UK Scopes Out Foreign Trade Options As Legal Challenges Continue on "Brexit"

17 November 2016

UK officials have continued exploring options for deepening ties with other trading powers in a post-“Brexit” world, as legal challenges continue on home soil regarding whether the government has the authority to launch exit talks with the European Union without first gaining parliamentary approval.

The UK’s Supreme Court is now considering the issue, after the country’s High Court ruled last month that legislators needed to first give consent. Government officials say that their appeal will likely be heard by the court in early December, though a result may not come until later that month or even in early 2017.

UK Prime Minister Theresa May has indicated that she plans to launch exit talks with the European Council by the end of March 2017, at the latest. (See Bridges Weekly, 6 October 2016)

UK-India trade talks coming up?

Among the most recent developments on the foreign trade front was a bilateral meeting between May and her Indian counterpart, Prime Minister Narendra Modi, last week.

The gathering in Delhi marked UK Prime Minister Theresa May’s first trip outside Europe in her new leadership role, with the premier referring to India as a “natural partner for Britain.”

“We are both firm supporters of free trade. We both want to be great exporting nations. And so we should work together, for the long haul, to break down the barriers to trade and investment,” said May.

Notably, the UK leader announced that the two countries would begin bilateral meetings aiming to improve commercial ties, including on services. “The UK will make India the first visa country to have access to our registered traveller scheme, offering many Indians smoother and swifter clearance at the border,” said May.

She added that it would be willing to do even more, so long as India was willing to work with them in getting Indian citizens who “have no right to remain in the UK” to return back to their home country. Indian officials, for their part, have indicated that immigration will be a key issue for them in any effort to deepen bilateral trade ties.

A joint statement by the two premiers indicated that the two sides would “make it a priority… to build the closest possible commercial and economic relationship” following the UK’s exit from the EU, with a working group being established to help support that effort. The document stops short of announcing plans for formal trade negotiations at this stage, however.

The efforts to deepen trade ties between the UK and India come amid questions over the next steps for the long-stalled EU-India trade and investment negotiations, which have lately come under renewed scrutiny given that various bilateral investment deals between individual EU member states and New Delhi are about to expire.

The EU-India negotiations have been underway since 2007, though have advanced slowly in recent years. European Commission officials have lately warned that letting individual investment deals lapse in the coming months could have knock-on effects for the larger trade talks.

Australia: EU talks next year, UK post-Brexit

The push for a possible UK-India trade deal comes as the island European nation scopes out possibilities for other bilateral accords after leaving the EU. To date, UK officials have already met with their Australian counterparts to explore the possibility of a future free trade deal, while both sides acknowledge that any formal talks would have to wait until the UK has left the European Union.

“I’ve hoped that we’ll be able to commence formal negotiations around a free trade agreement with the European Union toward the middle of next year,” said Australia Trade Minister Steven Ciobo late last month.

“I’d put that to one side and say we’re pursuing as well preliminary discussions with the UK around a free trade agreement, but the advice to me from the UK government is that they cannot formally commence negotiations until such time as the UK exits the European Union,” said the Australian official in the interview with BBC’s HardTalk.

The EU and Australia have both said that launching bilateral talks is a priority for their respective trade agendas going forward. (See Bridges Weekly, 19 November 2015)

US deal under Trump?

The election of Donald Trump as the next US president has also fuelled speculation in some quarters that this could pave the way for a future US-UK trade deal, even as the future of a bilateral US-EU accord remains unclear. (See Bridges Weekly, 10 November 2016 and related story, this edition)

The president-elect has been a vocal supporter of “Brexit,” crediting much of his unexpected win to the same “populist” trends that were also behind the UK referendum outcome.

During the campaign, Trump had also countered outgoing US President Barack Obama’s assertion that the United Kingdom would be at the “back of the queue” should the island nation leave the EU, saying back in June that it would instead be “at the front of the line.” Trump has also expressed his preference for bilateral trade accords, rather than the multi-country deals favoured by his predecessor.

Indeed, the UK premier was one of the first foreign leaders to congratulate Trump on his election win, with the real estate developer turned politician inviting May to visit him in the United States “as soon as possible,” according to a spokesperson for 10 Downing Street.

“[May] highlighted her wish to strengthen bilateral trade and investment with the US as we leave the EU. But she said that our relationship is so much more than that and our two countries have always stood together when it counts the most,” said the spokesperson.

ICTSD reporting; “David Davis: supreme court may not rule on article 50 until January,” THE GUARDIAN, 7 November 2016; “The bright side of Brexit? A U.S.-U.K. trade deal,” POLITICO, 24 June 2016; “May offers improved visa deal as India, UK launch trade talks,” REUTERS, 7 November 2016; “Delay over India trade deals signals another setback for Brussels,” FINANCIAL TIMES, 11 November 2016; “EU warns on lapse of investment protection deals with India, REUTERS, 11 November 2016; “India warns UK immigration policy could wreck trade deal,” THE GUARDIAN, 6 November 2016; “Brexit vote ‘not legally binding’ says Supreme Court judge,” THE INDEPENDENT, 16 November 2016.

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