Stuart Brown, an experienced EU trade negotiator, delivered a powerful testimony on doing trade deals at an event in Bradford-on-Avon recently that was put together by Chris Hoar. Here is a précis of his talk.
There are facts and experiences. There are also experience-based predictions and opinions. This evening I’m here to talk about facts and experiences. The predictions and opinions I leave to you!
I have been involved with EU policy since the early 1990s and have been a freelance consultant since 1999. I have experience in trade and sustainable development and have worked with trade experts from Spain, Italy, Germany, Switzerland and the USA.
Policy versus plan
A policyis what you want to happen, and a policy implementation planis how you are going to make it happen starting from where you are now, for example:
- What to do, when and in what sequence
- With what resources (e.g. money and people)
- How to limit the damage when things go wrong
Optimism has no place in this exercise. Any policy involves assumptions and each assumption generates a risk. You need to know what the risks are, how likely they are and how much damage they could cause, otherwise you are not in control of implementing the policy.
Brexit as policy
Brexit is a policy. It is a statement of what the UK wants to achieve but it involves a lot of assumptions, many of which involve a significant number of things that we cannot control.
So, to make a success of Brexit, the UK needs an implementation plan that has clearly defined and specific objectives e.g. it needs to be able to sustain foreign trade by the time we cease to benefit from the EU’s internal and external trade agreements.
The plan also needs to start from where we actually are (rather than where we think we are!) and respect realities and constraints. It also needs to be coherent. A policy is said to be coherent if it can be implemented before any time-critical deadlines, with the resources that are actually available and without compromising other policy areas.
I say again that confidence and optimism have no place in this. To deliver what you promise, you must be ruthlessly realistic about what you can and cannot do. These principles apply regardless of whether you are for or against Brexit.
The terms ‘trade deal’ and ‘strike trade deals’ fail to convey the scope and complexity of an actual trade agreement. In reality, a trade agreement can take years to negotiate and places a heavy demand on a large number of people.
The more optimistic the assumption, the greater the risk. For example, Liam Fox saying, ‘Striking an EU trade deal’ will be the ‘easiest in history’ is an assumption. It may be right, it may be wrong. What matters is how likely it is to be wrong and the severity of the consequences.
The UK’s declared aim is ‘managed divergence’ from the EU. All of the EU’s Free Trade Agreements with third countries require varying degrees of convergence. The UK therefore wants to negotiate a comprehensive bespoke FTA for which there is no precedent. In this situation, negotiations tend to take longer.
Does the UK have a Brexit implementation plan that fulfils all of the aforementioned criteria?
I have recently worked on two EU trade agreements:
- EU-Moldova Deep and Comprehensive Free Trade Agreement (DCFTA)
- EU-Vietnam Free trade Agreement (EVFTA)
The EU’s FTAs with Moldova and Vietnam have significant differences between them, but there was very little difference in terms of time and effort involved.
The DCFTA has no customs union and allows Moldova to pursue its own trade policy. (Further reading: http://eeas.europa.eu/delegations/moldova/documents/eu_moldova/argumentaire_en.pdf)
The process was initiated in 2009 with main work phase between 2010 and 2013, and came into effect towards the end of 2013.
The EV-FTA on the other hand eliminates more than 99% of customs duties on goods and includes a range of services. (Further reading; http://evfat.com/info-center/what-is-evfta/)
Negotiations started in 2012, content was agreed in 2015 but ratification was delayed until 2017 by the ECJ.
So, to summarise, the Moldova FTA took four years, the Vietnam FTA took five years and we also know that the recent Canada deal took eight years. In all three cases, ratification was delayed by processes outside the control of the country concerned.
So, bearing in mind these timelines, added to the fact that the UK wants divergence rather than convergence, a bespoke comprehensive FTA but has not yet agreed what it wants and has not yet started the detailed negotiation phase, what is the realistic timeline for this to happen?
In addition, the EU presently has more than 100 trade agreements with third countries. As a member state, the UK is able to trade because of these agreements. In order to maintain continuity of foreign trade the UK needs to negotiate and ratify agreements to replace these in a sufficiently short time to allow businesses to continue to operate.
Trade agreements require a lot of resource. The UK will need to find enough trade negotiators to handle the workload of a large number of trade negotiations in a fairly short period of time if it is to maintain continuity of trade.