Britain and EU cannot afford to delay trade talks

Andy jalil – – After the recent months have been dominated by hyped-up talk of cabinet divisions and a Brexit in peril, plans are beginning to emerge and a strategy is beginning to take shape.
That it took over a year to reach this point is lamentable evidence of a civil service caught unprepared for the referendum result.
Nevertheless, here we are, 12 months on and with a flurry of government papers on topics ranging from data protection and the regulation of goods to judicial cooperation and dispute resolution.
The papers come as Brexit Minister David Davis attempts to “drive the talks forward”, pushing the EU into discussing the pro-Brexit relationship between the UK and the bloc.
But though the detail behind the government’s ambition is welcome, of more significance is what the sudden hike in activity represents.
Davis is making a concerted effort to push the EU off its preferred negotiation path, which currently involves settling the terms of exit before discussing any new trading arrangements.
Davis may find the EU, in the form of Michel Barnier, reluctant to change course but he is right to make the argument. As he said: “many questions around our withdrawal are inextricably linked to our future relationship”.
Davis cites the border with the Republic of Ireland as a prime example, where “it is simply not possible to reach a near-final agreement on the border issue until we’ve begun to talk about how our future customs arrangements will work”.
The EU recently softened its language, so rather than insisting all divorce matters are settled before discussing trade, Barnier now demands that “sufficient progress” is made.
Another area where the terms of exit are linked with a future deal is the powerhouse of the UK economy: the services sector.
The ‘City’ (financial district of London) is waiting for a position paper of its own, setting out the government’s proposals on financial and professional services.
The matter is of critical importance to the EU, too, whose economic fortunes are bound up with those of the ‘City’. Pragmatic voices on the continent, and there are many, recognise precisely this and so people will not be surprised if Barnier and his colleagues come around, slowly, to the Brexit minister’s way of thinking.
He has made it clear that he is still pushing for the two sides to negotiate the terms of exit alongside plans for a future deal.
In addition to the position papers that are out, Davis has promised more papers in the coming weeks.
Firms in London’s financial district are increasingly frustrated as they await more clarity on the status of financial services after Brexit.
Policy Chairman at the City of London Corporation, Catherine McGuinness, said: “While these position papers provide a slightly clearer direction for the wider business community, City firms need more clarity.”
She added: “While it is positive to see the government highlighting the importance of the wider services sector, the City still needs more information to help prepare for March 2019 (the date of UK’s exit).”
Anthony Belchambers of the Legatum Financial Services Forum said the City must not be left as an “also ran” in the Brexit negotiations, adding that the silence so far on the financial sector’s future outside the EU was “odd” given the UK economy’s reliance on services.
Belchambers added: “The onus is on the government to make its position absolutely clear on financial services.” The City will welcome a “uniform position” from the government, he said, with a strong desire for a transitional deal across many aspects of financial services.
However, the transitional deal should not stop the UK making free trade deals outside the EU, Belchambers said, echoing a key concern of pro-Brexit economists.
A new analysis by Patrick Minford, chairman of the group formerly known as Economists for Brexit, suggested new trade deals could boost Britain’s GDP by four per cent annually, with a further two per cent gain from unilaterally pursuing free trade, including removing tariffs and trade barriers, could reach around £135 billion per year, according to the report.
The analysis was disputed by some economists.
Former Bank of England policy maker, Andrew Sentence, said the report “is not based on world trade realities”, while campaigners at Open Britain said the unilateral removal of tariffs would damage British manufacturing.