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Seven cards the government can play in Brexit trade talks

Theresa May says ‘a positive and constructive partnership’ with the EU after Brexit is the target. Beneath the jargon, the message to Brussels in the government’s latest position paper is simple: a trade deal is in your interests too. Ministers are at pains to point out that a messy Brexit won’t just do damage to the UK.

It’s true there are some in Brussels who will be keen to teach Britain a lesson for having the temerity to leave. The government’s pamphlet is a warning to that method of thinking. Here are seven cards the Government thinks it can play in negotiations on trade:

Britain runs a trade deficit with the EU:

Last year, the EU exported £116bn of goods to the UK but only imported £57bn of goods made in Britain. This discrepancy sends a clear message that the EU – not Britain – has more to gain from a deal.

Goods and services aren’t so easy to separate:

A widely-made point is that while the UK runs a trade deficit in goods with the EU, in terms of services, it’s a different picture. In financial services, for instance, the UK has a trade surplus with the rest of Europe. The government is saying that it’s not so easy to separate the two – making the point that services are often sold alongside goods (in the form of maintenance contracts and repair services). By this measure, today’s publication points out that the EU runs a services surplus with the UK (the EU imported £1.46bn of maintenance and repair services from the UK, while exporting £2.01bn worth).


A messy Brexit would do damage to supply chains across the EU:

Disrupting the UK’s trade with Europe would clearly do damage to Britain’s economy. But the pain would also affect businesses and consumers across the Channel. The government makes the point that this disruption would impact wider supply chains – impacting on goods sold by other countries: in 2011, the government says, objects made in the UK accounted for 1.9 per cent of the total value of other EU member state exports.

We’re not asking for something that hasn’t been done before:

A trade deal might be a big ask but Britain isn’t asking for something that hasn’t been done before. In the jargon of the government’s position paper, it says the EU has worked with others to overcome ‘technical barriers to trade’. Take a look at the Comprehensive Economic and Trade Agreement between the EU and Canada, for example; or the data sharing arrangements between the EU and China. If these have been done, why can’t they be done again?

Britain is in a better place to secure a deal than others:

The government goes a step further on the above point. It says that ‘the degree of integration between the UK and the EU makes our future partnership unlike any other existing arrangement’. The message is that the UK and EU are used to co-operating and the legislative framework to secure an agreement is already in place. This should mean any new arrangement is more straightforward to thrash out than the ones the EU already has with non-member states.

Avoiding a hard border between Northern Ireland and Ireland is in everyone’s best interest:

The government’s insistence that there will be no hard border between Northern Ireland and Ireland has been interpreted by some as a weak spot for the British government. In fact, it’s a difficulty that both sides have accepted they need to overcome. Today’s paper says the onus to find a solution here is as much on the EU as it is on Britain. The government quotes from the EU’s commitment in Brexit talks to find a ‘flexible and imaginative’ solution to this problem. The message is simple: we need to work together to avoid a hard border. This area of common cause should help both sides to come together on at least one big issues, even if talks inevitably get fraught.

Keeping people safe:

Some regulations for goods sold in the EU require a named person working within the EU to be accountable for those goods. When Britain leaves the EU, the government points out that this employee would – if they were working in Britain – be immediately outside. This could mean that there would be confusion about who is responsible for goods on sale and that items on the shelf in shops could not be traced back so easily.  While this might all sound dull, as the government says, there would undoubtedly be an impact on public safety if dodgy goods made it to consumers with no easy way of tracking down those who made them. Given the importance of public safety, it would be a foolhardy move on the EU’s part to walk away with no agreement in place on this issue.


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