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Britain’s trade honeymoon is over

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LONDON — Forget the flag-waving Instagram posts — Britain’s post-Brexit trading dreams are coming back down to earth.

The country’s much-hyped deals with Australia and New Zealand are facing fresh scrutiny over their impact on farmers, and the U.K.’s most senior trade official — once the darling of the conservative right — has been the subject of an extraordinary attack from a top Tory.

It comes amid slower-than-expected progress on a longed-for trade pact with India, a deal with the United States still stuck in limbo, and as hopes fade that the U.K. will be able to join a key pacific trade bloc this year.

The days of optimistic deadlines, quick wins and colorful social media output from trade secretaries are becoming a distant memory.

“There was a honeymoon period for U.K. trade,” said David Henig, director of the European Centre For International Political Economy. “Now we’re out of that honeymoon period, and things are getting a lot tougher.”

As the finer details of the U.K.’s agreements receive mainstream attention, British politics is coming to grips with what an independent free-trade policy actually entails: winners and losers, controversies, and interdepartmental wrangling.

Trade requires compromise

Forging an independent trade policy was one of the big selling points of leaving the European Union.

The U.K. quickly got to work, building a dedicated Department for International Trade (DIT) from scratch, recruiting a highly regarded trade expert in the shape of Kiwi Crawford Falconer to help formulate a negotiating team, and entering talks with Commonwealth allies.

In rapid time, the U.K. rolled over a host of agreements it had as an EU member, then secured from-scratch free-trade agreements, first with Australia, then New Zealand, as it raced to showcase a Brexit dividend.

Amid the headlines, however, were signs of unrest in U.K. agriculture about the terms of the deals, which see tariffs on beef and sheepmeat phased out and quotas on the quantities the nations can send to Britain rocket. British farmers, who believe the government liberalized unnecessarily far, fear an influx of cheaper produce with little to benefit them in return.

The U.K. insists the deals’ in-built safeguards offer protection, while others dispute the notion that Britain could be flooded with Australian and Kiwi meat, arguing that in trade, geography matters.

Yet this month, well-known tensions between the U.K.’s farming and trade departments went public following an explosive intervention by the recently fired former Environment Secretary, George Eustice.

In an extraordinary House of Commons intervention, he decried the Australia agreement as “not actually a very good trade deal for the U.K.” Negotiators were, he claimed, put “on the back foot” by then-Trade Secretary Liz Truss demanding that the terms of the deal were agreed before a G7 meeting in June 2021.

A former government minister said it “does seem astonishing” that the farming community was “thrown under the bus” in the process. The same person also fears that the U.K. has set a precedent, with negotiating partners Mexico and Canada already among those calling for equivalent access to Britain’s agricultural market. “This has profound implications for trade deals in other parts of the world, which is actually why f*cking Liz Truss is such a f*cking imbecile,” they said.

“[Eustice is] right to say that we took things too quickly,” said Ben Ramanauskas, a special adviser to Truss at DIT, who said his boss and Boris Johnson set the G7 deadline to provide “a nice photo opportunity and a nice headline to show that Britain can do trade deals again.”

He added: “[Setting a] deadline was a mistake. There’s been a tendency to do that at DIT.”

But Ramanauskas believes Eustice was wrong on the substance — and bemoans a lack of sophistication in Britain’s trade debate. “They see it as a zero-sum game. They see imports as a bad thing,” he said of Eustice and other critics. “I think imports are fantastic for obvious reasons: lower prices for consumers and other businesses, more competition, thriving innovation.”

Rushed negotiations

Shanker Singham, a trade consultant and close adviser to several previous DIT ministers, said experts have a shared frustration at people’s “mercantilist view” of FTAs. “In other words, it’s all about exports, current producers, the large incumbent producers and what their interests are,” he said, rather than factoring in other stakeholders such as consumers and future industries.

Kathryn Watson, an expert in trade policy at the consultancy Flint Global, said reaching an agreement with a trading partner requires compromise on both sides. “Yes, the U.K. probably rushed negotiations due to self-imposed political deadlines to get some wins on the board post Brexit, but Australia and New Zealand had negotiating leverage beyond that,” she said, citing the U.K.’s proposed accession to a major Asia-Pacific trade bloc, of which Australia and New Zealand are members.

