The news that Lord David Frost will be responsible for trade policy with the EU confirms that the UK government is settling in “for the long haul” on Brexit negotiations.
Dismantling arrangements built up over nearly 50 years is not an easy task – especially when they relate to your closest neighbours and major trading partners.
We don’t yet know how Frost will decide to operate in his new role. But as the Financial Times reports:
“Frost’s modus operandi with the EU has always been confrontation. He seems genuinely to believe that this is the best way to extract results and officials with close experience of working with Frost say he’s looking to ‘keep it confrontational’“.
His new role also confirms the centralisation of power around the prime minister, as a Johnson ally noted:
“Boris trusts David more than anyone else in government. They have a close bond.”
The key issue is that the Trade & Cooperation Agreement (TCA) is not a detailed Free Trade Agreement. That would have taken years to agree, and involved difficult trade-offs between one interest group and another.
Instead, the TCA left most of the key details around implementation to be worked out in the future:
- It makes no mention of services, for example, which are 80% of the UK economy
- Nor does it cover the detailed sanitary and phytosanitary regime applicable for food exports, now the UK is a ‘3rd country’
- It also established a new border between Great Britain and N Ireland, but left the details to be covered under the N Ireland Protocol
- And the whole issue of ‘Rules of Origin’ – which determine if goods are tariff-free – was left for businesses to work out for themselves
The government’s rush to leave the EU also means that the UK is now a rule-taker as far as the EU is concerned. It has no voice at the table when decisions are being made in Brussels.
Another dimension to Brexit is also looming on the horizon. Understandably, the UK government needs to show that Brexit has been worthwhile. It has already begun to phase in new Border Controls on EU imports. And it also intends to adopt new UK standards that diverge from the EU’s.
The chemicals industry is likely to be one of the first in line to feel the impact. It will need to spend £1bn to develop a UK version of REACH, the European regulatory system, even though companies have already paid to produce the existing EU REACH.
The concept of being “Ready for Brexit” therefore takes on a whole new meaning in the light of these critical developments.
This is why we will soon be offering a full consulting service, to help companies manage the major changes now underway in UK-EU trade. We hope you will find this helpful.