David Campbell Bannerman MEP: How the UK could negotiate trade deals quicker outside the EU
Guest Blogger, 22 March 2016
Advocates of Remaining in the EU have claimed that as the Canadian trade deal has taken seven years it will take at least seven years for the UK-EU free trade agreement to be done if we embrace Brexit. This is not correct. The comparison is misleading.
I serve on the European Parliament’s trade committee and am responsible for the report into the EU-India Free Trade Agreement (FTA) which is eight years – and paused. I’ve been involved in overseeing many FTAs around the world, such as Vietnam, South Korea, Colombia/Peru, and now ones for Canada and for New Zealand.
Taking aside the obvious logical contradiction of this Remain claim, which basically asserts: ‘EU trade deals take years longer than they should do – so we must remain and continue to let the EU do them badly for us’, then the critical comparisons between Canada’s and the UK’s deals regarding timing is nonsense for a variety of reasons:
1.) Canada’s trade deal was to reduce tariffs and quotas and regulatory obstacles that do not exist for the UK as an EU member. The UK is ‘compliant’ in the vernacular, whilst Canada and other nations the EU is doing trade deals with – the USA and TTIP, Japan, India etc. – are non-compliant. We will start way in front.
Trade deals take time because the EU has so many nations with different interests, and as they are complex and need a whole series of negotiation rounds – with negotiators, lawyers and technical experts locked in rooms. TTIP is on Round Nine.
If you want to negotiate away India’s 150% tariff on luxury goods such as whisky or luxury cars, yes that can be technically difficult, as well as unpopular politically and domestically. EU members now fear bigger players such as the US or India competing in their markets and protectionism is on the rise. But we have zero tariffs between us now.
So why would such delay through negotiations be necessary if you are just replacing an existing free trade arrangement through EU membership with a ‘withdrawal agreement’ between the EU and a departing member?
You only want to replicate what we enjoy now – the UK’s tariff free access to the EU Single Market, and the EU’s related access to our UK Single Market – the fifth largest economy in the world, and its largest single customer with a £89 billion trade deficit in goods. New EU member states – Croatia was the last one – are very simply added to EU trade deals despite having had no part in negotiations – so why not the other way around?
2.) We can avoid the shocking politicisation of EU trade agreements. I have made this point in committee time and time again: trade deals should be about trade and jobs (is that unnecessary?!), not about politics.
But the EU wants to enforce its ‘values’ on the rest of the world, using FTAs as its stick; and these include human rights and environmental measures. So trade deals have been delayed or threatened entirely by needless EU political posturing, whilst youth unemployment in Greece and Spain stays rigidly at 60%; and a quarter of the Greek economy is lost.
The Canadian deal was held up as a direct consequence of the EU trying to dictate human rights standards to Canada. It lost two years needlessly and this brought the entire deal close to collapse. Only clever lawyers saved the day with a formulation to get round the issue.
But without this it would be five years, and without related TTIP complications it would have been three. Talks were completed in August 2014 but the Investor State Dispute Mechanism (ISDS) crossover row will have added another two wasted years.
The Australians have just started negotiations and forecast just two years to completion, Vietnam was done in two years eight months.
So a deal with a compliant former EU member like the UK, with no tariffs or quotas or regulatory obstacles to haggle over, should be far less time intensive.
We may need to shore up some areas, such as services, where the Single Market exists in theory but not in practice, and expand the details of such a deal, but we are mostly doing a swap: a mutually advantageous FTA in exchange for EU membership.
3.) Normal free trade agreements have no imperative or set timescale. Ours does: Article 50 of the Lisbon Treaty/EU Constitution requires that the EU ‘shall’ negotiate a ‘withdrawal agreement’, meaning a trade and political association agreement, with a departing member and has two years to do so (extendable only if necessary). Canada, the USA and Japan have no such imperative nor timescale. Australia and New Zealand have been waiting years just to start theirs. So we have a time advantage there. Ironically, if we don’t meet that timetable or negotiations fail, we would have exactly the same trade deal all these countries have now – so not such a bad safety net.
Of course, uncertainty in the EU, with a Eurozone in crisis, negative growth and interest rates, and with some Italian banks allegedly hovering on the edge, will be a powerful extra incentive to move fast on a UK-EU FTA. Can they afford to lose suddenly much of their biggest export market?
So, in conclusion, I believe we should negotiate what I call a ‘WTO Plus’ trade deal – the WTO is a guaranteed deal under WTO (Most Favoured Nation) rules, with Article 50 being invoked to negotiate a free trade deal – the ‘Plus’ – on top in the manner of other WTO Plus deals, all different and all tailored to individual national needs, such as CETA (Canada’s) or the controversial TTIP (USA).
Realistically I think this will take around two years, and once that WTO Plus trade deal is agreed, the UK will then leave the European Union.
With the choice on June 23rd being between embracing the EU Superstate or reclaiming our British sovereignty, I am very happy to see the clock start ticking on an alternate trade deal the very next day.