Frontier Senior Associate, Amar Breckenridge, spoke on the issues facing UK trade policy at a webinar hosted by law firm Mishcon de Reya, which focused on challenges facing UK trade policy, negotiation FTAs and the impact of the new US administration on UK trade policy.
With the coming weeks seen as being crucial for the outcome of UK-EU negotiations on future trade agreements, the event provided an opportunity to take stock of the UK’s position.
There are a number of unique challenges facing UK trade policy. On one hand, the UK is trying to do what many other countries had done and were trying to do: building on WTO rules and commitments by entering into free trade agreements with various partners, like the US, Australia or countries in the Asia-pacific. Negotiating FTAs is at the best of times a challenge. What makes the situation even more challenging is that while the UK seeks greater economic integration with a number of trade partners, it is also seeking to reduce its integration with its largest trading partner, namely the EU.
New FTAs are unlikely to compensate for the economic losses that would be expected from replacing EU membership with a generic FTA. This is because a generic FTA is unlikely to provide benefits in areas important to the UK’s future economic growth: services liberalisation and non-tariff measures reflecting regulatory arrangements. Moreover, significant differences between the UK’s major trading partners on matters such as regulation in areas as diverse as food, environmental protection, financial regulation and data make it difficult for the UK to pursue deep integration simultaneously with all these partners. Finally, Amar observed that he potential effects of a hard Brexit on GDP growth, could rival those seen to date as a result of Covid-19.
Post-Brexit trade policy was always going to be demanding for the UK, and Covid-19 has made this all the more so. The key challenge now for the UK to identify steps to minimise the adverse effects of leaving the EU, and, in light of these steps, to work out how best to pursue broader, global trade policy ambitions.
Amar also commented on impact of the new US administration on UK trade policy, it is possible that bilateral negotiations will remain tough. However, the Biden administration’s greater appetite for tying trade to climate and environmental concerns, its more favourable disposition towards multilateralism and willingness to re-engage with the CPTPP could potentially create some useful opportunities for the UK. Amar discusses this particular issue in greater detail here.
Frontier Economics regularly advises clients on international trade issues.
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