Theresa May is having a difficult time laying the groundwork for Britain’s March 2019 post-Brexit reality. One of the Prime Minister’s greatest sources of frustration is how to manage trade after the UK leaves the EU. Without a trade agreement in place with its biggest trading partner, British industry and consumers will be hurt by higher tariffs and more frictions in exchanging goods and services.
According to Reuters, Theresa May’s government will submit legislation to shape its post-Brexit trade agenda this week. Liam Fox, the trade minister has an optimistic take on the situation:
“For the first time in over 40 years the UK will be able to shape our own trade and investment agenda – and we are determined that businesses and consumers can take advantage of this opportunity.”
Saying that existing trade agreements with the EU will be converted into UK trade agreements is easier said than done – just look at Theresa May’s current negotiations with the EU, or the contentious NAFTA talks that are ongoing. But at least May’s Britain is laying the post-Brexit groundwork.
Singapore on the Thames? Not so fast.
There are some challenges. Namely, so much of Britain’s trade is with the EU that there really is no replacement for what the UK currently has (or past March 2019, what the UK once had).
According to Thomas Samson of the London School of Economics, “the EU accounted for 44 percent of UK exports and 53 percent of its imports.” Simply joining another trade bloc won’t do much to replace the commercial relationship Britain had with the continent.
That’s an irreplaceable chunk of trade. But there could be some big upsides to joining one of the existing trade deals. First, Britain will have to take a piecemeal approach to create numerous bilateral agreements. That could take years, and there’s a chance the deals struck are worse than the TPP/NAFTA alternatives.
Second, despite strong growth over recent years, the European continent is still bound to a slower growth future. Joining the TPP would anchor the British economy to the fastest growing region in the world. Joining NAFTA would align the British with North American countries that it has long felt closer to than continental Europe (not to mention, longer-term economic conditions looks better in Canada/the US/Mexico than in, say, Italy/Greece/Spain).
Politics: The barrier to a post-Brexit multilateral trade world
The biggest hurdle is convincing the British people that this would be a good idea. Immigration was the biggest driver of the Brexiters, but trade came in a close second. Could residents in the midlands and north be convinced of just swapping one trade union for another?
The odds of this happening are low. But for British politicians and an electorate who might want a mulligan on the Brexit vote, this is at least worth consideration.
Cover photo: Matt Brown (Flickr Commons)