A summary of the most important trade news stories from the past week. This summary is emailed to our subscribers every Monday morning, along with the latest comment and analysis from The Channel Group. If you would like to receive this direct to your inbox, you can sign up at the bottom of this article or click here.
UK: A Clean Break with EU
After months of uncertainty, Theresa May finally confirmed that the UK would leave the Single Market in her key Brexit Speech. She also said that the UK would seek bespoke access to the customs union as part of a swift trade deal.
“As a priority we will pursue a bold and ambitious free trade agreement with the European Union. I want to be clear: what I am proposing cannot mean membership of the single market… It would, to all intents and purposes, mean not leaving the EU at all.”
Mrs May also said that she would rather have no deal than a bad deal for the UK. She warned the EU against offering a punitive deal, saying that the UK wanted the EU to succeed and that both parties would continue to work together on projects.
“It is true that full customs union membership prevents us from negotiation our own comprehensive trade deals. I want Britain to be able to negotiate its own trade agreements… I do not want Britain to be part of the common commercial policy and I do not want us to be bound by the common external tariff… but I do want us to have a customs agreement with the EU.”
She outlined plans for transitional deals to ease the burden on business, but not she and her cabinet reiterated that these would vary between sectors and would be strictly time-limited. Brexit Secretary, David Davis, said that it was likely that these would be “months, not years”. It is worth noting that the speech was met with some degree of incredulity on the continent, where the Uk was quickly reminded that there are two sides in a negotiation.
EU chief negotiator, Michael Barnier, responded fiercely to the speech, saying that “Agreement on orderly exit is [a] prerequisite for [a] future partnership. My priority is to get the right deal for EU27.” he also warned that ‘cherry picking’ parts of EU membership would not be possible, in a swipe at Theresa May’s instance on bespoke access to the customs union. This reiterates the Eu’s stance of ‘divorce first, trade talks later’. However, German finance minister, Wolfgang Schäuble, stated that a swift EU-UK trade deal would be possible.
A Global Britain
Theresa May also made a speech at the World Economic Forum in Davos. Responding to critics of her announcement that the UK would leave the EU single market, she said that the UK was a “great global trading nation” and that she would “build a truly global Britain”, which would not turn its back on the world.
Donald Trump became the 45th President of the US, extolling the virtues of protectionism in his inauguration speech. Two lines stood out; “Protection [of trade] will lead to great prosperity and strength” and “Every decision on trade…will be made to benefit American families”. At Davos, billionaire investor George Soros has predicted stride war between the US and China. Toby Illingworth has more on this worrying development for international free trade.
President Trump also invited Theresa May to the White House where a quick free trade deal is on the agenda. The Trump administration reportedly told Nigel Farage that a deal could be done “within 90 days of Brexit”. Theresa May will be the first foreign leader to meet the new US President and has said that she will be having “very frank” discussions. It’s worth noting that negotiations for a trade deal can’t start for over two years, so there is a long way to go still.
Trump’s nominee for commerce secretary, Wilbur Ross, told a congressional panel that he was “horrified” that billions of dollars of import duties were not being collected. “I think that kind of thing has to be fixed,” he said.
UK-Australia Trade Deal in Eight Months
Australia’s Treasurer Scott Morrison revealed that talks will open this week with the UK, saying “Discussions … will begin laying the foundations for Australia to strike new beneficial trade and investment arrangements with the U.K. that benefit our businesses, exporters and citizens”.
Alexander Downer, Australia’s high commissioner to the UK signalled that a UK-Australia trade deal could be struck in as little as eight months, but that the UK needed to relax immigration rules before a deal would be signed. When pressed on the sort of relaxation may be required, he said; “For example, an Australian company that invests in the UK might want to bring some of its executives to the UK. That can be done with what are called tier 2 visas, but maybe that could be made a little bit easier”.
Barnier: EU needs City more than it needs Europe
The EU’s Brexit negotiator, Michael Barnier, has said that “The City is more important to the EU than Europe is to the City”. His comments will ease fears from those in the City about the consequences of Brexit. Financial institutions based in London had feared a loss of access to the single market. Some commentators had predicted an exodus from the City, as FS firms relocated to the continent in order to retain market access. Read our full article…
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Before this, he worked for GlaxoSmithKline and as a theatre producer. Thomas enjoys playing cricket, cycling, and reading.