The British referendum to leave the European Union sent the stock market, pound, and consumer and investor confidence tumbling, but there is one group that undoubtedly stands to gain: international trade experts. Britain suddenly faces the enormous task of negotiating trade deals with all the nations and blocs that it currently exchanges goods and capital with under agreements made through the European Commission, as well as the opportunity to further liberalize trade with major trading partners. Chancellor of the Exchequer and former Foreign Secretary Phillip Hammond made clear that Britain is already on the hunt for experienced trade negotiators, something the nation seriously lacks after 43 years in the European Union (1).
Two new departments in the British government will handle post-EU trade deals; the Brexit office headed by David Davis will negotiate with EU member countries, and the International Trade Department headed by Liam Fox claims negotiations with countries outside the EU (2). According to EU officials, Britain cannot legally negotiate bilateral trade deals until it leaves the union (3). Though documents may not be signed until after that day, Theresa May’s government is rushing to begin discussions with the kingdom’s major trading partners. EU leaders might complain if Britain puts too much effort into new trade negotiations while delaying formal triggering of Article 50, but third party states prefer preparing themselves for an independent Britain rather than holding off in the name of the EU—at a cost to their own economy.
Already things are looking up for the UK. Malcolm Turnbull, the Australian prime minister, made clear he wants to quickly make a trade deal. Liam Fox has flown to the United States to speak with senior trade officials (4). Before that trip, he had also told press that Britain began productive trade talks with Canada on July 15th. In the same interview he put the number of EU-external free trade deals Britain is “scoping” at about a dozen, while stressing the attractiveness of a trade agreement with the world’s fifth biggest economy outside the auspices of the EU. The British people just resoundingly demonstrated the extent of anti-globalization sentiment in the country, but negotiators would at least only have to balance the demands of one national constituency rather than the 28 in the EU. Despite the sentiment of Brexit, the UK could find itself at the forefront of 21st century trade liberalization if its negotiators are effective and its politicians able to sell new deals at home.
The United States and China are top priorities for negotiations, says Mark Price, the Minister of State for Trade and Investment (6). The EU has trade agreements with neither (7). After earlier reports that the Chinese Ministry of Commerce is interested in a free trade deal with Britain, Chancellor Hammond this week told the BBC he began precursory discussions with Chinese counterparts. Such a deal could theoretically open the doors to major Chinese investment in Britain, alongside much greater access and ease of business for British service companies (such as banks and insurers) in China (8).” Do not expect an ambitious deal between China and the UK anytime soon; the threat Chinese manufactured goods pose to British industry makes the lowering of tariffs towards them almost politically impossible, especially now.
The United States’ top trade official, Trade Representative Michael Froman, met with Liam Fox this week, but also heads to Brussels to continue work on the TTIP, which Price mentioned as a potential guide for a US-UK trade deal (9). Earlier in the month, Froman raised the possibility that Britain could become a member of the TTIP as a third party (currently negotiations are between the EU and US), or even join the TPP—despite the presumed geographic criteria (10). He reiterated the ambiguous legal nature of trade talks at this point—before Britain actually leaves the Union, but also brought up a more practical hurdle. Until third party states understand the relationship between an independent Britain and the European Union, discussions between officials can’t leave the preliminary stages. When the degree of future EU-UK integration becomes clear, other trade talks can move into substantive discussion and spectators can see how much the new government can deliver on its early optimism.
(1) Schomberg, William. “Britain to hire foreign trade negotiators after Brexit,
says Hammond.” Reuters. 4 July 2016. Web.
(2) Mance, Henry. “The UK has no trade negotiators, says former Brexit minister.”
Financial Times. 15 July 2016. Web.
(3) Wintour, Patrick. “UK officials seek draft agreements with EU before
triggering article 50.” The Guardian. 22 July 2016. Web.
(4) Ross, Tim. “Brexit free-trade deals planned with the USA and Australia.” The
Telegraph. 16 July 2016. Web.
(5) Addison, Stephen. “UK opens ‘very fruitful’ trade talks with Canada, says
minister.” Reuters Canada. 16 July 2016. Web.
(6) Spicer and Henry. “UK trade minister’s quest begins with hiring negotiators.”
Reuters. 26 July 2016. Web.
(7) “Ageements.” European Commission. Web.
(8) Ahmed, Kamal. “UK explores multi-billion pound free trade deal with China.”
British Broadcasting Corporation. 24 July 2016. Web.
(9) Wintour, Patrick. “British-EU relations likely to be resolved by 2020, says
Liam Fox.” The Guardian. 26 July 2016. Web.
(10) Lawder, David. “U.S. trade chief holds talks on UK trade deal possibilities.”
Reuters. 14 July 2016. Web.
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Rye is a senior at the University of Southern California earning a B.A. with a double major in International Relations and Economics, while also earning a specialization in Computer Programming through the school of engineering's Information Technology Program. He is heavily interested in international politics, economics, diplomacy, and law. Rye plans to attend law school with an eye on a future career as a lawyer in the realm of international trade and business. He has interned with Sandia National Laboratories for 2 years as a Foreign Policy Analyst supporting the Nonproliferation Research and Development Group, with specific work regarding the JCPOA with Iran and US-Russia Arms Control. Rye grew up in a boisterous household in New Mexico and loves hiking, camping, and any physical activity outdoors.