EU, UK Look to Trade Future As Brexit Process Prepares for Launch

16 March 2017

As the expected launch of the formal Brexit negotiations approaches, EU and UK leaders are looking both to the next steps for their own bilateral relationship, as well as the implications for the European Union and what these developments could herald for their foreign trade future with external partners.

UK Prime Minister Theresa May received parliamentary approval earlier this week to formally trigger the Lisbon Treaty’s Article 50, the legal provision which officially begins the process for exiting the European Union. Despite prior speculation that she could invoke this provision as early as this week, more recent reports suggest that the UK leader will aim for the end of March.

“Our European partners have made clear to me that they want to get on with the negotiations. So do I,” said May a few days prior after meeting with fellow EU leaders.

Meanwhile, Scottish first minister Nicola Sturgeon announced plans this week to request Scottish and UK parliamentary approval to hold another  independence referendum, citing the impending “Article 50” move and the concerns that Scottish priorities will not be given sufficient consideration in the upcoming Brexit talks.

While UK citizens voted in favour of leaving the EU last June, Scottish voters favoured staying part of the bloc. Scottish leaders have since advocated for finding a way to remain in the EU single market even with the UK leaving – an idea that has been ruled out by the UK government. (See Bridges Weekly, 19 January 2017)

Tusk: Different EU integration models up for debate

The remaining 27 EU leaders are meanwhile preparing for a high-level “Rome Summit” on 25 March, at which point they are expected to adopt a declaration on the bloc’s future, building from a “process of reflection” that kicked off after a meeting in Bratislava, Slovakia, in September 2016. (See Bridges Weekly, 22 September 2016)

The group is exploring what its own next steps will be when it comes to shoring up their union against myriad pressures, including the rising anti-globalisation sentiment in some countries that has had wide-reaching effects around the bloc and is playing out now in member state elections, including the Dutch elections held on 15 March and the preparations for the French elections in April and May.

“It is clear from the debate that the unity of the 27 will be our most precious asset,” said European Council President Donald Tusk on 10 March following an informal meeting of all EU leaders, minus the UK.

According to Tusk, the “EU-27” group has already begun debating the possibility of what some officials refer to as a “multi-speed Europe,” which has also been raised as one option in a “white paper” published by the bloc’s executive arm earlier this month.

That white paper put forward by the European Commission outlines five different scenarios that the remaining 27 member states could work toward between now and the year 2025, suggesting that the final outcome could be a hybrid of some of these approaches.

These options include continuing the EU’s work in the same direction; re-focusing the bloc around its flagship “single market”; allowing “coalitions of the willing” within the EU to cooperate on advancing certain policy priorities; selecting as a group which priorities to focus on, while cutting back on others to be more effective; or working together as a whole on an even more ambitious policy agenda. 

“Some expect systemic changes that would loosen intra-EU ties and strengthen the role of nations in relation to the community. Others, quite the opposite, are looking for new, deeper dimensions of integration, even if they would apply only to some member states,” said Tusk in outlining the current viewpoints among the EU-27 membership.

The EU Council official called upon the group to ensure “political unity” going forward, a view which he said was shared among the other leaders – particularly in light of the thorny Brexit negotiations up ahead.

Foreign trade agenda

Meanwhile, the coming months and years are also slated to be pivotal ones for both the UK and the EU-27 in terms of their trade ties with external partners – both in terms of future deals, as well as understanding what Brexit will mean for their existing trade relationships.

The EU has a busy foreign trade agenda underway, with negotiations taking place around the globe. European Trade Commissioner Cecilia Malmström confirmed last week that the bloc is particularly interested in advancing trade deals in the Asia-Pacific region, and also continues its efforts to clinch agreements with the South American customs bloc Mercosur and several other partners. (See Bridges Weekly, 9 March 2017)

UK Secretary of State for International Trade Liam Fox met this week with Australian Trade Minister Steven Ciobo and New Zealand Trade Minister Todd McClay, with the latter official releasing a video shortly thereafter stating that both Canberra and Wellington are expected to be the first countries to have bilateral deals with the UK once it stops being an EU member.

Both Australia and New Zealand are also gearing up for trade negotiations with the European Union. Indeed, the EU and New Zealand announced this month that they had finished the scoping discussions that will help set the parameters of future negotiations. (See Bridges Weekly, 9 March 2017)

The UK, Australia, and New Zealand were among the various countries represented at the first-ever Commonwealth trade ministers’ meeting, which took place on 9 March in preparation for the Commonwealth leaders’ meeting next year. The UK’s Liam Fox said during the London meeting that building deeper trade ties within the 52-member group is one of their shared objectives.

“Our 52 member states include some of the largest and richest countries on earth, as well as some of the smallest and least developed,” said Fox, in a speech that noted the Brexit context while touting the UK’s commitment to trade and development and warning about the dangers of protectionism. “While our diversities might make a single trading model difficult, if we work together to communicate the benefits of free trade, while addressing the challenges of globalisation, then we have the opportunity to build a global economy that works for everyone.”

ICTSD reporting; “Dutch election: live blog,” POLITICO, 15 March 2017; “NZ, Australia to get first post-Brexit trade deals – McClay,” NEWSHUB, 11 March 2017; “Drive to replace UK-EU trade links with closer ties to Commonwealth,” THE GUARDIAN, 10 March 2017.

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