There will be a trade deal

Most diplomats in Brussels will tell you that Theresa May has just embarked upon a fool’s errand, that Britain might wish for a free-trade deal with the European Union but will have to learn that it can’t cherry-pick. Anyway, they say, nothing of any value can be agreed in two years. This received wisdom can be heard, under various iterations, in most capitals in Europe — and it’s natural that the EU will be sore, perhaps a little defensive. But there is a free-trade deal to be struck.

First, a declaration: I didn’t want Britain to leave the EU. I’m a Swede running a free-trade thinktank in Brussels and can tell you that the UK’s absence will be sorely felt by all of its allies. A great many governments will feel the same, but to deny Britain a free-trade agreement would be an extraordinary act of self-harm, for all sides. To use the tariffs and rules of the World Trade Organisation would mean greater barriers and slower trade. Economic logic may not be a good basis for predicting policy in this age of growing economic nationalism, but we’re not talking about a complex, labyrinthine Sykes-Picot endeavour. The task for trade negotiators now is to avoid a collapse of current trade, not to break up markets for new trade.

The model being pursued by Mrs May is a new alliance of light integration and soft rules. She wishes to leave the EU, the single market and the customs union — so any future trade agreement will look very different. And that suits the EU well because many of its leaders want to keep a trade premium for members and raise the cost for British exporters. So no more common standards for consumer and environmental policy or joint rules for farm subsidies and state aid to industries.