04 December 2019

EurActiv: One-year EU trade deal is fantasy

Prime Minister Boris Johnson would do better to come clean with the electorate on the complexity of the task ahead of negotiating a free trade agreement with the EU, writes Michael Leigh.

[...]The shortest free trade agreement negotiations the EU has ever held were with South Korea and took two and a half years, with another eighteen months for approval and ratification.

Most free trade agreements take six to eight years to negotiate. The FTA negotiations with Canada, often cited as a model for the UK, began in 2009 and were concluded in 2017. It will take another seven years for all aspects of the agreement to take effect.

Mr Johnson argues that it will be easier and quicker for the UK because its starting point is full integration with the EU and he only wants a bare-bones FTA on manufactured goods, excluding services and agriculture. He promises to speed-up the talks by exempting 87% of goods from import duties.

The UK’s trade is, indeed, fully integrated with the EU today. But once the UK leaves, it becomes a “third country” and any new trade deal has to be built from the ground up, brick by brick, covering all aspects of the new relationship.

Nothing from the old relationship is carried forward automatically. It all has to be negotiated line by line. British and EU negotiators will need to go through thousands of tariff settings to determine the customs duty and technical arrangements that will apply to each product.

Even for products attracting a zero duty, negotiators will have to agree on “rules of origin” (how much of the product must be made in Britain or the EU to qualify for zero rating), as well as any applicable health and safety rules.

Companies, unions, investors, farmers, fishers, environmentalists and consumers will lobby intensely throughout the negotiations. The profitability of some of Britain’s most dynamic businesses depends on the technical rules applied in their core market – the EU.

Mr Johnson’s claim that the talks will go quickly because they will be limited to goods is questionable. Services account for over 80 per cent of UK jobs. Many services are embedded in goods and cannot be kept out of the FTA if the UK’s complex just-in-time supply chains are to survive.

EU countries will insist that their competitive farm exports be included. So, FTA negotiators will have to go through the minutiae of plant and animal health as well as tariffs and quotas.

The EU will insist on a “level playing field” for workers’ rights, climate action, environmental and data protection. All this will require lengthy talks and consultations with interested parts of society.

Any attempt to force the pace, in closed doors talks, would harm a government that might, again, have a precarious majority. Restrictive rules affecting EU residents, scientists, researchers or students in Britain – adopted in the name of taking back control – would weigh heavily on the FTA negotiations.

A victorious Mr Johnson could make a breakthrough in FTA talks next year only if he is ready to stab his Singapore-on-the-Thames friends in the back and commit the UK to applying relevant EU principles, rules and standards for the lifetime of the agreement.

But he has loudly proclaimed the UK’s right to diverge from EU rules and made a point of watering down Theresa May’s earlier agreed language on regulatory alignment.

Furthermore, EU negotiators will call for access to UK fishing grounds by Spanish, French, German, and Danish fishing vessels to be maintained as a condition for opening European markets to UK fish exports.

Britain’s dwindling fisheries sector will be hard to placate if the government cedes to these demands. Other prickly issues, including Gibraltar’s future relations with Spain, are bound to be raised during the negotiations.

Once an FTA has been negotiated, both sides must sign and ratify it. The EU could, in theory, ratify a limited trade agreement without requiring votes in all 27 member states. But national capitals will insist on approving an agreement with a close neighbour and key trading partner like Britain.

Until recently, purely trade aspects of an agreement could be applied provisionally, pending ratification. But the new Commission President, Ursula von den Leyen, has promised that future trade agreements will only be applied provisionally once the European Parliament has given its consent. So, there are no short cuts.

The prime minister would do better to come clean with the electorate on the complexity of the task ahead rather than face new accusations of duplicity when his promise that a trade deal with the EU will be concluded in 2020 comes to nought.

Full article on EurActiv

© EURACTIV