Trade deal will be years after Brexit, warns expert

A trade deal with the European Union is not likely to be secured until a few years after Brexit has been negotiated, an international trade policy expert has warned.

sally jones: I think four or five years is a more realistic timeframe.

Sally Jones, director of international trade policy at Deloitte, told The Yorkshire Post that two sets of negotiations will have to take place with the EU.

One will focus on the divorce settlement, how much Britain pays to leave the union, while the other will then look at what future trade agreements the UK has in place with the EU.

Sign up to our Business newsletter

Sign up to our Business newsletter

Ms Jones said: “The problem is the ongoing trade relationship negotiations. I don’t think they can be done by March 2019.

“All of my experience in the context of trade policy tells me that even if we started those ongoing trade relationship negotiations in December, then 15 months is still too short a period of time in which to get to a comprehensive agreement between the two sides and to have it ratified. I think four or five years is a more realistic timeframe.

“When the Prime Minister talks about a deal on which parliament can vote she is still talking about both a withdrawal deal and a future trade relationship deal.

“I just don’t think that is possible. I think we will almost certainly have a withdrawal deal on which parliament can vote by then but I don’t think we’ll have a trade deal.”

Instead the trade policy expert believes that the UK may well end up with a Norway style trade deal at the end of the negotiations with Britain paying to access the single market.

“We would have Norway-like access for that period of time while our trade relationship is being negotiated,” she said.

But just as Norway does, Britain would have to make a “substantial” contribution to the EU, says Ms Jones.

“It pays roughly 80 per cent of the amount that it would pay for full EU membership,” she added.

Norway also has to accept EU regulations and agree to free movement of workers, a distinction from free movement of people.

Ms Jones, who is the global Brexit insight lead at Deloitte, says that businesses should plan for a scenario of “maximum change” to mitigate the impacts of Brexit, even though the negotiations are likely to see Britain make gains on some points while ceding ground on other areas.

“We say hope for the best, plan for the worst and be ready for whatever is coming,” the trade policy expert said.

Ms Jones says that in her own personal opinion a version of Brexit “that does the most to protect business” is also the version “that will do the most to protect the people”.

The Government faces a difficult task in constructing a Brexit deal that will appeal to everyone. In addition to the 48 per cent who voted remain, the 52 per cent that voted leave is fragmented on the version of Brexit it wants.

While both the EU 27 and Britain won’t want to weaken their respective economies, there are matters that are “more important” to European countries “than just getting the best possible economic deal”, says Ms Jones.

She cited a recent German Chamber of Commerce survey, where 87 per cent of its members said it would put the strength of the union ahead of a zero tariffs trade deal with Britain.

“For Europeans preserving the strength of the union is more important than just a straight economic position,” Ms Jones added. “As far as the continental European mindset goes, the European Union is a peace preserving mechanism.”

Interests of Union first

European politicians are not looking to punish Britain for leaving the EU, says Sally Jones, but they will put the interests of the Union first.

She said: “When I speak to politicians in Europe I never hear them say they want to punish the UK. What they do say is we are going to negotiate in our best interest. Our best interests will not always align with yours.”

Prime Minister Theresa May agreed to honour the contributions Britain had agreed to make to the EU until 2020. A point that was well received by the EU. But there are other liabilities that will still need to be thrashed out as part of the divorce proceedings.