And James Manning, a former U.K. trade negotiator who worked on the Australia deal, argued FTAs are “invariably” a negotiated outcome, and “making concessions in areas of sensitivity can be needed to get them over the line.” “Given the importance of agricultural exports to both Australia and New Zealand, it’s hard to see how those deals would have happened if the U.K. hadn’t made market access commitments in those areas,” he said.

It wasn’t just Eustice’s critique of the Australia deal that gained attention. In excoriating remarks, the former Cabinet minister also called for Falconer, the interim permanent secretary at DIT, to be replaced by “somebody who understands British interests better than he has been able to.”

There’s little sympathy for Eustice’s comments among the U.K.’s trade observers, who argue blame was both wrongly attributed and out of line, given Falconer’s inability to respond as a civil servant. “I hope [Eustice] will see his way to apologizing for it because it was completely unfair,” said Singham, adding that Falconer’s international reputation “could not be more stellar.” Ramanauskas added: “I thought his comments about Crawford were mean-spirited and wrong.” Another former DIT special adviser noted responsibility ultimately falls on politicians’ shoulders, as “civil servants advise, ministers decide.”

A person close to Trade Secretary Kemi Badenoch said: “With more than 25 years’ experience, Crawford is acknowledged as one of the world’s leading experts on global free trade and is doing an exemplary job.”

Though many hold the charismatic Kiwi in high regard, Eustice’s attack was a far cry from the veneration Falconer received from Conservative MPs, including the influential Brexiteer faction, the European Research Group, when first appointed to DIT in 2017. “The right of the party and the ERG at the time worshipped him as some sort of god,” the second former DIT special adviser said.

And while there is no shortage of people who would defend Falconer, others believe that attacks on officials are par for the course in trade policy. “Whether it’s fair or not, trade isn’t fair. Trade policy isn’t fair,” Henig said, who noted that former U.K. chief Brexit negotiator Olly Robbins received his share of flak during the Brexit years. “Honestly, I think we just have to get used to that sort of stuff.”

On the friction between DEFRA and DIT, experts also insist flare-ups between trade policy and agriculture are typical for a free-trading nation — and show that the U.K. is now discovering what it really means to forge its own path. “There is always tension in trade negotiations between agricultural ministries and trade ministries, but they’re usually not resolved at the negotiating table,” said Singham.

The issue for some, however, is that DIT seems unprepared for the recent fallout. “The main criticism is that [Falconer’s] not battle-hardened the department,” Henig argued. “Trade is this controversial area, and the department just doesn’t feel geared up for that. It feels a bit complacent.”

A DIT spokesperson said the department had “led the charge to show the U.K.’s strengths as an independent trading nation.”

They pointed out that the government has signed trade deals with 71 countries as well as the EU since 2016, and removed hundreds of trade barriers. “We’re not stopping there,” the spokesperson added. “Our trade strategy is targeting ambitious deals with India, the Gulf, Canada, Mexico, Israel and the CPTPP in the Indo-Pacific, while also ensuring our deals are reciprocal and in the best interests of the British people and economy.”

‘Put the brakes on’

Prime Minister Rishi Sunak, himself a critic of the U.K.’s first post-Brexit deals, has signaled a change of tack on British trade policy. Opting to prioritize depth over speed, Sunak is avoiding setting deadlines for Britain’s negotiations, while his government is even considering revisiting Britain’s trading relationship with the EU as firms continue to grapple with barriers imposed by Brexit.

Locked in challenging talks with notoriously tough negotiating partners like India, and hoping to complete a complicated accession process to the Pacific bloc CPTPP, the U.K. is now going through a more typical experience for a free-trading nation after an initial bout of exuberance.

It’s sparked hope that the U.K. can a finally have a mature discussion on what it actually wants from its newfound freedoms — and with it face up to the realities of trade policy.

“Frankly, the level of interest in this has been absolutely negligible,” said the former government minister. “Hopefully, people will start paying attention to it. They really need to.”

Emilio Casalicchio contributed reporting.

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