Mandelson: Mrs May’s deal will damage trade - People's Vote

Mandelson: Mrs May’s deal will damage trade

Commenting on the Government’s claims about Brexit and trade, Lord (Peter) Mandelson, leading supporter of the People’s Vote campaign and former EU Trade Commissioner, said:

“Mrs May’s deal paves the way for a host of broken promises over trade. We are giving up our rights to frictionless trade in Europe under her deal and we have no assurances of the continuation of the EU deals we benefit from today.

“Her suggestion we would then obtain the further deals she describes is fantasy. Especially with such a depleted number of actual trade negotiators available to them.

“Even the negotiations on the fundamental relationship she says she wants with the EU will drag on for years and may never be completed, so leaving us in the Irish border backstop.

“I have negotiated with the United States, China, India, the Gulf States, Australia, Malaysia, and Mercosur and in each case, based on my direct experience as Trade Commissioner, I estimate the chances of us getting a substantial trade deal with any of them are very low indeed, even after many years of patient negotiation.

“Nobody voted to be poorer, to add friction to trade or to damage business. The choice the Government wants to give us – between this miserable deal and a chaotic no deal - is no choice at all. That is why the demand for a People’s Vote and for the opportunity to stay as full members of the EU is growing all the time.”

The People’s Vote campaign also published analysis showing it would take on average over 6 years before the Government’s wish-list free trade agreements with the United States, China, India, Australia, New Zealand, Mercosur (South American trade bloc), Malaysia, Brunei and the Gulf Corporation Council could all come into force, assuming they could all be negotiated simultaneously. This doesn’t even take into account that the UK’s most important trade negotiation would be with the EU27.

Earlier this week the Foreign Affairs committee reported that there were only 90 staff (against a target of 240) trained to “expert level” on trade negotiations in the Foreign Office, meaning that the UK may not have the capacity to even negotiate a deal with the EU.

These were all countries or trade blocs which were cited in the Government’s economic analysis on Brexit published on 28 November 2018, where the Government modelled their Brexit analysis on a claim that successful negotiations with all these trading areas would have been completed. Research by the People’s Vote campaign has calculated the average length of time it takes for each of these countries or organisations to secure free trade agreements, from the beginning of negotiations through to them coming into force:

  • The Gulf Corporation Council takes on average 12 years.
  • Mercosur takes on average 8 years.
  • India takes on average 7 years and 4 months.
  • Malaysia takes on average 6 years and 5 months.
  • China takes on average 6 years and 3 months.
  • Australia takes on average 5 years and 4 months.
  • New Zealand takes on average 4 years and 8 months.
  • Brunei takes on average 4 years and 7 months.
  • The United States takes on average 3 years and 10 months.

Calculated as an average this comes to 6 years 3 months, if the Government sought to negotiate with of each these countries simultaneously, beginning in March 2019. Worse still for the Government, not a single one of these trade agreements would be in force by the end of the transition agreement of December 2020 or even by the maximum limit of an extension of transition by December 2022 (assuming trade talks start on 30 March 2019).

This also doesn’t take into account that the UK’s most important trade negotiation would actually be with the EU27, where in comments made on Thursday, the former Permanent Secretary at the Department for International Trade, Martin Donnelly, hinted that it could easily take more than 7 years for the UK to negotiate this agreement.

There is also the issue with the fact that the Government itself admit that when it comes to training up staff to the relevant level, they are not hitting their own targets, with a recent report by the Foreign Affairs Select Committee, showing that the Foreign & Commonwealth Office having only reached 37% of the target for expert trained negotiators by the end of March next year, when the UK is scheduled to leave the EU.   

Additionally, as the Government itself has acknowledged, leaving the EU will lead to a lower GDP of 3.9% compared to what it would have been had we stayed in the EU (modelled from 15 years after the new UK-EU deal coming into effect), even if these trade deals come on stream.

/ends

 

Notes to Editors

 

  • See the link below for a full breakdown of all free trade agreements negotiated by the United States, China, India, Australia, New Zealand, Mercosur, Malaysia, Brunei and the Gulf Corporation Council. This shows the average length of time it takes for each country to secure free trade agreements, from the beginning of negotiations through to them coming into force. If negotiations were ongoing as of 29 November 2018, or if they were complete but the agreement is yet to come into force, we have assumed 29 November as the implementation date.
  • There is no reason to believe that the UK’s negotiations with any of these countries will be abnormally swift. A quick deal with the US would mean Britain has capitulated and allowed American food and health companies full access to the UK market, including for products like chlorinated chicken and hormone beef, while achieving little penetration into the US market for Britain’s financial and other services industries. 
  • In the case of India, to get trade talks started the UK would need to agree to grant more visas for India workers, something the UK government blocked in the EU-India FTA talks.
  • China, meanwhile, is deeply protective of its services sector. In return for any kind of trade deal, Beijing would likely want Britain to advocate for it to be granted “market economy status” at the World Trade Organisation.
  • Both the Gulf Corporation Council as well as Mercosur are exceptionally slow at negotiating free trade agreements and it is fanciful at best to assume that an FTA with the Gulf Corporation Council would actually be deep or in any way comprehensive.
  • In the Government’s Brexit economic analysis published on 28 November 2018, the Government stated the following: “For the purposes of EU exit modelling, the UK is assumed to pursue successful trade negotiations with the United States, Australia, New Zealand, Malaysia, Brunei, China, India, Mercosur (Brazil, Argentina, Paraguay and Uruguay) and the Gulf-Cooperation Council (UAE, Saudi Arabia, Oman, Qatar, Kuwait and Bahrain).”https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/759762/28_November_EU_Exit_-_Long-term_economic_analysis.pdf (p.22)
  • Not a single trade deal with any of these countries would be in force by the end of the transition agreement or even by the maximum end point of the extension limit of transition (31 December 2022), assuming that negotiations do not get going for real until 30 March 2019.  Article 132 of the withdrawal agreement states that “Notwithstanding Article 126, the Joint Committee may, before 1 July 2020, adopt a single decision extending the transition period for up to one or two years.” https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/759019/25_November_Agreement_on_the_withdrawal_of_the_United_Kingdom_of_Great_Britain_and_Northern_Ireland_from_the_European_Union_and_the_European_Atomic_Energy_Community.pdf
  • According to the Government Brexit analysis from 28 November 2018, UK GDP would be 3.9% smaller in comparison with a scenario of where we would stay in the EU modelled from 15 years after the new UK-EU deal coming into effect) and this scenario assumed successful trade negotiations with all the countries modelled https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/759762/28_November_EU_Exit_-_Long-term_economic_analysis.pdf
  • The former Permanent Secretary at the Department for International Trade, Martin Donnelly, was quoted in Thursday in Dublin as warning “it may take more than seven years for the U.K. to negotiate a bespoke trade agreement with the EU.”https://www.bloomberg.com/news/articles/2018-11-30/brexit-trade-aims-fantasy-u-k-s-former-trade-chief-says
  • In a report by the Foreign Affairs Select Committee of 28 November titled “Delivering Global Britain: FCO Skills”, it was noted that despite the Foreign and Commonwealth Office’s target of having 240 staff trained to “expert level” in trade policy and negotiations by March 2019 so far, only 90 staff had reached this level. Jon Benjamin, the Head of the Diplomatic Academy, was quoted as saying that the training targets in this field were “challenging”. https://publications.parliament.uk/pa/cm201719/cmselect/cmfaff/1254/1254.pdf   

    For full details of the time taken to negotiate please see this link: https://bit.ly/2QrEQND