It was easy to be confident about the UK’s ability to do great trade deals during the Brexit campaign. After all, the UK hadn’t actually done its own trade deals for over 40 years, since joining the EU in 1973. So it had no experience to guide it. But now, time is running out for all the new deals to be in place by the end of the year.
Last week, the US Congress grilled US Trade representative Robert Lighthizer on progress with the UK – US trade deal. Back in 2017, President Trump had promised that a deal would be done “very quickly”. But since then, it seems little progress has been made. And Lighthizer was very cautious in his replies to the Committee, warning:
“There hasn’t been an enormous amount that’s happened yet. There are very, very fundamental issues that we have to come to grips with. I don’t want anyone to think this is going to be a rollover.”
Other potentially important deals are also proving hard to finalise. Japan, for example, has refused to simply rollover its existing deal with the EU. Instead, it has said the UK will have to “limit their ambitions”.
The problem, of course, is that time is the key element in any negotiation. The side that needs to settle quickly often ends up facing a ‘take it or leave it’ choice. Japan can also afford to play hardball, as it has its core deal with the 460 million people in the EU market. The UK market, whilst important, is very much smaller.
The massively important negotiations with the EU are going the same way. Since the UK left on 31 January, it is no longer negotiating under Article 50 as a EU member. Instead, it is a 3rd country, having to deal from the outside. And naturally enough, the EU negotiators are piling on the pressure, with Michel Barnier warning earlier this month:
“The truth is that there was no substantial progress”.
Unfortunately from a UK perspective, the Covid-19 pandemic creates further risks. EU27 companies are having to close operations as the economic crisis grows. And for many, it may prove easier to close them in a 3rd country such as the UK, rather than in the EU itself.