Britain’s trade honeymoon is over – POLITICO

LONDON — Forget the flag-waving Instagram posts — Britain’s post-Brexit business dreams are coming back to earth.

The country’s high-profile deals with Australia and New Zealand are facing new scrutiny for their impact on farmers, and the UK’s top trade official – once a darling of the right conservative – was the subject of an extraordinary attack by a senior conservative.

It comes amid slower-than-expected progress on a long-awaited trade pact with India, a deal with the US still stuck in limbo, and as hopes fade that the UK will be able to join a key Pacific trading block this year.

The days of optimistic deadlines, quick wins and colorful social media production by trade secretaries are fading to a distant memory.

“There has been a honeymoon period for British trade,” said David Henig, director of the European Center for International Political Economy. “Now we’re out of that honeymoon period, and things are getting a lot more difficult.”

While the finer details of UK deals receive mainstream attention, UK politics tackles what independent free trade policy really entails: winners and losers, controversies and interdepartmental wrangling.

Trade requires trade-offs

Forging an independent trade policy was one of the main selling points of leaving the European Union.

The UK quickly got down to business, creating a dedicated International Trade Department (DIT) from scratch, recruiting a highly regarded trade expert in the form of Kiwi Crawford Falconer to help form a negotiating team and starting talks with Commonwealth allies.

In record time, the UK canceled a slew of deals it had as an EU member, then struck free trade deals from scratch, first with Australia , then New Zealand, as it rushed to introduce a Brexit dividend.

Amid the headlines, however, there were signs of unrest in British agriculture over the terms of the deals, which provide for the phasing out of tariffs on beef and sheepmeat and quotas on the quantities nations can send to Britain. UK farmers, who believe the government has liberalized unnecessarily far, fear an influx of cheaper produce with little benefit in return.

The UK insists the deals’ built-in safeguards offer protection, while others dispute the idea that Britain could be inundated with Australian and kiwi meat, arguing that in trade, geography matters .

Yet this month, well-known tensions between the UK’s agriculture and trade departments were made public following an explosive intervention by the recently sacked former environment secretary, George Eustice.

In an extraordinary speech from the House of Commons, he decried the Australian deal as “not really a very good trade deal for the UK”. of the agreement were reached ahead of a G7 meeting in June 2021.

A former government minister said it ‘seems amazing’ the farming community has been ‘thrown under the bus’ in the process. The same person also fears that the UK has set a precedent, with negotiating partners Mexico and Canada already among those demanding equal access to the UK agricultural market. “This has profound implications for trade deals in other parts of the world, which is actually why fucking Liz Truss is such a fucking jerk,” they said.

“[Eustice is] right to say we took things too quickly,” said Ben Ramanauskas, special adviser to Truss at DIT, who said his boss and Boris Johnson had set the G7 deadline to provide “a great photo opportunity and a nice title to show that Great Britain can redo trade agreements.

He added: “[Setting a] delay was a mistake. There’s been a tendency to do that at DIT.

But Ramanauskas thinks Eustice got the substance wrong – and laments a lack of sophistication in the UK trade debate. “They see it as a zero-sum game. They see imports as a bad thing,” he said of Eustice and other critics. “I think imports are fantastic for obvious reasons: lower prices for consumers and other businesses, more competition, thriving innovation.”

Rushed negotiations

Shanker Singham, a trade consultant and close adviser to several former DIT ministers, said experts shared a common frustration with people’s “mercantilist view” on FTAs. “In other words, it’s all about exports, current producers, large incumbent producers and their interests,” he said, rather than considering other stakeholders such as consumers. and future industries.

Kathryn Watson, a trade policy expert at consultancy Flint Global, said reaching a deal with a trade partner requires compromise on both sides. “Yes, the UK probably rushed the negotiations due to self-imposed political deadlines to secure post-Brexit board wins, but Australia and New Zealand had bargaining power beyond that. of that,” she said, citing the UK’s proposed membership of a larger Asia-Pacific trading bloc, of which Australia and New Zealand are members.

