“The freedom to do our own trade deals” is a mantra for ardent Leavers as they explain their determination to vote down Theresa May’s Brexit deal. Their objection is that the May deal could trap Britain in a permanent customs union with the EU, making it impossible to negotiate new trade deals with other countries.
This is a very odd argument. The countries most often mentioned as ideal targets for new trade deals — the US, China and India — all present significant problems. 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.
It is true that Donald Trump has promised a “quick massive bilateral trade deal” with Britain, just as soon as the divorce with the EU comes through. But then again, Mr Trump also promised to ban all Muslims from entering the US and to make Mexico pay for a border wall.
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. The powerful US farm lobby would want Britain to change its health and sanitary standards, deeming them “non-tariff barriers” to trade. American healthcare providers would want more access to the UK market, prompting anxiety about the National Health Service. Michael Gove, a leading Brexiter and secretary of state for environment, food and rural affairs, has promised that Britain will never have to import American “chlorinated chicken”. But without these sorts of concessions, Britain could once again be in “no deal” territory.
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. Alex Younger, the head of MI6, recently warned against the dangers of allowing Huawei, a Chinese electronics firm, to bid for British 5G networks.
Underlying these dilemmas is an emerging tension between the economic and security components of Mrs May’s vision of a “Global Britain”. Even as the UK looks longingly towards the Chinese market, it has joined American efforts to push back against China’s strategic ambitions in the Pacific.
Late last year, Britain’s HMS Albion clashed with the Chinese navy when it sailed through contested waters in the South China Sea. China has a long record of linking trade and politics — from Taiwan to Tibet — and is likely to make a trade deal contingent on Britain taking a more compliant attitude.
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”. On the contrary, the legacy of empire adds a dangerous edge to discussions. On my most recent visit to Delhi, one government official informed me that Churchill was “as bad as Hitler”, citing his alleged role in the Bengal famine of 1943-44, in which millions died.
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. The episode was a useful, if chilling, reminder that trade negotiations are an unsentimental business. If countries spot desperation or a legal vulnerability, they will exploit it.
Some Brexiters acknowledge these difficulties, but still see a big prize at the end of the rainbow. They think that Britain will free itself from dependence on the slow-growing EU and attach itself to the most dynamic economies in the world.
But the UK government’s own research casts doubt on the value of this ultimate prize. 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.
Letter in response to this column:
Law of the jungle will apply to European trade / From Robert Cooper, London, UK
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