channel.

The UK could potentially work this to its advantage, over time, but doing so would require a degree of political and national humility that is seemingly in short supply.

Positive or negative, a trade agreement with a medium-sized country on the other side of the world will have little impact on the UK’s economy as a whole. At its best the negotiations might prove instructive – getting rolled over by the experienced Australians would be quite the learning experience for our fledgling trade negotiators.

Yet, when it comes down to it, I wouldn’t be surprised if the most valuable lesson we learn from our first post-Brexit forays into the world is that, when lofty free trade ambition runs up against domestic political reality, the UK is really quite ‘European’ after all.

Sam Lowe is a research fellow at the Centre for European Reform.