EU referendum

Will anyone talk to the UK about trade after Brexit?

After meeting up with a friend at Somerset House, I decided to go for a long walk in the rain, which I rather enjoyed. As I was walking up Constitution Hill from Buckingham Palace towards Hyde Park Corner at around 6:20 pm, I saw a few police officers on motorbikes clearing the way with loud whistles, and there followed The Beast, the US presidential vehicle, a few big American cars with bright blue and red flashing lights, one with the back open and manned presumably by the Secret Service, and finally a fleet of light grey or silver and very ordinary minibuses that looked empty. By the time I fumbled my phone out of the pocket to take pictures, struggling all the while with my broken umbrella, the motorcade was long gone. Perhaps it was a good thing that I was incompetent, as taking something out of the pocket and pointing it at the presidential motorcade might not have looked too innocent.

Anyway, President Obama is in town, and his remarks have fuelled the Brexit debate. I was not surprised by what he stated, since the content is in my view quite obvious, but I was startled by how he articulated it. I had not expected the US president to be so clear and blunt, even if he is now in a freer position to express and do what he wants to express and do. Mr Obama said:

And on that matter, for example, I think it’s fair to say that maybe some point down the line there might be a UK-US trade agreement, but it’s not going to happen any time soon because our focus is in negotiating with a big bloc, the European Union, to get a trade agreement done. The UK is going to be in the back of the queue.

This observation does not just apply to the US. Imagine yourself as a leader of a country, with whom (or rather with which market) would you prefer to make a deal, the European Union with a population of over 440 million (over 500 million with the UK) that includes the world’s fourth (Germany), sixth (France), and eighth (Italy) largest economies, or the UK even if it is the fifth-largest economy with a population of almost 65 million (provided Scotland remains in the UK after Brexit)?

Trade agreements and deals involve long, arduous, and complicated deliberations. In many cases there are objections: some of which are justified, some based on vague fears, and some centred on vested interests. There are opportunities that arise from better access to the market, but at the same time, there are sectors that require protection. Negotiating parties want the doors opened in the fields their citizens and businesses can grow, and guard areas where they are vulnerable. Given the often loud opposition, governments embarking on deals have to invest their political capital, and these talks will demand a lot from the civil service. The UK might be freer to pursue more favourable arrangements outside the EU, but what if no one wants to talk to the UK, or not before concluding the work with a larger market called the EU? What would make other countries want to come to an agreement with the UK instead or ahead of the EU? In passing, due to the size and attractiveness of the EU as a trading bloc, it is arguable that while no individual member state of the EU secures all it wishes by being a part of a larger collective, it might still obtain a better deal than negotiating on its own.

If the other party does not want to come to the table, then it is necessary to make an offer that the other party can’t refuse, in order to jump the queue (tut, tut, tut, that is not particularly British). Britain used to make others listen by sending in the gunboats. It is however unlikely that such tactics would be tolerated today. Besides, the Royal Navy does not have many gunboats to send around. The other way to jump the queue is to make an offer that is unduly advantageous thus attractive to the other party, so that it is worth the other party’s time to do the deal.

Irrespective of what the US president has said, it is the British people who make the decision about the UK’s membership of the EU. Those who advocate leaving the EU must make more coherent arguments to address the issues that Mr Obama raised: engage and counter the message, instead of shooting the messenger.