Most Favoured Nation: Wither Global Britain?

It's all over. And semiconductors.

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The UK had a pretty good run on the free trade agreement front. It managed to roll-over nearly all of the EU’s trade deals (other than with, last time I checked, Algeria, Bosnia and Herzegovina, Greenland and Montenegro), and has inked new deals with Australia and New Zealand and digital agreement with Singapore.

But, even before Liz Truss’s resignation, there was a sense momentum is slowing.

This is slightly annoying for me personally because I have been fairly bullish on the UK’s ability to get a couple more deals – India and CPTPP – done this year.

On India, for example, when Boris announced the negotiations would be wrapped up by Diwali (October 24), I assumed they would go something like this:

Stage one: UK and Indian negotiators spend hours talking with each other, make some progress, but lots of issues outstanding.

Stage two: Some time in early October, Boris goes to India and [as happened with the UK-Australia negotiations], says “yes” to pretty much everything India is asking for. Deal done.

On CPTPP accession, I though the UK would probably be able to make progress to the point it could announce something close to a success by the end of the 2022.

And then Boris was booted out, Liz Truss came in, and … for a while I thought India would still happen, with similar choreography to above. Enter domestic politics.

There are good reasons and bad reasons for not doing a trade deal with India. For example, you might not do a deal with India because you have failed to convince the Indian negotiators to offer-up enough trade liberalisation, or even worse because doing so would require you to agree to things, for example on IP and data flows, that run counter to your economic interest. A good reason.

But you also might not do a deal with India because for no reason whatsoever you decide not to extend your youth mobility scheme to young Indians, or agree terms allowing Indian services providers to fulfil short-term contracts in the UK. A bad reason.

It seems as though the UK isn’t going to end up doing a trade deal with India for a bit of both. It hasn’t managed to get enough out of the notoriously tough Indian negotiators to make pretty much any industry group happy and the right of the Tory party have started to ramp up the anti-immigration rhetoric.

It feels to me as if the UK might have missed its window to do something here, assuming that whoever the next Prime Minister is will be slightly less enthusiastic about free trade agreements than Liz Truss, who will perhaps go down in history as the most enthusiastic prime minister about free trade agreements ever.

CPTPP is a little more complicated. One of the reasons the UK’s accession process has slowed down is slightly out of the UK’s control: China asked to join. In practice, this means the existing membership are less willing to ignore some of the areas where the UK rulebook is non-compliant with CPTPP rules — for example its approach to sanitary and phytosanitary rule making, patents, and mutual recognition of conformity assessment – for fear of setting an unhelpful precedent [if you’re going to say no to China joining because it doesn’t comply with the rules, you can’t be bending the rules for others].

But there is another reason accession is proving difficult. In order to get the Australia and New Zealand FTAs wrapped up quickly, the UK agreed to scrap tariffs [over time] on most imported food. Now other CPTPP members want the same, and they have some leverage. The UK is currently renegotiation its rollover bilateral FTAs with Canada and Mexico, and, understandably, they want what the Ausies and New Zealanders got. And if they don’t get it, then CPTPP accession, which they also need to sign off, might take a while too.

And while the UK is [evidently] willing to upset its domestic farmers to a point, the domestic situation is not what it once was. And it is not clear the government is willing to push the farmers – which in England, at least, tend to be found in Conservative constituencies or Conservative/Lib Dem marginals – much further.

[The UK can of course legitimately argue that it doesn’t need to give them the same access as it gave Aus and NZ because Canada and Mexico will not offer the same in return … and I’m sure we’ll work it out eventually. But it’s taking time.]

Farewell Global Britain, we hardly knew ye …?