UK, Trading Partners Begin Laying Groundwork for Post-Brexit Deals
The UK continues informally exploring the option of foreign trade deals with non-EU partners for once the Brexit talks are completed, with officials reporting continued discussions with countries such as Canada and Switzerland.
The United Kingdom formally triggered the Brexit process last week, with negotiations with the other 27 EU members soon set to begin in earnest. (See Bridges Weekly, 30 March 2017, and related story, this edition)
As an EU member, the United Kingdom has devolved its competencies for negotiating its own trade deals to the European Commission. However, once the UK has exited the bloc it will be able to negotiate agreements on its own behalf, prompting a series of informal discussions with potential future partners in preparation.
Australia’s Ciobo: Trade deal could benefit services, investment
Officials from the UK and Australia have already made known their interest in inking a bilateral trade deal when the former is no longer an EU member.
Liam Fox, the UK’s Secretary of State for International Trade, met with his Australian and New Zealand counterparts last month, and has indicated that both countries would be at the front of the line for such arrangements. (See Bridges Weekly, 16 March 2017)
Australian Trade Minister Steven Ciobo said last week that having such a deal would be a “win-win” for both sides, noting that negotiating with the UK outside the European Union could actually lead to additional options for Canberra.
“We’ve seen, for example, with the EU that Australia has had a lot of constraint, especially around agricultural exports into the EU, with low levels of quotas. I want to make sure that we can use this Brexit opportunity as an opportunity to boost those and basically to make it as straightforward as possible when it comes to goods, services, and investment,” said Ciobo to ABC TV, according to a transcript provided by his office.
Australia and the EU are also planning to begin free trade negotiations in the near term, with preparations ongoing. The two sides are currently working to complete a “scoping study” on what could go into such a deal.
According to the Australian Department of Foreign Affairs and Trade, bilateral trade between Australia and the UK reached A$27.0 billion (US$20.4 billion) in 2015-2016, with the latter ranking as Canberra’s top trading partner in Europe and fifth largest bilateral trade partner overall.
Canada meetings underway
Canadian and UK officials have also held various meetings in recent weeks in a bid to prepare a future trade deal following Brexit. The United Kingdom is Canada’s largest European trading partner.
“We are working, respecting established rules, pursuant to EU law as well, but we are having informal talks with our British partners,” said Canadian International Trade Minister François-Philippe Champagne last week, according to comments reported by CBC News.
The EU and Canada have already negotiated a trade and investment deal between them, known as the Comprehensive Economic Trade Agreement (CETA). The agreement has been signed by both sides and ratified by the European Parliament. It is now making its way through the Canadian legislative processes, after which it can be provisionally applied. For full application, this will require the approval of the relevant EU national and regional parliaments. (For more, see related story, this edition)
Switzerland coming up?
Meanwhile, Switzerland has also displayed an interest in a future trade “arrangement” with the UK, following a meeting on 31 March between Swiss Federal Councillor Johann Schneider-Ammann and UK Secretary of State for International Trade Liam Fox.
“As part of the [Swiss] Federal Council’s ‘Mind the gap’ strategy the aim is to reach a follow-up arrangement for the time after Brexit as quickly as possible, particularly on trade,” said a statement issued by the Swiss Federal Department of Economic Affairs, Education, and Research.
The statement also referred to interest from the UK’s side for agreeing on a new set-up. The statement further cites the two-year window under EU law for the Brexit talks to conclude as providing additional impetus for moving quickly.
“The timeframe to prepare a follow-up regime for relations between Switzerland and the UK – which if possible should be more extensive than usual free trade relationships – is therefore tight. Talks are currently under way at expert level,” said the Swiss official.
Switzerland, while a European nation, is not a member of the EU. Instead, the two parties have a series of bilateral deals across various different sectors, including on trade. Switzerland and the EU also have an agreement on free movement of persons, with the Swiss having an association agreement with the EU to participate in the Schengen Area, which eliminates internal border controls among other features.
Updates on India?
Another option for a trade deal could include India, some officials suggest, though no formal announcements have been made about whether the two sides will seek to begin official negotiations. UK Chancellor of the Exchequer Philip Hammond met with Indian Finance Minister Arun Jaitley this week for discussions on trade and other subjects.
“Our trade and investment relationship is already strong – the UK has been the largest G20 investor in India during the last ten years and India is a leading global investor in the UK, creating over 7000 new jobs last year alone, but there is much more we can do,” said Hammond ahead of his travels to Delhi and Mumbai.
UK Prime Minister Theresa May and Indian Prime Minister Narendra Modi met in Delhi late last year, with both leaders expressing their interest in deeper trade and economic ties, but without mentioning whether this wish could lead to official trade talks. (See Bridges Weekly, 17 November 2016)
ICTSD reporting; “India dents UK trade hopes with lapsed deal,” FINANCIAL TIMES, 5 April 2017; “Swiss aim for swift trade deal with Britain after Brexit,” REUTERS, 31 March 2017; “Switzerland heads for EU immigration climbdown,” FINANCIAL TIMES, 13 December 2016; “Canada in informal trade talks with U.K. ahead of Brexit,” CBC NEWS, 31 March 2017; “Canada Seeks to Avoid Brexit Cliff-Edge With Trade Talks,” BLOOMBERG, 22 March 2017.