Global trade deals can’t substitute for a good Brexit deal
This week the think tank OpenEurope published a report with recommendations for Britain’s future trade after it leaves the EU.
It suggests that Britain may be able to make up much of its shortfall in trade resulting from leaving the EU by strengthening its trade, particularly in services, with countries like India, Canada, Israel and China.
However this majorly underestimates the costs both to the economy and to workers of leaving the EU single market while it fails to take into account the threats to public services that come from the kind of global liberalisation of services it recommends for Britain post-Brexit.
The EU single market matters – for trade and rights
Controversially the OpenEurope claims ‘the UK’s services exports do not benefit from EU membership.’ I can’t see how this claim can be supported. Trade in services contributes most to our economy and the EU is one of our most important markets for our services. About a third of our services are traded in the EU. NIESR estimates it contributes 2.6% to our economy each year.
Our significant trade in services with EU countries has been facilitated by the common framework of regulations and standards between EU countries that is involved in single market membership. These rules mean that, for example, a legal firm can establish itself in another EU country without additional registration. It also means that the staff in that legal firm have the right to be treated with the same rights in one EU country as in another.
The same is true of trade in goods between EU countries. Not only has free trade in goods been enabled by the lack of tariffs between EU countries, but the common standards countries must uphold on areas such as workers rights, prevents countries undercutting each other and enabling a level playing field.
The TUC has highlighted that it is essential for the UK government to ensure that any Brexit deal guarantees that UK law will continue to uphold the same high levels of rights for workers as those found in the EU.
In addition the deal should ensure there continues to be barrier and tariff free trade in goods and services with the EU which is crucial for jobs and our economy.
Many, such as trade experts at UKTPO, have highlighted how difficult it would be for the UK to negotiate a similar level of barrier free trade in services with non-EU countries. This is partly due to the vastly different regulations non-EU countries have around standards, both technical, but also on social and employment rights.
In China – one of the countries OpenBritain suggests could be a potential partner for future UK deals – not only are products produced to a lower level of safety specifications but labour standards are also not upheld. Workers have no right to join independent trade unions and labour rights campaigners are frequently jailed.
Of course the UK should seek to build trade relationships with non-EU countries after Brexit but this must be in addition to, rather than a substitute for a deal with the EU, either for jobs or rights. And all Britain’s trade deals must ensure workers rights are protected and extended, both here and abroad.
Public services under threat
There are also dangers in OpenEurope’s suggestion that the UK government turning away from the EU single market and pushing for global liberalisation of service markets.
The TUC, like unions internationally, have campaigned to raise awareness of the dangers of agreements like the Trade in Services Agreement (or TiSA) which involve the EU. This deal seeks to liberalise trade in services around the world, however, the way it seeks to do so is by bringing down important protections for public services that would increase privatisation, while they make no reference for respect for workers’ rights.
For unions, rather than rush to negotiate trade deals with partners that don’t respect workers’ rights or pursue liberalisation drives in service markets across the world, UK trade policy should focus on reaching the best deal for workers with the EU and an industrial strategy that empowers the workforce, funds skills and addresses regional inequalities.