The Japanese ambassador to the United Kingdom has slapped down premature celebrations of a Japan/EU trade deal, as Hungary admits it is the EU which stands to lose if it does not come to an agreement with Britain.
EU loyalists seized on an announcement that a deal had been agreed between the bloc and Japan, the world’s third-largest economy, as clear evidence that Brexit would be a step backwards on trade.
Speaking to BBC Radio 4, Ambassador Koji Tsuruoka stated that the EU – which is notoriously slow to negotiate trade agreements – had only agreed a deal in principle, and it could be years before one is actually finalised and brought into force.
He indicated that Britain, which unlike most other EU member-states does the lion’s share of its trade outside the bloc, had been a driving force in the negotiations, and that a bilateral deal on similar terms should be easy.
“Once UK is out, we will welcome bilateral deals with them,” he added – leaving open the possibility that Britain could actually end up concluding an agreement with Japan before Brussels.
Source: Commonwealth Exchange
EU member-states are not allowed to conduct an independent trade policy, meaning that Britain has been prevented from making deals with long-standing partners such as Australia and New Zealand by Continental governments who do not want to compete with Commonwealth producers.
This would change after Brexit, prompting EU leaders such as Hungarian Foreign Minister Péter Szijjártó to warn the bloc’s leadership in Brussels that failing to strike a deal with Britain could lead to a “nightmare scenario” in which Britain signs a raft of global agreements and leaves European producers at a competitive disadvantage.
“If there’s no deal, if there’s no comprehensive economic, trade and investment agreement, then we will be in big trouble in Europe, because the last time we were able to implement a free trade agreement was in 2011 with [South] Korea,” he explained.
“So the problem is the EU is very slow on free trade agreements, and if Britain gets free hands then you will be able to sign free trade agreements with India, with Turkey, with the U.S., with Australia, with which the European Union does not have free trade agreements.
“So, if this is the case, then it will harm our competitiveness, harm the competitiveness of Europeans furthermore … we want the most comprehensive economic trade and investment partnership with the UK in the future.”
U.S. President Donald Trump became the most powerful world leader to announce his intention to sign a “very big, very powerful” trade deal with Britain after Brexit at the G20 summit in Hamburg, Germany.
“We’ve had tremendous talks,” he said of his meeting with Prime Minister Theresa May at the summit.
“There is no country that could possibly be closer than our countries … We have been working on a trade deal which will be a very, very big deal, a very powerful deal, great for both countries, and I think we will have that done very, very quickly.”
Such a deal could have a hard impact on the EU in general and the Eurozone in particular, which depends on the United Kingdom as its largest export market.
Even with the EU having failed to negotiate a trade deal with the U.S., it is already Britain’s single largest trade partner, and roughly as large a market as the whole of the EU – minus the UK – combined.
Eurozone firms could be expected to lose market share to U.S. firms if Brussels adopts a belligerent attitude on UK/EU trade.
Leaving the EU without a deal would see Britain trading with the bloc under World Trade Organization (WTO) rules.
This would mean the introduction of some tariffs on British exports, which for the most part are very low and more than compensated for by the cheaper pound – although certain items such as food and cars would still face more significant charges.
Estimates indicate tariffs would total around £5.2 billion across all exporters but, crucially, tariffs on EU imports would raise a much larger £12.9 billion for the British government, thanks to a large trade deficit.
This means Britain would come out significantly ahead even in a ‘No Deal’ scenario, and able to amply compensate the exporters most impacted by tariffs through a combination of investments, subsidies, and general tax cuts which could well increase their overall competitiveness, without breaking WTO rules.