The government is ardently pursuing bilateral deals with the subcontinent and other non-EU countries – but why not just do business with our neighbours?
I still recall the stinging rebuffs I received as a teenager pursuing some beautiful young woman with whom I was besotted: “Can’t you take a hint?” The British government is similarly failing to take the hint that the Indian authorities are not going to succumb to ardent wooing for a bilateral trade deal. A few months ago Theresa May was despatched from Delhi in a rather humiliating manner, and either the message has not yet reached the Treasury or the PM wants to see her chancellor sent packing in a similar way.
Throughout the coalition government, great efforts were made to open up the Indian market to British exports and, at the same time, to secure an EU-India trade agreement similar to the one negotiated with Korea. In his first major overseas visit, David Cameron took me, several other cabinet ministers and a trade delegation. I went four times in all. The Indians were unfailingly polite and perhaps flattered by the attention. But British exports remained a pathetically small share of Indian imports.
In addition, the trade agreement made no progress for reasons which had little to do with the rest of the EU and a lot to do with Britain. The British were pressing for better access for banking and other services but – thanks to May at the Home Office – maintained a consistently restrictive and negative approach to visas for Indian visitors and overseas students. India’s modest request under what is called Mode 4 relating to visas for IT specialists was firmly rebuffed. The message to India that “we want your money but we don’t want your people” was, to say the least, not a great pitch.
And post-Brexit, the pitch has remained the same but has become increasingly desperate, a point the Indians haven’t been slow to notice.
More generally, the government’s post-Brexit obsession with non-EU bilateral trade deals represents a touchingly naive faith in what can be accomplished through trade diplomacy to offset the certain losses which will come from raising trade barriers against our own exporters by withdrawing from the EU single market and customs union. After Brexit, we shall face tariff and non-tariff barriers which previously did not exist, not just in the 27 countries of the EU but the 50-odd countries of Africa, the Caribbean, Pacific, the Mediterranean region and elsewhere with countries that the EU currently has preferential arrangements with.
The government’s hope appears to be that other countries of significance – the US, China, India, Japan, Australia – will agree to reduce their trade barriers to UK exporters of goods and services to such an extent as to offset, and more, the self-inflicted losses in Europe.
This has even led Liam Fox to the Philippines, where he is seeking a trade deal from its leader Rodrigo Duterte. When our trade minister is reduced to soliciting trade deals from a man whose main claim to fame is, allegedly, organising death squads, you understand how desperate the government really is.
The one serious argument for believing that progress may be possible is that there are some sectors, notably temperate and tropical agriculture, where EU, non-UK, vested interests have stood in the way of a wider multilateral agreement in the WTO or bilaterally. But that has to be weighed against the far greater bargaining power of the EU as against the UK acting alone and the simple, practical, point that it is easier to trade with neighbours than countries on the other side of the world.
For reasons I have already given, India will play hard to get. China may see advantage in “divide and rule” in its dealings with the west, reversing its own historical experience. The UK may provide a useful foil in undermining the EU 27 and the US on issues like China’s recognition as a “market economy”.
But the areas where there is potential for closer links with China – infrastructure investment in the UK, creative industries, use of the City for renminbi trades – do not require a bilateral trade agreement. Japan is deeply discomfited by Brexit, having hitherto seen the UK as a platform for its companies to export to the EU. And it isn’t at all clear why the difficult barriers of language and business culture, which inhibit exports to Japan, will yield to a British trade offensive when they haven’t before.
The Home Office message to India that “we want your money but don’t want your people” was not a great pitch.
Then there is what is rather archly called the Anglosphere: the handful of countries where people sound like us Brits. No doubt, Australian and New Zealand farmers would welcome an opportunity to reverse the barriers thrown up against them 40 years ago. But that, and a dwindling pool of colonial sentiment, don’t take us very far.
These countries have long since adapted to regional markets dominated by the US and China and British exporters will find them in no hurry to revert to our product and process standards, long since abandoned. Canada has only just reached, painfully, a bilateral agreement with the EU and has absolutely no intention of tearing it up to do more with the UK.
That leaves Trump’s America. A lot hangs on keeping the president’s attention for several years on what is, for him, a peripheral issue. ; on his ability to steer a deal through Congress (and a less friendly Congress in two years’ time); on successful attempts to neutralise the influence of “economic nationalists” like Steve Bannon, who will have noticed that the UK runs a trade surplus with the US; and on UK negotiators being more successful than anyone else’s in finding a way through a morass of state-level, non-tariff barriers and buy-America preferences. Come to think of it, why not maintain the relationship with our neighbours instead?