Brexit offers chance for UK to change its world role
With the coming exit from the EU, scheduled for 2019, Prime Minister Theresa May has asserted that she wants to rediscover the UK’s heritage “as a great global trading nation.” This is not just with China, but also including former parts of the British Empire and now-Commonwealth, such as India, plus other key emerging markets like the Gulf Cooperation Council states in the Middle East, and key industrialized countries such as Australia, Canada and the United States.
To this end, Fox has confirmed he is already discussing, informally, new post-Brexit UK trade deals with at least a dozen countries. And he even hinted, extraordinarily, in his China trip this week that London might try to seek membership of the Trans-Pacific Partnership, which is a proposed 11-member trade and investment deal between Asia-Pacific countries including Japan, Canada and Mexico.
At the same time as informal talks have begun with multiple nations on bilateral trade agendas, Fox has also opened discussions with the 164-strong body of the World Trade Organization over its post-Brexit terms of membership. The UK’s current membership is governed by its status within the EU, with Brussels making commitments on trade tariffs and quotas on behalf of its 28 governments.
In potentially tough forthcoming negotiations, Fox is seeking to replicate, as much as possible, the UK’s current schedule of WTO commitments. Upon leaving the EU, these obligations would serve as the baseline from which London would seek to negotiate new trade agreements.
Government is in informal trade talks with nations all over the globe, but Britain’s planning for its post-EU future is severely hampered by the fact that deals cannot be officially negotiated until it actually leaves the bloc.
While these WTO negotiations contain significant opportunity, they also have risk. For if the UK fails to achieve a new schedule of WTO commitments, the nation’s trading arrangements will be severely disrupted, with a proverbial cliff-edge scenario a danger.
A central challenge for Fox with both these potential bilateral trade deals and his WTO agenda is that no agreements can be formally negotiated, let alone finalized, until after the UK actually leaves the EU. Thus, while there has been much fanfare over a potential new UK-US trade deal, for instance, any such agreement could probably not be secured until at least the second half of Donald Trump’s current four-year term, when the administration could have lost much traction in Congress, which would also need to vote on a deal.
Moreover, while there are key areas ripe for agreement between the two nations in such a pact, including lowering or eliminating tariffs on goods, there are potential disagreements. This includes over harmonizing financial services regulations, while other possible icebergs lie on the horizon too, not least given the president’s rhetorical commitment to “America First.”
Likewise, Fox can only engage in informal talks with other WTO members until a final Brexit deal is in place. Until then, many WTO members are adopting a cautious, wait-and-see approach, pausing to see the exact terms of the UK’s exit arrangements.
Outside of trade, May has reaffirmed that, post-Brexit, the UK will continue to play a major role in international security, including through its membership of NATO. While London will play a genuinely global role through continued membership of forums such as the UN Security Council, its renewed commitment to Europe will also be very important going forward.
May has sought to emphasize that, while the UK is departing the EU, it is not leaving Europe. Instead, she has stressed her desire to continue, if not intensify, cooperation with EU partners in areas including crime, counter-terrorism and foreign affairs.
To this end, the prime minister wants the UK’s future relationship with the EU to include practical law enforcement partnership working arrangements, plus those for sharing intelligence, given the apparently growing threat of terrorism across the continent. She has also highlighted that she wants close liaison with EU allies on foreign and defense policy to keep the continent secure, including the prospect of UK military personnel remaining for some time in Eastern Europe, given the perceived threat from an emboldened Russia under President Vladimir Putin.
With the UK government intent on leaving the European Single Market, this potentially extensive web of security and defense relationships would be strongest if molded upon the type of “bold, ambitious free trade agreement with the EU” with “the freest possible trade on goods and services” that May set out as one of her key Brexit negotiating objectives. In the prime minister’s own words, this would allow for “tariff-free trade with Europe and cross-border trade that is as frictionless as possible,” while leaving the common commercial policy and no longer being tied to the common external tariff, thus permitting the UK to pursue its own trade agreements.
At this stage, the EU has not yet formally commented in great detail on post-Brexit security and foreign policy cooperation with the UK. However, it is likely that many national leaders, including in Germany, France and Eastern Europe, will particularly favor a continued strong working relationship given the growing array of external security challenges facing the union.
Indeed, it is reported that at least one key EU country, Germany, will sign a new post-Brexit bilateral defense cooperation deal in areas including maritime patrols and cybersecurity. Both May and German Chancellor Angela Merkel are not just agreed on the need to show a common front in Eastern Europe, but also internationally too in the campaign against Daesh terrorism in theaters like Iraq and Syria, where Germany is supplying reconnaissance aircraft, alongside bombing missions by the UK’s RAF.
Taken overall, Brexit offers a new opportunity for the UK to reinvent its world role, especially in the context of trade relations. However, big uncertainty remains over this agenda, and it will probably not be clear until at least the 2020s exactly how successful it proves to be, given that no new trade deals can be agreed until after the nation leaves the EU.
• Andrew Hammond is an associate at LSE IDEAS at the London School of Economics.
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