Britain’s ambassador to the European Union, Sir Ivan Rogers, has said it could take up to 10 years to negotiate a post-Brexit UK-EU trade deal – and even then it risks being rejected by national parliaments.
Are trade deals really that complicated to negotiate?
Trade deals are monumentally complex. When Greenland, a country with a population smaller than that of Uxbridge and an economy based essentially on a single industry (fishing), withdrew from the EU in 1985, it took three years to negotiate its future relationship with the bloc.
Ceta, the EU-Canada deal, took seven years to negotiate and was about 22 years in the making. But this was a relatively simple trade agreement that does not include the services provisions and deals on non-tariff barriers that a big exporter of professional services like Britain will almost certainly require.
Deals between larger economies such as the US/EU Transatlantic Trade and Investment Partnership (TTIP) and the US/Asia deal known as the Trans Pacific Partnership (TPP) proved so complicated and controversial that they have collapsed under their own political weight.
Can a future trade deal be discussed during article 50 exit talks?
The two-year article 50 talks, due to begin before the end of March next year, deal with the divorce arrangements: the exit bill the UK must pay to cover past and future budget commitments; the rights of EU citizens living in the UK and vice versa; the fate of the EU agencies located in Britain.
Article 50 says the exit deal must take “the framework of the future relationship” into account, so there will need to be some clarity on a broad post-Brexit outline. But EU leaders are adamant there can be no concrete “shadow negotiations” on trade as part of the article 50 process, and the union cannot conclude a free trade agreement with another country while it is still a member.
So it seems likely substantive talks on the detail of the new deal will not start until at least March 2019.
How long could ratification take?
EU procedures for ratifying trade agreements are much tougher than for ratifying the article 50 withdrawal deal, which needs only a qualified majority in the council and a majority in the European parliament.
A trade agreement cutting across policy areas in the preserve of member states would be classed as a “mixed agreement” and require unanimity in the council, a majority in the European parliament, and ratification in all 27 national parliaments as well as in some regional parliaments (including that of Wallonia, which almost derailed the Ceta deal). That is 36 legislatures, each with a veto.
Donald Tusk, the European council president, has said repeatedly the negotiation and ratification process could take between five and seven years. Brussels insiders, particularly trade specialists, think this is highly optimistic.
Wouldn’t it be quicker to start from scratch?
Even the nuclear option – a hard Brexit followed by reliance on existing World Trade Organisation (WTO) rules – could take years to achieve. The first, and more surmountable, problem is that Britain is a signatory to WTO deals through its membership of the EU.
Assuming other WTO members agree to overlook this and transfer existing rights to Britain without seeking to unpick unpopular elements, there is an even bigger problem though. This relates to the import and export quotas shared among EU member states. In the case of lamb, for example, the WTO schedule permits 283,825 tonnes of sheep and goat meat to be imported duty-free into the EU from 14 countries, ranging down to just 100 tonnes from Greenland.
British farmers would need to fight to secure their share of this existing schedule to export into EU and non-EU markets, a fiendishly complicated prospect just in one small agricultural category.
What would a transitional deal contribute?
British business leaders as well as the chancellor, Philip Hammond, have argued that a transitional deal will be essential to smooth over the Brexit bump, ease uncertainty, and prevent the UK economy plunging off a cliff edge should Britain exit the EU at the end of the article 50 process with no future deal in sight.
Several EU politicians, including the Luxembourg prime minister, Xavier Bettel, have expressed reluctance, saying the union was not prepared to create a new status of “‘a little bit member’, ‘pending divorce’, ‘nearly divorced’.”
For the EU’s chief Brexit negotiator, Michel Barnier, an interim deal would have “some point and usefulness” only once Britain has explained exactly what it wants from its future relationship with the EU, and the bloc had established what it could accept. At present, it was “difficult to imagine”, he said.