UK is vulnerable to exploitation in trade-deal haste, diplomat says
9th September 2016. By Matthew Holehouse
The UK’s prospective trade partners will seek to “extract flesh” as they exploit London’s ambition to strike fast deals post-Brexit, Singapore’s ambassador-at-large has warned.
Theresa May’s new administration has stressed the speed and volume at which it hopes to secure bilateral trade agreements after leaving the EU, naming Australia, Singapore, South Korea, Mexico and India as potential early matches.
But policymakers have said little about the terms on which those accords will be struck, or the risks that hasty pacts conducted by inexperienced negotiators pose to British producers and manufacturers.
“Let’s say, India: any trade negotiator worth his salt will say, ‘Ah ha! They need this more than I need it. How much flesh can I extract?’,” said Bilahari Kausikan. “It’s not a good situation.”
Kausikan, in an address today to the Policy Exchange think tank in London, stressed that no deal can be contemplated until the UK has settled its new tariff schedule at the World Trade Organization and finalized a bilateral deal with the EU.
That agreement must balance a wish to maintain trade links with the need to be punitive to discourage other states from “having evil thoughts,” he said.
“Of course, everyone would want to have a free-trade agreement with post-Brexit UK,” he said. “The devil’s in the details.”
David Cameron’s decision to “gamble” with Britain’s future “for reasons of partisan advantage” has cast doubts over all of Europe’s reliability as a trade partner, Kausikan added.
“What is ultimately at stake is credibility,” he said. “You must expect that what the EU and Britain say, and the commitments you make will henceforth — not forever, but for some time, how long no one knows — [will] be received with something more than the usual skepticism that infuses all interstate relations.”
Investment decisions in the UK are being reconsidered or suspended while the UK’s future relationship with the EU is decided.
“That you do not seem to be in a hurry adds to the uncertainties,” Kausikan said. “While I understand it is still early days, I would respectfully urge you to get your thumb out, and give your economic partners at least some idea of where you are headed.”
Kausikan said he was speaking in a personal capacity. But public rebukes from previously discreet partners will be an uncomfortable post-Brexit culture shock for British officials.
Kausikan previously served as the permanent secretary in the Singapore Ministry of Foreign Affairs. He also served as the country’s permanent representative to the United Nations and as ambassador to Russia.
He hinted that the Brexit affair had vindicated Singapore’s authoritarian model that prizes political stability and national sovereignty.
It was understandable, he said, that British voters had rejected the “absurd” and “arrogant” European project. “The idea of creating a post-nationalist European was as delusional as the Soviet Union’s idea of creating a new socialist man.”
At the same time, he said, the Brexit vote “has given democracy a bad name.”
“I do not say this out of mere schadenfreude, although having been subjected to innumerable lectures from European leaders on democracy I will admit to a tad of it,” he added.
Complete this form to receive emails from MLex with selected highlights from our global coverage of regulatory risk and opportunity, as well as upcoming events, special reports and exclusive interviews.