In World Economy News 24/10/2016
In their heyday, British trade negotiators fanned out to Japan, Peru, the Soviet Union and elsewhere, hashing out such delicate arrangements as securing access for English biscuits in return for allowing in a Russian perfume called “Lenin’s Tomb.”
After the U.K. joined the European Union, the need for those talents waned. Then came the Brexit vote.
Now the U.K. faces an unparalleled trade challenge: It must rapidly agree to new trade terms with the bloc and seek new accords with old allies and fast-growing markets. The last time the U.K. formally negotiated a trade agreement was in the early 1970s — meaning that the country has little expertise in navigating the ultracomplex world of modern deals on its own.
“I don’t think there is any precedent [for such a range of complex deals],” said Alan Winters, director of the U.K. Trade Policy Observatory at the University of Sussex.
In the post-WWII decades, trade negotiators were titans of the British civil service. Their department, once located on the site of the old Palace of Whitehall, would throw parties in Henry VIII’s wine cellars and dispatch teams of dozens of negotiators to iron out deals across the world.
Civil servants like Christopher Roberts, the 78-year-old former director-general of trade at the Department of Trade and Industry, got no formal training in negotiations. He learned the ropes in the 1960s on deals to export British herring and cookies to the Soviets, in return for letting in Russian jam and perfume. (Mr. Roberts said he suggested changing the scent’s name from Lenin’s Tomb and doesn’t know how it fared.)
Modern deals are considerably more convoluted than in the 1970s, when the main goal was to pry open markets. These days, dismantling barriers to trade requires agreement on issues ranging from safety standards and environmental regulations to labor laws and competition policy.
“They are getting more and more complex,” said Luis González Garcia, a lawyer at Matrix Chambers in London and a former trade negotiator for Mexico. “It’s not so much about market access. It’s about regulations.”
In the coming years, the U.K. will face several distinct but interlocking sets of potentially tortuous trade talks.
As it extricates itself from the EU, the U.K. must agree on a schedule of tariffs and other terms with the World Trade Organization’s more than 160 members.
It must also seek to lay the groundwork for a free-trade agreement with the EU, likely to be no quick task. The EU has spent seven years talking to Canada about a free-trade pact and the agreement still hasn’t been ratified.
The U.K. will have one advantage over non-EU countries: As an existing member of the bloc, it already abides by regulations governing EU trade in goods and services, which, in theory, should make reaching a deal easier.
“If both sides behave in a rational manner, it should be an easy negotiation,” Mr. Garcia said. The risk, he added, is talks quickly becoming politicized.
Once the WTO and EU deals are completed, the U.K. will likely start hashing out new deals with other countries, a prospect pro-Brexit lawmakers trumpet as one of the main prizes of withdrawal.
Securing new deals will require the U.K. to leave the EU’s single market for goods and services and the bloc’s customs union. Prime Minister Theresa May’s government hasn’t explicitly said this is its intention, and the U.K.’s precise post-Brexit status will depend on how its talks with the EU conclude.
Britain is scrambling to find new negotiating staff to deal with this monumental trade agenda. A spokeswoman for the Department for Exiting the European Union said recruitment is under way, but declined to say how many of the 400 — and counting — people already on the new department’s payroll are trade specialists.
Nearly all the negotiators from the peak days are long retired. After 1973, when the U.K. joined the EU, the job of a trade negotiator began to lose its luster. Britons headed the EU’s trade division for much of the 1990s and 2000s, but the commission negotiated on behalf of all its members, not Britain alone. U.K. citizens with such Brussels experience might prove useful in London, but some aren’t disposed to give up well-paying jobs there and are unlikely to be fired.
In the late 1980s, representing the U.K. trade delegation, Mr. Roberts managed to squeak some agreements through, sealing a deal to lower Japanese excise duty on whiskey imports during a meeting in his living room, he said.
Mr. Roberts thinks the job now will require the same talents he applied then, new complexities or not. He is scheduled to give a seminar at the London School of Economics to share tips with young civil servants.
“A competent civil servant should be able to learn the background in six months or so,” he said. His main advice is that both sides should come out feeling they have gained something. Resist the urge, he will warn his successors, to “crush opponents into the ground.”
Source: Dow Jones
