Reports that the UK are prepared to dilute their climate ambitions to facilitate the trade deal agreed with Australia put a serious question mark over how the UK is formulating trade policy post Brexit.
As the fifth-largest economy in the world, the UK would be expected to have the upper hand in a negotiation with a smaller economy. That is why the US, China and the EU are the biggest beasts at the negotiation table and, after that, the negotiating power of nations basically reflects their economic standing.
Prior to any concession on climate change language to accommodate the Australian’s the perception was that Australia had done particularly well and from an agriculture perspective seemed to get all they asked for, much to the dismay to UK and even more so to Irish farmers.
Political versus economic ambition
There is no doubt that the UK are greatly driven by the political ambition to demonstrate that they are capable of negotiating their own trade deals having had outsourced this for the previous thirty years as a member of the EU.
The difficulty with politically driven ambitions is that the political timescale works very different than the economic one that follows the introduction of a new trading arrangement.
The UK faces the same dilemma in the trade negotiation with New Zealand which is now in the final stages of negotiation.
On the face of it, there is little the UK can secure from New Zealand in return so again the main driver of a rapidly agreed trade deal will be political optics
New Zealand are a much smaller economy again than Australia and logic would dictate that the UK would hold the stronger negotiating hand.
However, New Zealand will have noted concessions secured by Australia and will be aiming to match these in their deal. On the face of it, there is little the UK can secure from New Zealand in return so again the main driver of a rapidly agreed trade deal will be political optics.
Contrast in speed of UK and EU negotiations
It is significant to note that the EU commenced a trade negotiation with both Australia and New Zealand in 2018, three years before the UK started their talks. There remains a way to travel in these negotiations before a deal is concluded in contrast with the UK speed.
At some point the UK will have to consider what it is achieving with current trade policy that is politically driven to the exclusion of economic ambition. The reality is that independent of a larger negotiating block like the EU, the UK is less dominant.
Ireland is just an observer
By choosing this route, the UK has also moved itself outside the EU customs and sanitary and phytosanitary (SPS) single market, which cause great cost and loss of business to companies that trade in goods of either animal or plant origin.
Despite being the country most impacted by UK trade policy, Ireland is just an observer. The full consequences of Brexit will only be fully felt when these agreements come into effect.