Trade without complications?

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The European parliament session on Brexit this week was far from impressive.

The president of the European Commission, Jean Claude Juncker, was angry that only 30 MEPs thought listening to him was better than enjoying an early start to their summer break. That seems sensible, but his criticism of MEPs overlooks the fact that they are elected, while he is just a well paid civil servant.

His deputy, Frans Timmermans, struck a more humorous note. He likened the claims of one British MEP to the Black Knight in Monty Python’s Holy Grail. After King Arthur chops off his arms and legs the Black Knight will not give up and threatens to bite the King and bleed over him. The point of his story was that the MEP from the south of England, Raymond Finch from UKIP, had said access to the EU-27 market was not essential for the UK, since there was a world beyond Europe keen to do business.

Trade is in many ways the central issue of Brexit. Despite the rhetoric on both sides a key decision for the UK and EU-27 will be how much do they need to trade with each other. For agriculture that is an easy question to answer. For many commodities we need access to the EU-27, but it has even greater need to access the UK as a net food importer. Both sides need a market access deal, but wider politics than agriculture are being played out over trade. The worry is that decisions will be driven by politics rather than economics.

Many in government believe that if the price of free trade with the EU-27 is accepting free movement of people a hard Brexit, with no trade deal, would be the better option. However with the government’s wafer thin majority that may now be harder to deliver, given that the DUP do not want a hard border or to see agriculture suffer from Brexit. It is true that there is a big world out there with which the UK can trade after Brexit, but economic reality needs to come into that debate. The EU has already sown up trade deals with some of the key targets for the UK, most recently this week with Japan. As an EU member now the UK has access to all those markets, and will have until Brexit happens. Beyond then the challenge for the UK is to persuade those countries to take seriously a deal that gives them access to a market of 60 million people against 500 million plus in the EU.

It is often claimed that the UK could do a massive free trade deal with the countries of the Commonwealth. There are 52 countries in that group, but 31 are classed as small states, with populations below 1.5 million. For agriculture the key issue is which represent potential export partners, and prospects seem limited. Indeed some of the big countries are also big agricultural players. These include Canada, Australia and New Zealand which will be competitors when it comes to food, and which would have their sights set on supplying into the UK market rather than buying from it.

There are prospects for UK agriculture and food on global markets, but those are already there because of trade deals the EU has in place. Leaving the EU is not going to change that dramatically. Where there are new prospects they may well be for specialist rather than mainstream agricultural products. Indeed the former DEFRA minister, Andrea Leadsom, identified prospects as tea, jam and biscuits – none of which would do much for agriculture. On that basis ministers that favour a hard Brexit are wrong to hold out false hopes to the agriculture and food industries that there is untapped demand in the world that makes access to the EU-27 unimportant. That was the argument from the UKIP member of the European parliament who found himself likened to Monty Python’s Dark Knight.

Thomas Jefferson, one of the founding fathers of the United States who was its third president from 1801 to 1809 said about trade that the aim of government should be ‘peace, commerce and honest friendship with all nations – and entangling alliances with none’. This is what the government wants with the EU 27, but whether that is possible only time will tell. Indeed given the world’s history of trade disputes Jefferson’s hope for trade without complications was probably a vain one even then.