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Even though the United Kingdom officially left the European Union on 31 January 2020, negotiations regarding the future relationship between the two parties are still ongoing. Many points related to trade issues still have to be agreed upon: while both EU chief negotiator Michel Barnier and cabinet minister Michael Gove have expressed optimism regarding the progress of the talks, major disagreements are present with respect to how close the relationship between the two economic powers should be. For instance, European Commission President Ursula Von Der Leyen has explicitly stated that the UK will have to face a trade-off between maintaining a close partnership with the continental bloc and more policy autonomy. 

Another major challenge for the future of UK trade policy is represented by the preferential agreement with the US currently under consideration. A document published by the Office of the United States Trade Representatives in February 2019 highlights the presence of very strong demands from the American side concerning technical standards harmonisation, regulatory practices and intellectual property rights. Furthermore, US President Donald Trump’s recent remarks on the UK Government’s decision not to completely exclude Chinese telecommunications giant Huawei from its 5G network infrastructure has further stressed transatlantic relations. On top of these fundamental challenges, the UK will have to face several obstacles in pursuing new preferential trade agreements with third countries now that it is no longer part of the European Single Market.

Given these current developments, what will a post-Brexit trade policy strategy look like? To answer this question, the British Government will have to consider not only the commitments previously made in the wake of the 2016 referendum but also all the stakes involved. The UK is currently facing a trilemma. 

First, as reiterated multiple times by Prime Minister Boris Johnson, Brexit will have to honour the original promises of newfound political independence, meaning that any future agreement will necessarily have to be not excessively bound to pre-existing commitments and to EU legislation. 

Second, the British Government will have to take into account the needs and interests of business in order not to cause too much disruption to their operations and to avoid losses in efficiency and competitiveness. 

Thirdly, and possibly most importantly, ensuring that the UK will gain or, at least, not lose political leverage vis-à-vis its trading partners must be a fundamental objective for any sort of future trade policy strategy. 

Business associations and interest groups have already made their voice heard concerning the objectives policy makers will need to pursue. A position paper recently published by the Confederation of British Industry (CBI) gives us a clear view of what the demands of British business are. For instance, they stress the importance of ensuring that no tariffs are applied to UK-EU goods, of regulatory cooperation on testing and compliance, and of minimising the burden of customs documentation, among others. 

Similar sentiments are echoed by The Society of Motor Manufacturers and Traders (SMMT), which represents a significant share of the manufacturing sector, demanding that  tariff-free trade between the UK and the EU is guaranteed for the automotive industry and advocating for freedom of movement of staff employed in production facilities. The financial and banking sector, represented by the British Bankers’ Association (BBA), prioritises re-establishing framework arrangements previously present in other EU legal frameworks (e.g. data protection) and establishing new ambitious free trade agreements with third countries. 

Some of these demands are potentially incompatible with the Government’s willingness to strike a CETA-like deal with the EU, which would instead be more in line with Brexit’s promises. Moreover, the idea of signing new agreements with third countries, although favoured by both Westminster and business groups, may present several political and geopolitical challenges as shown by the recent developments in the UK-US relations, which in turn may paradoxically undermine the UK’s pursuit of political independence.

In conclusion, the British Government will have to play their cards right in order to design a successful post-Brexit trade policy. Finding the right balance between the three broad objectives highlighted above will be no easy task. It is of vital importance that Westminster carefully evaluates the costs and the benefits of every option on the table to ensure that the UK maintains a competitive position in the global market and that business will not suffer any negative short and medium-term consequence.

Marco is currently undertaking work experience at Bright Blue. Views expressed in this article are those of the author, not necessarily those of Bright Blue.