You may have seen a flurry of stories this week fretting over chlorinated chicken and GMOs flooding into the UK from the US. This was perhaps not the reaction Liam Fox had hoped for in his recent visit to the country, where he was discussing a proposed new transatlantic deal.
Uncoincidentally, these stories bear a somewhat striking familiarity to the fervour previously surrounding another high-profile transatlantic deal – TTIP. This most recent deal with the US holds many of the same pitfalls as TTIP, but this time, it could have very different implications for a post-Brexit government.
With all this talk of trade, however, it may be easy to forget that the UK cannot enter a new trade agreement until Brexit has officially taken place in 2019. Since the announcement of Brexit, all eyes have therefore been fixed on the Repeal Bill (now the European Union (Withdrawal) Bill) which eventually allow for such a trade deal to take place. On the same day that this new freedom to make trade deals comes into play, all other EU laws, regulations and deals will also cease to apply.
I will let the magnitude of those implications sink in for just a moment, but not for too long – As the EU’s chief Brexit negotiator, Michel Barnier, reminded us recently: the clock is now ticking. When March 30th 2019 eventually comes around, everything that the EU currently deals with on behalf of the UK will suddenly become its own responsibility.
To the optimistic readers, the new Withdrawal Bill reassures them that this giant transfer of responsibility will be very much a one-step process. As anyone in the legal realm will tell you, however, the law never stands still for long. From the day those EU laws have been adopted, absorbed and accommodated, a new clock will start to tick – the divergence clock. Put simply, divergence will mean that once those laws need updating, it will become the UK’s responsibility to deal with them and enforce them in their totality – that is where the increasingly-flaunted prospect of a new deal with the US becomes very interesting, especially for those seeking to influence regulation.
As the EU’s chief Brexit negotiator, Michel Barnier, reminded us recently: the clock is now ticking. When March 30th 2019 eventually comes around, everything that the EU currently deals with on behalf of the UK will suddenly become its own responsibility.
On his recent travels to Trump’s America, Liam Fox has been quick to defend concerns surrounding a proposed lifting of trade barriers between the two nations, as has Michael Gove back home. What now seems like a lifetime ago, everyone was once worrying about similar implications surrounding TTIP. Then as now, it was feared in the UK press that TTIP would come with a feared Pandora’s box of nasty American products and services potentially flooding the UK market.
When TTIP negotiations were starting, a more confident Conservative government was equally confident to point out the many benefits of easing the flow of trade with America. They assured voters about the EU-US deal by explaining to them that the negotiations rested, as all negotiations ultimately do, on leverage. Back then of course, the leverage on the EU (and therefore UK) side was clear, as were the potential economic benefits. The biggest economic bloc in the world, trading with the biggest national economy in the world. This was a clear win-win for both sides, especially in the context of ever-buoyant developing economies and the spectre of a major recession still looming for both parties.
The stakes presented by TTIP for your average European, however, were equally clear: high standards for consumer goods at risk, delicate nationalised industries exposed to competition and ever-adapting welfare states trying to cope in a modern global economy. Now that the UK has approached its own TTIP-style agreement alone, you would expect the dynamics of these negotiations to have changed. If you are a Brexiteer, you would feel that they have most certainly changed in the UK’s favour. In some ways, the dynamics are certainly different, but in essence they remain largely the same.
As recent stories will continually remind us, the stakes and associated fears are the constant in the negotiation equation, but the leverage most certainly is not. Chlorinated chickens aside, the UK will no doubt be expected to compromise more than it may be comfortable with, given a weaker negotiating position than was the case with TTIP. While this provides for new market realities and opportunities on both sides of the Atlantic, it may also lead to lowered standards for consumers and sustainability practices, as has been feared.
It does not need to be stated that the UK is by no means a small economy. Indeed, within it, it lauds many of the best companies and institutions in the world. But fundamentally, it is simply not comparable to the size or breadth of the EU (or even, one should add, the combined economies of the Eurozone). Primarily, this is due to overall size, but more crucially (especially in the short-term) it also comes down to experience and capability.
Every area imaginable, once overseen by the joint resources of the largest trading block in the world, will now focus solely on the UK and its institutions. Many of which are significantly smaller, do not yet exist, or will simply not be able to deal with the task at hand. Inevitably, there is the question of resourcing in monetary terms, which has for years been in decline in key areas and will need bolstering; but there is also the much bigger issue of political capital, continually expended to deal with the consequences of Brexit.
Far from being the opportune moment to cement trade deals, the months immediately following Brexit may offer the worst time to put the UK’s nascent and burgeoning institutions under the great burdens of global negotiation pressures – especially when pitted against bigger and more experienced players like the US (ignoring for a moment the remaining EU-27 itself). The UK’s institutions, regulators and lawmakers will all struggle to deal with the immense workload of a new agreement. Depending on the government in power at the time, the priorities for what garners the most attention, will naturally create winners and losers.
Due to recent developments at home, the United States may have some reasons to approach the UK with a pinch of mutual understanding, as storm clouds converge over its own economy and political establishment. It is perhaps no coincidence that the UK and US are both trying to reassure voters about the prospect of economic deals, at a time of economic and political uncertainty domestically. Last week saw the forecasts of growth for both countries cut by the IMF – the UK’s downgrading, it should be noted, was the biggest of any advanced economy.
On this last point, commentators will be quick to retort that overall UK growth remains among the highest within the EU and that the UK’s overall position therefore remains steadfast. While true, on further assessment and in a world where leverage and size are the key to any future negotiation, competence and experience will matter more than ever to make up for the losses in those areas caused by Brexit. As many commentators in the months to come will no doubt note, the UK seems to be increasingly in short supply of both.