There is no simple path on Brexit trade negotiations

MARSEILLE // On both sides of the English Channel, businesses and political leaders face two years or more of uncertainty and complex negotiation as the process of British withdrawal from the European Union turns last week’s referendum result into reality. The most senior EU figures – the presidents of the European commission, council and parliament, […]

MARSEILLE // On both sides of the English Channel, businesses and political leaders face two years or more of uncertainty and complex negotiation as the process of British withdrawal from the European Union turns last week’s referendum result into reality.

The most senior EU figures – the presidents of the European commission, council and parliament, and under its rotating system the union itself – have swiftly ruled out any notion of renegotiation of the contentious concessions agreed in February.

That deal, secured by the prime minister, David Cameron, but fiercely criticised by pro-Brexit campaigners as offering few worthwhile or new concessions at all, “will not take effect and ceases to exist”, they say.

For them, the mechanics of withdrawal may be painful but they must be completed as quickly as possible under the relevant statute, article 50 of the Treaty of European Union.

There are trade agreements to thrash out. Discussions are needed to clarify the rights or lack of them of expatriates resident in Britain or having moved from the UK to EU member states. Britain has been warned not to expect an easy ride.

“No special treatment,” said Manfred Weber, the leader of the conservative European People’s Party, the largest group in the European Parliament.

And the four EU presidents emphasised the seriousness of the talks process, noting that it is for Britain to formulate its proposals: “We hope to have [the UK] as a close partner of the EU in the future … Any agreement, which will be concluded with the UK as a third country, will have to reflect the interests of both sides and be balanced in terms of rights and obligations.”

Their words amply justify the immediate post-referendum thoughts of Olivier Campenon, the newly appointed president of the 144-year-old Anglo-French Chamber of Commerce in Paris, a job that has suddenly become a good deal trickier.

“The British people have voted democratically and chosen to leave the EU,” he said. “It’s certainly a major blow for the whole of Europe but also a historic date in that it signifies a journey into the unknown. Many scenarios were canvassed during the campaign but the truth is we don’t know what will transpire, only that we are confronted by a different Europe.”

The Société Générale bank and the plane maker Airbus have sought to soothe nerves by committing themselves to their operation or relations with the UK.

If companies more readily associated with mainland Europe developed cold feet about dealing with the UK, one area that could suffer is the north-eastern city of Sunderland, which produced the earliest reverse for the Remain camp as voting was counted.

The Nissan plant on the city’s outskirts employs 6,700 people in a job-starved area. So far the message from afar is essentially encouraging. Carlos Ghosn, the chairman and chief executive of Renault and Nissan, diplomatically said his group would adapt to whatever decision the British made.

But he made clear his preference for a vote to stay inside the EU and some industry sources have suggested future investment decisions may well change. “We obviously want the Nissan UK plant and engineering centre to remain as competitive as possible when compared with other global entities and each future investment opportunity will be taken on a case-by-case basis, just as it is now,” Mr Ghosn said in February.

The German BMW and Daimler groups said more recently that withdrawal would be “very regrettable”, a view shared by Peugeot Citroën and General Motors’ Opel, and stressed that much would depend on what sort of post-departure agreements Britain negotiated.

Smaller business are wary, too. One UK entrepreneur, Nelson Sivalingam, the founder of Wonderush.com, which aims to help small business fight big, market-dominating corporations, rues that Britain is leaving rather than aspiring to lead Europe.

“Although the Leave campaign pitched that we will be better off financially, the plain fact is that much of UK company investment and foreign investment is heavily linked to having a guaranteed tariff-free access to the EU market,” he said. “Raising early-stage funding in the lead-up to the referendum has been tough, as investors have been very cautious because of the uncertainty, and this just gets worse.

“Recruiting international talent is already harder than it should be and by leaving the EU we’re taking a further step back.”

He fears many start-ups, already tempted to take their business to the United States and raise capital there, will want to move out of the UK.

“The idea of proposing to leave and then make individual trade agreements is like having a divorce but then asking to be friends with benefits,” he said.

Mr Sivalingam said that despite the focus on imports and exports, the growth in high-tech businesses and trade in digital services was just as important. “Brexit could mean tech start-ups are exposed to multiple regulations from the UK and the EU with regards to data handling and movement.”

The road ahead seems likely to remain bumpy for some time, even after – or indeed if – the initial market wobbles calm.

But amid much concern about Britain’s future outside the EU, and the rest of Europe’s trading relations with the UK, one glimmer of hope appeared in the early responses to the Brexit vote.

“The vote to leave the EU has clearly weakened the near-term outlook for the UK economy,” said the international financial research company Capital Economics. “But we still think that the ultimate damage will be smaller than many estimates have suggested.”

Many men and women doing business with Britain from the other 27 EU nations, and countless British exporters, fervently hope that view is proved right.

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Source: Business

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