A blueprint for Brexit

UK prime minister Theresa May has shared her ambition to reach out beyond Europe to build new trading relationships following Britain’s exit from the European Union as part of plans to create a “truly global Britain”, in a speech at Lancaster House, Westminster, this week.

Mrs May confirmed to an audience of EU ambassadors that Britain will leave the EU’s single market and withdraw from the principle of free movement, but intends for the UK to remain close to its “friends and allies” in the continent.

But she added: “What I am proposing cannot mean membership of the single market. Instead we seek the greatest possible access to it through a new comprehensive, bold and ambitious free trade agreement. That agreement may take in elements of current single-market arrangements in certain areas.”

She said that Britain will seek a new and equal partnership between an independent, self-governing, global Britain and the EU, as part of efforts to ensure Brexit leads to tariff-free trade and “the freest possible trade in goods and services between Britain and the EU’s member states”.

Mrs May continued that Britain will not seek to adopt a model already enjoyed by other countries, nor does it seek to hold on to “bits of membership” as it leaves. This includes continued membership of the EU’s customs union, which sets out common tariffs with partners outside the EU.

Instead, Mrs May wants the UK to strike deals with partners outside the EU, something that European institutions do on behalf of their member states.

She noted that the new US president Donald Trump has said that the UK isn’t at the back of the line for a trade deal, suggesting that she would be looking for a trade partnership with America – the largest economy in the world.

Short on details

Unfortunately, Mrs May’s speech hasn’t been met with the same level of optimism with which she delivered it by the trade sector. The British International Freight Association (BIFA) has criticised Mrs May’s speech, saying that while it delivered some clarity on the UK’s plans to leave the European Union’s single market, it remained short on the details that will assist its members as they go about their business of managing much of the UK’s visible international trade.

“Our members across the country over the last few months have been dealing with a lot of uncertainty,” says Robert Keen, director general of BIFA, the representative body for UK freight forwarding companies. “They would have welcomed clarity on the mechanics that will underpin Mrs May’s desire for ‘tariff-free and frictionless trade’.”

Following Mrs May’s speech, BIFA hopes that the government has “a fundamental understanding of all of the possible permutations and challenges in regards to our future trading relationships with Europe and the rest of the world”, post membership of the EU.

“Freight forwarding executives are none the wiser on the actual mechanics of Britain’s future trading relationships and how they might affect the freight forwarding sector. Will Customs reintroduce EU transaction border controls? How will controls on dual use items be managed?

“Mrs May has made reference to maintaining the common travel arrangements between the UK and the Republic of Ireland, but how will freight be managed between the two countries?

“What our members need from Government is some answers to those questions. As the old saying goes, the devil is in the details. And after [the] much anticipated speech, much of the real detail is missing.”

Meanwhile, Charlotte Kirk, director of British insurance company ITIC, told Baltic Briefing that despite Mrs May’s speech, ITIC remains concerned about the provision of insurance services in Europe when the UK is no longer part of the European Union.

“As such, we will ensure that ITIC is correctly geographically located so as to be able to continue to offer the cover and services to its longstanding loyal members within the EU,” she added.

Unity trumps trade

Following her speech, the UK’s secretary of state for Foreign Affairs Boris Johnson said that foreign countries are “queuing up” to strike trade deals with the UK once it leaves the EU. One country that is keen to hold off on any negotiations with Britain until it formally triggers Article 50, however, is Germany.  

Although German foreign minister Frank-Walter Steinmeier reacted positively to Mrs May’s speech, he reiterated his country’s position that negotiations could only begin once the UK formally triggers Article 50.

“It’s in the interests of Germany and Europe to strengthen the cohesion of the European Union of 27 members, and to protect the unity of the European’s single market,” he said in a statement following Mrs May’s speech.

Chancellor of Germany Angela Merkel has also warned Germany’s business leaders to fall into line behind Berlin on Brexit, saying that allowing Britain a bespoke trade pass to the EU risks bringing down the trading bloc.

In other words, the principle of European unity, in particular the freedom of movement, appears to be more valuable to Germany than the €89bn worth of goods and services the country sells to Britain annually.

Should Mrs May’s plans for Brexit fall flat, Downing Street has confirmed that it is working on a Brexit Plan B, although it is unclear what this secondary plan would entail.