Dick Cunningham is the Senior International Trade Partner in the Washington, DC, office of Steptoe & Johnson. Brexit may be new to him. It is evolving and new to everyone, but the UK and trade are not new topics for Dick Cunningham. He has been working on issues affecting UK trade for more than 40 years. Last Wednesday, November 16th, Mr. Cunningham kicked off GBD's new series on Brexit, a series that is being cosponsored by Steptoe and Johnson. Not long before that, Mr. Cunningham was in London, talking to officials of the new Department of International Trade (DIT) and others about the process of implementing the results of the UK's June 23 referendum on Britain's membership in the EU.
One of the many issues - or rather, sets of issues - facing the UK has to do with the future of their trade with countries that have free-trade agreements with the European Union. Currently, those agreements cover the UK's trade with those same countries, but they won't once the UK leaves the EU. Today's quote was part of what Mr. Cunningham had to say on that topic. Here is a bit more:
"There are by my count sixty EU free trade agreements, of which the UK is now a party because it's a member of the EU. And in March 2019, assuming everything goes in that way, the UK will not be a party to those unless it has done some negotiations to put in line - they can't obviously sign a free-trade agreement until they have become officially out of the EU. Their position is that they can go ahead and negotiate. They've started preliminary talks with Australia and a couple of other countries.
"The EU opposes that. The EU says, you have no power to negotiate, even to talk. One of the people on the DIT team said, "Well, I guess if they don't like what we're doing, they can throw us out of the EU." [That] actually shows a certain hard Brexit mentality, even among the DIT people who are basically not anti-Europe, but they are hard Brexit and in favor of the basic message of Ms. May."
Mr. Cunningham's observations about the UK's dealings with countries outside the EU went far beyond their procedural differences with Brussels. Having noted that Prime Minister May wants the UK to be a "beacon of trade liberalization and open markets," he used the Q-and-A session to highlight two challenges in particular that the UK will face when the time comes to negotiate deals around the world. One of those is
sequencing, deciding the order in which those agreements should be negotiated, and the other is
upgrading and the fact that many in the UK business community will want to see agreements that go well beyond what is contained in the 55 or 60 free-trade agreements that the EU has already concluded.
Regarding sequencing, Mr. Cunningham mentioned his experience earlier advising the Korean government as they negotiated a series of FTAs. One problem the Koreans encountered, he said, was that relatively minor concessions given to relative minor trading partners took on new and problematic importance when larger trading partners demanded the same thing, asking, "Why can't you give us the same deal you gave country x?"
More Modern Agreements. Mr. Cunningham explained that:
"The UK business community absolutely, absolutely wants free-trade agreements that are like TPP, TTIP, KORUS, KOREA-EU, the ones that go behind the border, the ones that do a lot more in services, the ones that do a lot more in investment, the ones that do a lot more in intellectual property. And most of the EU's free-trade agreements are not of that ilk, because they are older, last generation, free-trade agreements. So there are going to be major pressures to do different types of free-trade agreements with different types of issues, with different prioritization questions, and different sequencing questions."