And James Manning, a former UK trade negotiator who worked on the Australia deal, argued that FTAs ​​are “invariably” a negotiated outcome, and “concessions may need to be made in sensitive areas to get them across the line.” “Given the importance of agricultural exports to Australia and New Zealand, it is difficult to see how these agreements would have played out had the UK not made market access commitments in these areas,” he said.

It’s not just Eustice’s criticism of the Australia deal that has caught the eye. In excoriating remarks, the former Cabinet minister also called for Falconer, the DIT’s acting permanent secretary, to be replaced by ‘someone who understands British interests better than he has been able to’.

There is little sympathy for Eustice’s comments among UK trade watchers, who argue that the blame was both wrongfully assigned and irrelevant, given Falconer’s inability to respond as than a civil servant. “I hope [Eustice] will see how to apologize because it was completely unfair,” Singham said, adding Falconer’s international reputation “couldn’t be more stellar.” Ramanauskas added, “I thought his comments about Crawford were mean-spirited and untrue Another former DIT special adviser noted that the responsibility ultimately lies with politicians, as “civil servants advise, ministers decide”.

A person close to the Commerce Secretary, Kemi Badenoch, said: “With over 25 years of experience, Crawford is recognized as one of the world’s leading experts on global free trade and does an exemplary job.”

Although many hold the charismatic Kiwi in high regard, Eustice’s attack was a far cry from the reverence Falconer received from Tory MPs, including the influential Brexiteer faction, the European Research Group, when he was first appointed to the DIT in 2017. “Party right and the ERG at the time worshiped him as a kind of god,” said the second former DIT special adviser.

And while there’s no shortage of people who would defend Falconer, others think attacks on officials are normal in trade policy. “Whether fair or not, trade is not fair. Trade policy is not fair,” said Henig, who noted that the UK’s former chief Brexit negotiator, Olly Robbins, had received his share of criticism during the Brexit years. “Honestly, I think we just have to get used to that stuff.”

On friction between DEFRA and DIT, experts also insist that flare-ups between trade policy and agriculture are typical of a free-trading nation – and show the UK is discovering now what it really means to chart your own course. “There are always tensions in trade negotiations between agriculture ministries and trade ministries, but they are usually not resolved at the negotiating table,” Singham said.

The problem for some, however, is that the DIT seems unprepared for the recent fallout. “The main criticism is that [Falconer’s] did not harden the department,” Henig explained. “Trade is a controversial area, and the department just doesn’t feel prepared for it. It’s a bit complacent.

A DIT spokesman said the department had ‘led the charge to show the UK’s strengths as an independent trading nation’.

They pointed out that the government had signed trade agreements with 71 countries as well as the EU since 2016 and removed hundreds of trade barriers. “We don’t stop there,” the spokesperson added. “Our trade strategy aims for ambitious agreements with India, the Gulf, Canada, Mexico, Israel and the CPTPP in the Indo-Pacific, while ensuring that our agreements are reciprocal and in the best interests of the people and of the British economy.

‘Put on the brakes’

Prime Minister Rishi Sunak, himself a critic of the UK’s first post-Brexit deals, has signaled a shift in British trade policy. By choosing to prioritize depth over speed, Sunak avoids setting deadlines for British negotiations, while his government is even considering reviewing Britain’s trade relationship with the EU as the businesses continue to struggle with the barriers imposed by Brexit.

Locked in tough talks with notoriously tough negotiating partners like India, and hoping to navigate through a messy CPTPP Pacific bloc membership process, the UK is now going through an experience more typical for a free-riding nation. exchange after a first episode of exuberance.

It has raised hopes that the UK can finally have a mature discussion about what it really wants from its new freedoms – and with it face the realities of trade policy.

“Frankly, the level of interest in this has been absolutely negligible,” the former government minister said. “I hope people start paying attention to it. They really need it.”

Emilio Casalicchio contributed reporting.