On Global Trade & Investment
Published By:
The Global Business Dialogue, Inc.
Washington, DC Tel: 202-559-9316
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TUESDAY, JANUARY 21, 2020
Click
HERE
for the January 15 quote from a Tokyo shopper.
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STANDARDS AND THE FUTURE OF UK-EU TRADE
"Japan sells cars to the EU but they don't follow EU rules."
Sajid Javid
January 17, 2019
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Sajid Javid
is the UK’s Chancellor of the Exchequer, and last Friday, in London’s Pickles Café, he sat down with reporters from The Financial Times. Today’s featured quote is from the write-up of that interview. The entire article is well worth reading, but for us two paragraphs in particular stood out. Right at the beginning of their article, the authors –
Roula Khalaf, George Parker,
and
Chris Giles
– wrote:
“Mr. Javid quashed any prospect of the Treasury lending its support to big manufacturing sectors – which include cars, aerospace, pharmaceuticals, and food and drink – that favor alignment with EU regulations.”
They then quoted
Mr. Javid saying
:
“There will not be alignment, we will not be a ruletaker, we will not be in the single market, and we will not be in the customs union – and we will do this by the end of the year.”
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We are still operating on the assumption that the United Kingdom will leave the EU on the 31st of January, that on February 1st it will be out. That is only a week and a half away; yet still there are questions. The House of Lords having rejected key elements of the withdrawal agreement, their amendments now need to be considered again by the House of Commons. Doubtless the experts are right and these objections from the ennobled will not deter the process, but we live by the adage nothing is done until it’s done.
These musings are in no way meant as a criticism of Mr. Javid. His focus was on the next phase, that is, the negotiating of a trade agreement between the United Kingdom and the European Union. In that context, today’s featured quote and the more substantial one in the Context section fit together like two pieces of the same garment. For us, however, they provoke somewhat different responses.
When the Chancellor of the Exchequer says. “we will not be a ruletaker … we will not be in the customs union” he is clearly negotiating. That is not to say he is not serious. The difference between
a red line
and
a going-in position
is not always clear, and both are part of any negotiation. The larger point has to do with his intended audience. It is not just the EU. His negotiating target isn’t only the Brussels bureaucracy. It is British business, especially big business in Britain. As proud as business leaders are of their ability to adapt, they are fierce defenders of the status quo, especially the status quo that represents their current arrangements and methods of doing business. That includes, of course, the regulatory environment in which they operate. And so the Chancellor is telling them, things are going to change.
As for today’s featured quote with its focus on Japanese car imports into the EU, it raises another question.
Is it really the case that the EU will demand more from the UK than it has settled for in agreements with, for example, Japan and Canada?
At the moment, the answer appears to be clearly, “yes,” they will. That could change over time, but whether it changes or not, the question itself creates difficulties.
Consider for example the EU’s pending agreement with Mercosur, the Latin American bloc that includes Argentina, Brazil, Paraguay, and Uruguay. The negotiations are essentially complete, but the EU member states will have to sign off before the agreement can go into effect. Belgium, for example, or more specifically Wallonia, has signaled it intends to object. According to The Independent, the Minister-President of Wallonia,
Elio Di Rupo,
has said that Wallonia “would not accept the EU-Mercosur deal unless South American producers were made to sign up to EU rules.” The rules he is concerned about relate to food, especially beef. That is a subject for another day. The point here is simply that things are likely to become increasingly complicated as the EU tries to create and maintain different standards for FTAs with different partners.
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Beyond Brexit and the Future of UK-US Trade
is the topic for the next GBD colloquium. The title link will take you to the announcement for this session, including the list of speakers and registration options. Sign up today. It would be great to see you on the 28th.
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Pickles
is the page for this restaurant on Trip Advisor
The Lords Object
takes you to one of several articles on the House of Lords’ amendments to the UK’s withdrawal bill.
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©2020 The Global Business Dialogue, Inc.
1717 Pennsylvania Ave., NW, Suite 1025
Washington, DC 20006
Tel: (202) 559=9316
R. K. Morris, Editor
Joanne Thornton, Associate Editor
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