• Bryan

The UK Needs To Agree On A Comprehensive Trade Deal With The EU Soon

With Royal Assent given to the UK's EU withdrawal legislation, the government has now unveiled a new team to lead negotiations with the EU.

The 40-member team known as Taskforce Europe and led by David Frost, a diplomat, will report to Prime Minister Boris Johnson.

Boris Johnson wants to secure a new long term trade agreement with the EU by the end of the year, with negotiations expected to start in March.

The objective for the taskforce is a free trade agreement with the EU that eliminates all tariffs and quotas, while trying to retain current EU regulations, according to the Secretary of State for leaving the EU Stephen Barclay.

This idea of not diverging from current EU regulations seems a curious position, given that non-tariff barriers like regulations pose a fundamental challenge to agreeing on trade deals with other countries after the UK officially leaves the EU.  

There are critical regulatory standards that govern UK-EU trade such as food safety and the environmental requirements that countries like the US fundamentally disagree with. 

US food safety and environmental standards fall well short of what is acceptable in the EU or the UK. For instance, US chicken imports are banned because of the US practice of washing chicken in chlorine.

The EU has also banned the importation of beef products that come from animals treated with artificial growth hormones, which are administered to cattle in the US.

It is unclear how the UK government is going to address these significant differences with the US in order to agree the much-touted UK-US trade deal.

As the UK tries to navigate this entirely self-inflicted situation, confidence in the country is slowly eroding. A recent survey of 245 senior bankers and asset managers by consultants Duff and Phelps shows that London is now viewed less favourably as a financial hub.

New York has now moved further ahead of London in how participants in the survey perceive the city. Although this is just about sentiment, it is of concern that Asian financial centres like Hong Kong and Singapore are now not too far behind London.

With some institutions having relocated some of their personnel to continental Europe after Brexit, some of the survey participants believe that Frankfurt and Paris could eventually overtake London. The UK government needs to do all it can to restore confidence in London in particular, and the UK by resolving the uncertainty for businesses caused by Brexit. It is of critical importance that a comprehensive trade deal is agreed with the EU soon.


Click Here To Become A Member To understand and stay on top of all market themes and how to implement into trades.