- EXCLUSIVE: The CBI — Britain’s biggest business group — warns Liam Fox’s plan to “cut and paste” 40 free trade deals is near-impossible and could push Britain towards a “cliff-edge”.
- This week, BI reported the European Commission was “deeply concerned” about the UK trade department’s lack of preparation for rolling over trade deals it enjoys as an EU member state.
- Liam Fox believes these free trade deals can be carried over without any renegotiation.
- However, in a major intervention, the CBI says there are “serious doubts” this can happen and warned that the trade department does not have the skills to renegotiate deals in time.
- Senior British business figures have contacted BI to share their difficulties in working with the UK trade department.
LONDON — Britain’s leading business group has “serious doubts” that the UK government will be able to fulfil its promise to roll-over Britain’s 40 existing free trade deals with non-EU countries in time for Brexit, telling Business Insider that failure to do so could “wipe out” entire sectors of the economy.
UK International Trade Secretary Liam Fox has promised to roll-over Britain’s existing deals with non-EU countries, as part of its EU membership, the “second after” Brexit.
However, the Confederation of British Industry has told BI that this is very unlikely to be possible, potentially leaving entire sectors of the economy on a “cliff-edge” after Brexit.
“The UK fundamentally lacks the experience or the bandwidth to conduct 20 or more trade renegotiations in parallel to complete before the potential cliff edge of January 2021,” the CBI’s chief trade spokesperson, James Ashton-Bell, told BI.
“The potential of a cliff edge for these agreements is very real, and potentially hugely damaging at both firm-level and for entire sectors of the UK economy. It could wipe some out overnight. Some export-reliant companies could literally go bankrupt.”
The CBI represents over 190,000 businesses nationwide and has worked closely with the DIT in its Brexit planning.
The Department for International Trade has insisted that Britain’s existing free trade deals can be carried over without any renegotiation.
“Transitioning EU trade agreements is a technical exercise, not an opportunity to renegotiate terms,” a DIT spokesperson told BI earlier this week. “We have already held discussions with more than 70 countries and none have displayed any interest in disrupting trade flows, or in erecting barriers to trade that do not currently exist.”
However, the CBI believes such renegotiations are almost inevitable and doubt that the government has the capacity to deal with them.
“While we support the government’s aim, there are very legitimate issues that would likely require reopening despite the UK not having the capacity to run many negotiations in parallel,” Ashton-Bell said.
Some export-reliant companies could literally go bankrupt.
He added that Theresa May’s government “cannot reasonably expect that these ‘replications’ of agreements will be free from prolonged renegotiations,” citing a number of concessions third countries have made to the EU which “they’ll no longer be willing to give the UK on its own,” plus deals which countries have expressed a desire to modernise.
He cited countries like Norway and Switzerland, where trade terms are not written down in a single agreement, and therefore cannot be replicated in any case without a completely new deal being struck.
A DIT spokesperson told BI that they were confident of a “smooth” transition on existing free trade deals.
“The Government is committed to ensuring continuity in our existing international agreements as we leave the European Union, with transitioning existing EU FTAs one of the Department’s top priorities,” they said.
“Ministers and Officials have engaged with more than 70 partner countries so far, and we are confident of securing a smooth transition for businesses and consumers.”
“I feel sorry for the civil servants, to be honest”
BI has also seen confidential EU analysis which suggests that trade deals cannot be simply rolled over via a signed agreement between the UK and the EU, as Fox argues.
The report — produced for MEPs by the European Parliament’s Research Service and titled ‘Brexit and the UK participation in existing EU trade agreements’ — says Brexit “would require a renegotiation [of trade deals] thus giving the opportunity to third countries to require more concessions from the UK.”
The CBI’s intervention follows a BI report, which revealed the European Commission had warned other EU institutions that it is “deeply concerned” about the UK’s lack of preparation for carrying over trade deals after Brexit. The Commission also cited Fox’s “failure to grasp basic concepts and trade-offs” relating to the rollover process.
In the same report, a leading UK business figure who works closely with the government accused “large swathes” of Fox’s department of being “reluctant to accept the help of outsiders.”
Since BI published that article on Wednesday, various figures from across British business have told BI that they have experienced similar difficulties when working with the DIT.
A leading figure from the creative industries, who recently held a meeting with DIT, said: “My main takeaway was I feel sorry for the civil servants, to be honest. It’s a nightmare job. Fox is not the brain of Britain.”
Another business leader echoed concerns about Fox’s leadership, telling BI: “Officials inside DIT confess that there is a lack of direction from the top on where to prioritise effort and how to choose which areas are of most importance.”
Others said the Trade department had been reluctant to accept advice from industry.
“Officials have repeatedly turned down offers from business to help both with the technical aspects of the agreements and with engaging governments and businesses in the countries concerned,” another business leader who had dealt with the DIT said.
The government’s opponents accused the government of putting Britain’s existing trading relationships at risk.
“Brexit is a threat to our global reputation as a trading nation: we are putting up barriers between us and our biggest trading partner, and now we know our existing trade deals with countries across the world are at serious risk,” Labour MP Ian Murray, a supporter of the pro-EU People’s Vote Campaign, said:
“Giving Liam Fox something to do with his spare time is not a good enough reason for jeopardising our existing trading relationships. Not only will there be no new trade deals for years to come, businesses are clear we risk losing the ones we already have with more than 65 countries across the world through our membership of the EU. This could bankrupt some companies.
“As the Brexit that is being delivered looks increasingly different to the one that was promised, we all have the right to demand a People’s Vote on the terms of any Brexit deal.”
