Trade does not just benefit the “1%.” It is not just for people who own stocks. Trade does not affect just the people who work in places that directly export to foreign countries. International trade matters to everyone, probably every single hour of every day. Take just the first hour of my day, for instance.
Even if the EU had been able to create and maintain a common trade position prior to Brexit, the loss/partial loss of the UK within the Union will make it difficult for the EU to continue with business as usual for at least a short period of time. The uncertainties surrounding the departure of the second largest market within the EU means that EU negotiators have to reconsider their own market positions in nearly every single sector.
But what does not exist is an agreement that opens trade in goods between most of the RCEP dialogue partners—particularly between the big players like India and China. RCEP will create new trade linkages between these markets for the first time. This dynamic has always created certain tensions and, as the talks have progressed and officials have started filling in the details about which tariff lines will have to be cut and by how much, hypothetical discussions about market opening are starting to feel quite real. For some officials grappling with how to handle tariff reductions in potentially sensitive sectors, the rubber is meeting the road.
New Prime Minister Theresa May’s troika of foreign ministers, Liam Fox, David Davis and Boris Johnson all campaigned strongly to Leave and now they must lie in the bed they have made. This Special Edition Talking Trade post explains the options available to the UK and looks at their feasibility.
To launch negotiations on a free trade agreement with Singapore (or any other country) would mean starting to build a house without a clear foundation. No sensible partner would want to do such a thing. Instead, potential trade partners will want to wait until the specific terms and conditions of Brexit are sorted. Then, and only then, will it be possible for the UK to figure out what sort of obligations can it take up with the EU, at the WTO, and with potential trade partners.
Brexit also changes the relationships that the UK has with all of the existing EU trade agreement partners. These are not only the 58 existing free trade agreements, but also various preference schemes in place, mostly for least developed economies. It also means that the UK will have to reset trade relations with most of the rest of the global trade system, since the UK will need to re-establish its independent seat at the World Trade Organization (WTO). This is much trickier than it first appears.