Tit for tat - Trade secrets

Sam Lowe, senior research fellow at the Centre for European Reform, joins us for three blunt questions.

What do you think people are missing in the Brexit debate?

I think it is possible that Boris Johnson and the EU get a deal done by the end of the year. And if we trust that Johnson is telling the truth when he says that he wants maximum freedom to diverge, to scrap freedom of movement, strike new trade deals and regulate the domestic economy as he sees fit, then the landing zone becomes clear: at best an EU-UK trade agreement that gets rid of tariffs and quotas, but does little to mitigate regulatory and administrative barriers to trade, or facilitate trade in services. Rather than taking a breather, businesses and investors should be gearing up for a hard landing on New Year’s Day, 2021.

What’s the most important trade priority for post-Brexit Britain aside from its EU negotiations?

Brexit has not just damaged the UK’s standing with the EU, but also with much of the rest of the world. There is a need to address this, but I’m not convinced running headfirst into a lopsided trade agreement with the US is the way to do it. Instead, I would focus on continuity and stabilising the UK’s relationship with existing trade partners. In particular, I would prioritise renegotiating the EU’s trade agreement with Japan. This is not necessarily about the trade agreement itself, which only recently came into force, but instead a trust (re) building exercise with one of the biggest investors in the UK (after the US and EU) and a country the UK will need to work closely with if it is to successfully secure its interests in the face of warring regional trade superpowers.

What’s the biggest threat to global trade this year?

I’m not sure it is the biggest, but I think the combination of both a more assertive, ‘geopolitical’, European trade policy, and the environment’s increased presence in the trade debate could be quite disruptive (and not necessarily in a negative sense). While it is unlikely to emerge for a long while yet, in the context of Trump potentially shifting his tariff cannon back towards Europe, if the EU kick-starts a discussion on introducing a carbon border tax it could lead to fireworks.