Alexander Downer

The free trade deal Britain must sign up to after Brexit

Now the UK is leaving the EU, Boris Johnson’s government can start planning a serious trade strategy for life after Brexit. So far the focus has been on a UK/US free trade agreement. But before that, the initial challenge for Britain will be to establish a rational set of priorities.

First, the government must ask what resources is it prepared to commit to trade policy? Second, it needs to establish what trade agreements would be most beneficial to the UK economy. After all, there’s no point in giving priority to a laborious trade negotiation with, say, Burkina Faso, if the benefits of that agreement would be very limited.

And third, how difficult would it be to conclude a free trade agreement with those priority countries? Are those countries ready to open up their markets on a reciprocal basis with the UK? Talk of a free trade agreement with India may meet several criteria but it would be difficult to negotiate. India is not a free trade economy.

Trade negotiations should be a major priority for the government because good agreements have the potential to turbocharge Britain’s economy. British exporters will have better access to markets, building a stronger export culture throughout the economy. Imports will be cheaper and more accessible, lifting domestic living standards as a result. And finally, open trade drives micro-economic reform, contributing to increasing the productivity of British firms.

For those reasons, the Department for International Trade needs to be well resourced and led by a senior member of the Cabinet. As far as prioritising negotiations, the starting point must, of course, be the free trade agreement with the EU. That agreement must not deny the UK the opportunity to make high quality agreements with other countries.

Logically, an FTA with the United States should be the next priority.

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