The harsh reality of negotiations is fast catching up with the International Trade Secretaryby David Henig / February 12, 2019 / Leave a comment
Photo: NurPhoto/SIPA USA/PA Images When the histories of Brexit are written, Liam Fox will surely be remembered for saying that the post-Brexit free trade deal with the EU should be the “easiest in human history.” To be fair he did follow up this remark in July 2017 by saying that if it didn’t happen it would be because “politics gets in the way of economics.” But then since politics typically gets in the way of economics, to assume otherwise is somewhat on the naïve side. Sadly this is hardly an isolated case of naïve optimism in Fox’s time as International Trade Secretary. Indeed his time in office has been marked by repeated signs of worrying complacency. My experience in trade policy, including at the Department for International Trade until last year, is that it is a complex interaction of politics, economics and diplomacy, taking time to deliver results. Instead Fox has shown a tendency to promise the highly unlikely, with serious implications for the UK’s businesses and international standing. A few examples make the point. In October 2017 he told a Conservative Party conference event that “we’re going to replicate the 40 EU free trade agreements that exist before we leave the European Union so we’ve got no disruption of trade.” In the last few days it has been revealed that in fact few of these agreements will be ready if the UK leaves the EU with no deal, and some may not be in place even if there is a deal. According to Fox, part of the reason is that “a number of countries… are unwilling to put the preparations in for no-deal.” Heroic blame-shifting for something he should perhaps have foreseen. In July 2018 appearing before the Commons Trade Select Committee, Fox said that negotiations on agricultural quotas required to establish the basis for trade at the WTO were “going quite well” and that any problems were “not with the United Kingdom.” Sadly WTO members disagreed with this analysis and a number raised formal objections to the UK’s proposals in November 2018. The problems aren’t just with other countries, but even with Fox’s flagship in parliament, the Trade Bill. Also in July 2018 Fox set out his proposals for parliamentary scrutiny and public involvement in trade policy, saying “I am confident that our proposals will deliver the scrutiny and transparency that the UK public, including parliament, expect and deserve.” It turned out that parliament expected rather more, with the House of Lords voting to delay the Trade Bill until the government returned with more detail of parliamentary involvement. Labour Leader of the House of Lords Baroness Smith said that “it is not unreasonable that, before we complete our consideration of this Bill, we should have more information about, and proposals on, such an important policy issue.” Even the new trade agreements that Fox wants to start negotiating immediately after Brexit are running into difficulty. The most high profile of these would be with the United States, but this has raised the issue of the UK having to change food standards. In July 2017 Fox said “I can rule out that we will be dropping our standards on consumer protection or environmental protection or on animal welfare.” These remarks are somewhat undermined by the fact that the Brexiteer’s trade advisor Shanker Singham, formerly part of Fox’s “Committee of Experts” at DIT, recently submitted evidence to the US government suggesting that “the opportunity for a major G7 nation to depart from the EU’s application of the precautionary principle in agriculture also represents a huge opportunity for America’s farmers and biotech firms.” Then there are Fox’s hopes to join the 11-member Comprehensive and Progressive Trans-Pacific Partnership or CPTPP, which was part of a public consultation launched in 2018. In January 2019 Australia’s trade minister was rather less positive, saying “My sense is that it will be easier for the UK to be able to strike, initially, a bilateral agreement with Australia and possibly with other nations, than it would be to bypass that and simply [join] the TPP.” A successful trade policy has to rely on good relations with business. Yet again, Fox doesn’t appear to be enjoying the best of luck. The Times reported the head of Unipart John Neill saying that “Liam Fox’s credibility is extremely low.” Or perhaps this is the price paid for two years of failing to keep business informed of progress, with British Chambers of Commerce Director General Adam Marshall expressing concern to the Financial Times that the Department for International Trade was not being open enough about the status of trade negotiations. If we can summarise Fox’s performance as secretary of state then, it might be that he has persistently underestimated both the difficulty in getting your own country to agree what it wants, and the difficulty in getting the other side to agree to this. For all of his repeated speeches about the benefits of free trade, typically citing Adam Smith, Ricardo, and comparative advantage, trade is always intensely political. Negotiators from other countries were always going to seek to take advantage of Brexit, business from the UK to be involved in decisions, and parliament to know what was happening. Fox has been in post for two and a half years, and has never seemed to be on top of this. Worse still, we have seen little evidence that there is any kind of strategy to the UK’s trade policy. Businesses know little about the basis for their trading relationships in less than two months, and for that Fox must take a large share of the blame. It is time that Fox lost the breezy optimism and started to face up to the more difficult reality.