BREXIT - All for one and one for all...not
The UK Prime Minister, Theresa May, has repeatedly stated that she will act in the interests of everyone in the United Kingdom in relation to the UK's Brexit negotiations with the EU. There are calls, particularly from certain tabloid newspapers, to "all stand together behind Ms. May". These words of unity have the same tone that has been used in times of hardship or sadness for the nation - the death of Princess Diana, the recent terrorist attack on the steps of the Houses of Parliament, the blitz bombing campaign in World War II. These are fine words but in relation to Brexit, they are misplaced.
Ms. May has two deals to strike, first, the terms upon which the United Kingdom will leave the EU. Second, the terms of the future relationship between the United Kingdom and the EU, assuming that the United Kingdom does not default to no relationship beyond the baseline of the WTO rules. This second negotiation is the most important, because this trade deal will affect the UK economy, its businesses and people for the foreseeable future.
The challenge to unity for the British is that a trade deal can never be equally in everyone's interests. There will be some who win more than others; there will be some who win and some who lose. The reason for this is the process for the negotiations and the purpose of a trade deal.
The process is to divide the economy into sectors, for example the automotive sector. In relation to each the parties negotiate the terms of access and the duties, if any, applicable on the one hand to the export to the EU of UK produced vehicles and, on the other hand, the export to the United Kingdom of EU produced vehicles. Naturally, each side will be looking for the best possible deal and will have in mind their self-interests. UK automotive producers, for example, will not have in mind the consequences of their deal on UK farmers. If they agree to abide by future EU rules on product testing and safety, they do not think about whether such an outcome - if carried across to the agricultural sector - would be of help or hindrance to UK farmers.
The role of seeking the best interests for all UK stakeholders will be with the UK government and the increasingly large number of bureaucrats being employed by the government to negotiate the trade deal. The practical challenge faced by all trade negotiators is that it is not humanly possible to take account of all potential interests when negotiating a particular sector. Indeed, it is the very complexity inherent in trade negotiations that has led to them being negotiated sector by sector, so breaking down the complex issues into manageable parts, before bringing them all together and cutting any last minute deals.
This difference of self-interests is by force of economics and politics accentuated by the governments negotiating the trade deal. The UK government must pay more attention and take better care of those economic sectors that are more important to the UK economy. The automotive sector is a significant contributor to the UK economy and, thus, the government will want the best deal possible. It may be prepared to make concessions (some people lose) to get the best deal. Unfortunately for British farmers, they are no where near the top of the list of economically important sectors - the gross value added of the whole of the UK agricultural sector is only about 7% that of the financial and business services sector.
Like the United Kingdom, the EU will seek to present a unified position, but as the trade agreement must be agreed by each of the other 27 Member States, again each country will seek to promote its self-interest, by wishing the best possible access to the UK market for its exporters, whilst resisting opening up its markets to UK exports. Malta doesn't produce cars so has little if any interest in that sector. It does have a financial services sector that is small but growing. It may be willing to give access to its market to UK vehicle producers, but be unwilling to do so for the UK's financial services sector.
The advice to UK businesses is that they need to be organized to communicate to the UK government, in the strongest possible terms, their preferred outcome. Industry bodies will be best placed to represent the interests of a business sector. As well as promoting the business case, political influence will also be relevant. The UK agricultural sector has in the past been able to exert influence beyond its economic standing, for example, by emphasizing the role of farmers as guardians of the countryside, and by reference to the deep cultural identity that many British people have with the countryside.
Whilst the photo-shot opportunities will no doubt arise, showing a unified cabinet of ministers supporting Ms. May, when it comes to the real possibility of a factory closing in the constituency of one of the ministers, the minister's attention will focus on what is important and where support should be given. So, all for one and one for all, except when it counts.