EU and UK trade talks after Brexit

The European Union (EU) has been finalizing multiple trade deals since Brexit, many of which have been painstakingly negotiated over several years. Meanwhile, the UK government has been hurriedly concluding numerous continuity trade agreements (rolling over former EU deals) and embarking on new ones, raising alarm bells over their quality and benefit to the UK.

The EU and UK hold competing trade talks with partners ‘Down Under’

During the process of the EU’s negotiations with a trade partner, there are normally about a dozen or so rounds of talks, often lasting several years. The latest were held with New Zealand in early July. These negotiations, which commenced in 2018, cover a broad sweep of sectors including tariff-free trade in goods, services, rules of origin, government procurement, intellectual property and sustainable development. A key new area of discussion involved digital trade where both sides reportedly made significant progress on various complex issues.

According to the European Commission (EC), a trade deal with New Zealand, under a scenario of maximum trade liberalisation, would boost EU exports to the country by 32% by 2030, compared to no deal, while marginally lifting the bloc’s GDP.

“EU exports to Australia are expected to expand up to 32.5% by 2030, boosting EU GDP growth by €4.1 billion – underlining how a far more positive economic outcome can be systematically achieved over several years rather than a few months.”

In recent weeks, the UK government has been trumpeting a new trade deal with New Zealand about to be reached after only a few months. Liz Truss, then international trade secretary, announced they were close to an agreement – “the most advanced struck by any nation”. Yet, by the government’s own estimates of the benefits of such a deal, UK exports there will only rise by 7.3%, even in the most liberalised trade scenario. The long-run impact on GDP growth of 0.00% would be even less beneficial. Hardly the “most advanced” trade deal!

In mid-June, Boris Johnson announced an “agreement in principle” with Australia. It was heralded as becoming the UK’s first “new” trade deal since Brexit – i.er. not a rolled-over continuity agreement.[/fusion_highlight] Truss proclaimed it as a “gold standard agreement which shows what the UK is capable of as a sovereign nation”. Yet again, by the government’s own measure, the deal will only boost long-term growth by 0.01% to 0.02%, while, under a scenario of maximum trade liberalisation, UK exports to Australia will rise by just 7.4%.

In contrast to the UK’s hurried trade talks, the EU has been negotiating a deal with Australia since 2018. Two rounds of discussions have been held since Brexit. In parallel, the EU issued a sustainable impact assessment on the trade deal. It stated that EU exports to Australia are expected to expand up to 32.5% by 2030, boosting EU GDP growth by €4.1 billion – underlining how a far more positive economic outcome can be systematically achieved over several years rather than a few months.

Transparency and environmental issues

Major criticisms have surfaced over the UK government’s lack of public information concerning its trade negotiations. For instance, in talks with New Zealand and Australia, the British business sector has lambasted what it sees as opacity. This is despite the large number of businesses that signed up to the government’s Trade Advisory Groups (TAGs). The TAGs were designed to involve businesses and industry groups at each stage of discussions in post-Brexit trade talks but seem to have fallen significantly short of doing so.

By contrast, the European Commission (EC) provides updates on each round of talks, including details on progress in various economic and non-economic (where relevant) sectors being negotiated. Typically, such information is regularly provided shortly after the end of each round of negotiations on its website.

“However, US President Joe Biden has since put any trade talks with the UK on indefinite hold. This has left the UK with little prospect of finding a major economy with which to conclude a deal that would even come close to offsetting the loss of free access to the EU single market.”

The UK’s farming industry has been particularly vocal over the environmental impact of Australian agricultural imports, particularly that of livestock, raised under different standards. The UK government has sought to alleviate these concerns, saying it would not sacrifice the UK’s high environmental and animal welfare standards – declarations which have been hard to evidence given the opacity surrounding the talks.

This is in stark contrast to the EU’s transparent position over its trade negotiations with Australia. It admits any prospective deal’s environmental effects will be “marginally negative” – a statement spelled out in the environmental commentary at each stage of the negotiations on the EC’s information portal.

The EU focuses on balanced new trade deals; the UK on churning them out

The EU commenced trade negotiations with the US in 2013 but both sides ended them in 2016. Boris Johnson had originally hoped to conclude a quick post-Brexit trade deal, promised by former US President Donald Trump. Johnson’s ambition was doubtless partly motivated by a desire to eclipse the EU in clinching such a trade agreement.

However, US President Joe Biden has since put any trade talks with the UK on indefinite hold. This has left the UK with little prospect of finding a major economy with which to conclude a deal that would even come close to offsetting the loss of free access to the EU single market.

On the other side of the world, the EU resumed trade talks with India in May 2021, after an eight-year hiatus. Both sides committed to a “balanced, ambitious, comprehensive and mutually beneficial” trade agreement. They also agreed to find “solutions to long-standing market issues,” clearly signalling their intent of assuring quality over politically expedient short time frames in concluding a deal.

UK trade talks officially kicked off with India slightly later and, Johnson claimed, would be completed by year’s end. The claim has prompted concerns that such a deal may be hastily cobbled together and not sufficiently subjected to necessary rigorous scrutiny by Parliament, industry, labour and other interest groups. This suggests the prospects of securing a balanced deal are somewhat unlikely.

The UK has also launched trade talks with a regional trade grouping of ten Asia-Pacific countries known as the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). The British government’s ambition to join this regional grouping has become central to its “Global Britain” mantra.

In the CPTPP’s case, critics of the UK government’s approach to accelerated trade negotiations have pointed to political expediency over achieving qualitative agreements – as demonstrated by its attempts at hurriedly concluding controversial trade with Australia and New Zealand, given both countries are also important backers of the UK joining the CPTPP.

Are the UK’s continuity agreements worth giving up original EU trade deals?

The UK government has, meanwhile, rolled over numerous EU trade deals into ‘continuity agreements’, post-Brexit. These have included arrangements with Japan, South Korea, Singapore, Vietnam, Turkey, Switzerland, the EEA states as well as regional groupings of several countries in Africa, the Pacific and elsewhere.

Some of these can diverge from the original EU agreements. With Japan, for instance, the first of its kind in place, new measures were agreed including on digital trade. However, where progress may be claimed; certain sacrifices had to be reluctantly conceded by UK negotiators.

In Japan’s case, this involved Tokyo’s insistence that significant oversight and prohibition of any new state support for industry, impacting their bilateral trade, be introduced. The end-result of the reworked continuity agreement was one where 80% of the benefits are estimated to have favoured Japan.

Relinquishing full access with the EU Single Market is a poor trade policy

On balance, the UK’s new and continuity trade agreements show little or no real progress beyond benefits the UK would derive from EU-negotiated deals. Arguably, they may even have left the UK worse off in some instances. Yet even that’s if one excludes the loss of trade with the EU itself arising out of Brexit. Indeed, the British Chamber of Commerce’s reactions to the UK’s trade discussions with New Zealand and Australia affirmed that any prospective benefits from any deals with them would not offset the loss of business from Brexit.