14 January 2019

Financial Times: Brexiters’ delusions on trade die hard

What the Brexiters are yearning to do is to throw away membership of the EU, the world’s second-largest consumer market, in favour of arduous talks, whose benefits are uncertain at best, writes Gideon Rachman.

[...]The actual record of the Trump administration on trade should make Britain very wary. Mr Trump is the most protectionist US president in living memory. Historic friendships with the US are no defence — just ask the Canadians, who were designated a national security threat by America so that the Trump administration could impose steel tariffs on Canada.

Even a more normal US administration would make trade demands that Britain would find very hard to swallow.  [...]

A trade deal with China presents even bigger problems. Just a couple of years ago, David Cameron’s government was lauding a new “golden era” in UK-Chinese relations. But since then the British have become much more concerned about the national security implications of a rising China. [...]

Very well, say some Brexiters, what about India? It is an English-speaking democracy, with strong links to Britain. True enough, but the Indians are also notoriously tricky customers in trade negotiations, holding up deal after deal with practised obstinacy.

India will also have specific demands that are difficult for Britain — in particular, easing visa restrictions to work or study in the UK. That would be a tough sell to the many people who voted Leave to reduce immigration. The British would also be naive to think that India harbours some special fondness for the UK because of the two countries’ “historic ties”.  [...]

Even the Australians, beloved by many Brexiters, will do Britain no favours. At the World Trade Organization, the Australian government has been particularly tough in demanding increased quotas for agricultural goods as the price for smoothing Britain’s transition out of the EU.  [...]

An internal Treasury study concluded that even if Britain does succeed in striking trade deals with all the key partners it has identified, they will not compensate for the loss of trade that flows from leaving the EU.

Meanwhile, the EU has confounded the idea that it is a protectionist behemoth by successfully concluding trade deals with Japan, Canada and South Korea. Since the EU can offer an internal market comparable in size to that of the US or China, it starts trade negotiations from a position of strength.

The sad truth is that if the Brexiters are really serious about negotiating trade deals that will open up new markets for Britain, they should be clamouring to stay inside the EU.

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