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U.K. Trade Strategy Needs Radical Rethink for Post-Brexit Deals

  • Britain lacks trade experience, Institute for Government says
  • Says more collaboration, less secrecy needed for success

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The U.K. must “radically” overhaul its approach to trade policy if it is to land post-Brexit deals with other countries, the Institute for Government said.

After decades of access to the European Union’s single market, the U.K. is facing a renegotiation of its trading relationship with the bloc and the need to strike deals with the rest of the world on its own. Those tasks will require improvements across the British government in order to be done well, IFG said in a report.

QuickTake How Does the U.K. Want to Trade With the EU?

For the U.K. to be successful in forging new trade agreements, civil servants need to collaborate with businesses and other departments, be open with the public and develop their expertise. Parliament should also be guaranteed a direct vote on any future trade deals before they are ratified, according to the think tank.

“Whitehall is not set up to do trade well. Not only does it currently lack the necessary expertise, but its standard ways of working -- generalist, secretive and unwilling to make difficult trade-offs -- are all enemies of doing trade policy well,” said Jill Rutter, Brexit program director at IFG. “Ministers will find that taking back control of trade also means taking back responsibility for some very difficult political choices.”’

Massive Undertaking

Prime Minister Theresa May started Brexit negotiations at the end of March with the smallest number of civil servants since the 1940s, raising questions about how the U.K. could complete the massive undertaking of disentangling itself from the EU in the two years allowed for divorce negotiations. May has promised a “bold and ambitious” agreement with the EU as well as new arrangements with the rest of the world.

The negotiations have had a rocky start, with U.K. officials hoping to work immediately on a trade deal, while EU leaders say any exit fee and the rights of EU citizens must be agreed upon first. The U.K. also isn’t supposed to negotiate commercial accords with other countries before it leaves the EU, a rule International Trade Secretary Liam Fox is fighting against.

The government’s lack of experienced negotiators is a “major gap” in its credibility and it should build expertise by starting with smaller deals that are easier to achieve, even if that runs counter to political pressures. The U.K. would also benefit from establishing an independent body to advise on trade, the report said.

The government should prioritize “carrying over” existing EU free trade agreements, especially with Canada, Singapore, South Korea, Switzerland and Turkey, according to IFG. It should also seek new agreements with Australia and New Zealand since they’re “like-minded, medium-sized economies.”

Brazil, China

There’s little point attempting to quickly secure a new trade deal with the U.S., IFG said, since President Donald Trump will probably be unwilling to compromise much given his rhetoric on trade. Negotiations with Brazil, India and China would also be unlikely to quickly bear fruit, according to the report.

“There is a real danger that the U.K. wastes its limited capacity launching trade negotiations with large numbers of countries, and either doing bad deals quickly or getting bogged down in protracted talks going nowhere,” said Oliver Ilott, a senior researcher at IFG. “The government needs a strategy that targets a few priority countries and explores options.”

In the long run, once the U.K. has built up trade negotiating experience, it should be able to move more quickly than the EU to secure trade deals, IFG said. That might come with reduced bargaining power, however.

The think-tank’s research was based on 25 interviews with current and former trade officials from Australia, Canada, New Zealand, the U.S., and the EU.

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