International trade expert offers a grim vision of a no-deal Brexit at BMPA Conference
At the recent BMPA Conference, delegates were offered a grim vision of what a no-deal Brexit could look like from international trade expert Lars Hoelgaard.
He speaks with some authority, having previously been the Deputy Director General at the European Commission’s Agricultural Department. And, he understands better than most how the EU ticks and what its likely reaction will be to Brexit Britain ‘sailing out into the blue’ to strike new deals with an autonomous trade policy. Something he characterises as a ‘Singapore fantasy’.
First, Mr Hoelgaard explained, there is the reality of EU red lines including the ‘divorce bill’. If this goes unpaid, he said, there will be nonegotiation. This would appear to be the opposite of Boris Johnson’s approach of threatening to not payuntil a better deal is negotiated.
Extensions to the article 50 process are also going to be a red line unless the UK can offer a very good reason (a second referendum or an election for example) rather than simply wanting more time.
Standards form another line that the EU will not cross as evidenced by their reluctance to accept US chlorine washed chicken. Discussions concluded that US standards were not always equivalent to EU standards. If the UK has to make the ‘wrong’ compromises to trade with third countries (for example accepting chicken produced to lower standards), the EU will need to introduce ‘safeguards’ to protect their market. The UK meat industry might be ‘paying the price’ for different compromises made with different third countries.
Standards form another line that the EU will not cross as evidenced by their reluctance to accept US chlorine washed chicken.
Mr Hoelgaard was blunt in his assessment of the type of deal the UK will have to accept from Donald Trump’s America: “you’re going to take some hormone beef, some chlorinated chicken and some GMOs” although it must be said that this would be part of a negotiation. He also questioned why the UK would want to swap the large amount of trade we do with our geographically near-neighbour for some ‘marginal, perhaps non-existent’ trade with the US.
How can we make this work?
Along with the stark warnings surrounding a no-deal Brexit, Mr Hoelgaard did offer an alternative vision for maintaining frictionless trade with our biggest market. This centres largely on the need to harmonise standards and the regulatory environment, with close cooperation being the key to reducing barriers to trade.
He said that the so-called ‘alternative arrangements’ touted by Brexiteers won’t make life as simple and easy as they like to suggest. Indeed, animal products are the one thing that will suffer the most if border checks are introduced and will start to impede trade immediately with the UK’s lack of preparedness only serving to exacerbate the disruption.
Instead, he suggested that the Swiss model could prove ‘inspirational’ for the UK to achieve a certain degree of independence. They work together with the EU to harmonise standards and regulation, particularly in the veterinary field which is constantly changing. They have created a common veterinary area which works well as animal products are not subject to border checks.
Ultimately Mr Hoelgaard’s message was that we must ‘get back to reality’ by agreeing to have both a customs union and a form of single market in order to make it work. His consultancy TradeUp has done analysis to see a way forward and they believe that we can find a way to uphold at least the ‘illusion’ of sovereignty, independence and regulatory affairs.
He described an alternative to a painful and protracted FTA negotiation: ‘If you want a quick solution, go for a customs union and common veterinary area and we’ll be able to do business’.
It’s now up to Theresa May’s successor to get the process back on track, which Mr Hoelgaard believes can happen. But only if the UK switches from the ‘wrong approach’ currently being taken to presenting the EU with a constructive, rational political position that’s been agreed first domestically.
Given the divisions in Parliament, that seems some way off.