Brexit trade deals will be worse than current EU deals, says Liam Fox's former trade chief

Britain's International Trade Secretary Liam Fox speaks during a signing of a trade continuity agreement with the Pacific Islands, as the government seeks a Brexit solution, in London, Britain March 14, 2019.Britain's International Trade Secretary Liam Fox speaks during a signing of a trade continuity agreement with the Pacific Islands, as the government seeks a Brexit solution, in London, Britain March 14, 2019.Reuters / Henry Nicholls

  • Countries are likely to offer the United Kingdom worse trade deals than it currently enjoys as an EU member, the former head of Liam Fox's International Trade Department has told Business Insider.
  • "The United Kingdom alone can offer significantly less in terms of market access or government procurement than can all of the European Union," Donnelly said.
  • Major trading partners of the UK including Japan and the USA have indicated that they will seek tough concessions from the UK in trade talks because it is a relatively small trading partner.
  • "Trade negotiators are not sentimental," Donnelly said.

LONDON - Countries are likely to offer the United Kingdom worse trade deals than it currently enjoys as a member of the European Union, the former head of Liam Fox's International Trade Department has told Business Insider.

Sir Martin Donnelly, who was the Permanent Secretary of the Department for International Trade until 2017, said that the UK could offer less market access as an individual country than as part the EU, and would therefore be offered less favourable terms when negotiating free trade arrangements after Brexit.

"The United Kingdom alone can offer significantly less in terms of market access or government procurement than can all of the European Union," Donnelly said.

"That means that other countries are less likely to offer us the same deal because they don't get the same benefits," he added.

"Trade negotiators are not sentimental, they look for reciprocity of benefits."

Trade Secretary Fox promised that the UK would roll over dozens of existing EU free trade arrangements "the second after" the UK left the EU, the scheduled date for which has been delayed by at least two weeks beyond March 29.

But major trading partners of the UK including Japan have indicated that they will seek tougher concessions from the UK in trade talks than it secured from the EU when they agreed the terms of a free trade deal in 2018.

Japanese trade negotiators are confident they can extract better terms, the Financial Times reported, a sign of how difficult Fox's task may be in attempting to strike independent trade deals once the UK has left the EU.

"By negotiating as a country of 65 million, we start in a significantly less attractive position than when we are a part of a bloc of around 500 million," Donnelly told BI.

"That's what's coming back to us from the negotiations, and that is not surprising."

He said the lack of clarity around the government's trade policy once it has left the EU would act as an impediment to striking liberal trade deals because foreign companies would demand certainty about the UK's trading arrangements on issues including rules of origin.

"Once you include issues like rules of origin, it becomes more complicated for their companies.

"They want to know if they're based in the UK can they still be part of a European supply chain, which gets benefits from EU trade deals, or not?"

Trump administration to take a hard line on Britain

President Donald Trump speaks before signing an executive order on President Donald Trump speaks before signing an executive order on &quotimproving free inquiry, transparency, and accountability on campus" in the East Room of the White House, Thursday, March 21, 2019, in Washington. (AP Photo/Evan Vucci)Associated Press

Washington has also indicated that it will take a typically hard line in negotiations, despite Donald Trump saying trade with the UK would "increase substantially" after Brexit.

The US Trade Representative earlier this month published its "negotiating objectives" for a future trade deal with the UK once it has left the EU.

The document states that the UK must "remove expeditiously unwarranted barriers that block the export of U.S. food and agricultural products."

It adds that "unjustified trade restrictions," such as the ban on the sale of chlorinated chicken and hormone-injected beef in the UK, must be removed in order to "eliminate practices that unfairly decrease U.S. market access opportunities."

Fox has also said a free trade agreement with the United States is one of his department's "top priorities" but Washington too has indicated that it will take a tough line on negotiations.

The US Trade Representative earlier this month published its "negotiating objectives" for a future trade deal with the UK once it has left the EU, which stated that the UK must "remove expeditiously unwarranted barriers that block the export of U.S. food and agricultural products."

It adds that "unjustified trade restrictions," such as the ban on the sale of chlorinated chicken and hormone-injected beef in the UK, must be removed in order to "eliminate practices that unfairly decrease U.S. market access opportunities."

Our Brexit Insider Facebook group is the best place for up-to-date news and analysis about Britain's departure from the EU, direct from Business Insider's political reporters. Join here.

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