Once again the trade deal talks between the UK and the European Union end with no outcome and looks like the UK is deliberately delaying the trade deal talks with EU because it never wanted one.
The UK, which is the second-largest economy in Europe after Germany, exited from the European Union on the 31st of January, 2020, under the leadership of Prime Minister Boris Johnson- an outspoken supporter of Brexit.
Till the 31st of December this year, Britain and the European Union are under a ‘transition period’, which means all the rules and regulations for business that were applicable to London as part of the EU will remain applicable till this date.
Both groups were supposed to ratify an agreement which will govern economic, political, and diplomatic relations between them after the end of the transition period. However, as the relations between them hit a new low with the UK tilting towards the United States more and the Germany-led EU allying with China- a deal by the end of this year looks very unlikely. UK’s chief negotiator David Frost and his EU counterpart Michel Barnier began the latest round of negotiations in London on Monday, and it ended on Thursday without any concrete outcome.
Michel Barnier, the EU chief negotiator, warned attempts to bludgeon Brussels with “ultimatums or threats” would fail, adding: “I don’t think we’ve got time for these games.”
Speaking at a press conference, Barnier said, “By its current refusal to commit to the condition of open and fair competition, and to a balanced agreement on fisheries, the UK makes a trade agreement at this point unlikely.”
The ruling party MPs of Britain also warned that Barnier’s bullying will not work and Britain is ready to go ahead without a deal. Conservative Party MP Mark Francois said, “One thing that runs through history is, people who bully us tend not to do well out of it.” He added, “That isn’t going to work and if necessary we will leave on December 31 and we will trade on Australia/WTO terms which is how most of the world trades anyway.”
Most of the analysts believe that the UK is deliberately delaying the deal as British negotiators believe that they would have an upper hand in negotiations if the economic damage due to Coronavirus is accounted for. London is expected to emerge as an even more powerful financial hub in the post-Coronavirus world, as the governments across Europe want to raise billions of dollars from markets.
Tony Travers, a professor of politics at the London School of Economics, told The New York Times, “The City of London is going to be very important as a way for governments to raise money.” He added, “They may think the EU will be more concerned about upsetting things, given the scale of coronavirus, and may give them a better deal.”
Also, given the EU’s sluggish economic growth and lethargic bureaucracy, the UK is looking for new avenues for trade and business ties in countries like India and Australia, which have the potential to grow exponentially in the coming decades. The UK might pursue a free trade deal with the EU, which currently accounts for 49 percent of its total trade, after a few years. But, its current focus is the countries with which the EU do not have FTAs as it wants to give its businesses first mover’s advantage in these countries.
India, which was negotiating an FTA with the European Union till now, has made it clear that now it will go with London for an FTA instead of Brussels. Recently the EU struck an FTA with Vietnam, which is India’s rival in attracting manufacturing, and therefore, New Delhi might decide to dump the EU altogether.
The UK is also about to start negotiations with Australia and New Zealand in a post-Brexit world. In fact, Simon Birmingham, trade and investment minister of Australia said the country is “ready to help the UK find new beginnings post-Brexit and in doing so, open up new doors for our farmers, businesses and investors”.
He also added, “We’ve been preparing for this deal since the UK decided to leave the EU and welcome their agreement to commence negotiations.
New Zealand’s trade minister, David Parker, echoed Birmingham’s sentiments. Parker said, “As the UK embarks on its next steps post-Brexit, New Zealand is pleased to be among the first countries to negotiate a trade agreement with one of our oldest friends.
The industry leaders and lobbying bodies also want the British government to aggressively pursue FTAs with non-EU countries like the United States and Japan. Chief Executive of the Society of Motor Manufacturers and Traders, Mike Hawes, said, “There is critical need for the UK to secure free trade agreements, starting with our biggest trading partner, the EU, but also with other key global markets, including the U.S., Japan and Turkey.”
Japan and the UK aim to announce a comprehensive FTA by the end of this month, as the UK is no longer party to the FTA with the EU which Tokyo signed in 2018. However, the countries with which the EU already has FTAs are not a major focus for Boris Johnson as the UK’s businesses have already explored these markets. Moreover, given the fact that EU member countries already have FTAs with these countries; this puts the UK’s businesses at a disadvantage.
On the other hand, having FTAs with markets that are unexplored or underexplored by British businesses, like India, Australia, New Zealand, Canada and the United States, would provide new markets and investment destinations to British businesses.
The UK and the US free trade deal, which will be one of the largest in the world given the fact that the total trade between both countries is more than 200 billion dollars, is in near conclusion in its negotiations and is expected to be announced before the US Presidential election in November this year.
The Boris Johnson government is also looking for an FTA with Canada, with which the UK has historic political, business, and cultural ties.
It is very much evident that UK is deliberately delaying a deal so that it exits from the European Union without an FTA. The UK is aggressively exploring unexplored markets to have the first mover’s advantage and putting FTA with EU on a halt for at least next few years.
