British-EU relations likely to be resolved by 2020, says Liam Fox

Liam Fox MP

Liam Fox, the international trade secretary, has said he expects the issue of Britain’s relations with the EU to be resolved by 2020, the date of the next election.

He suggested the UK would not trigger article 50, which starts the clock on the UK’s negotiations to withdraw from the EU, until early in the new year, and said he did not expect the UK to join a customs union with the EU.

His remarks in the Wall Street Journal are possibly the most specific timetable to be set out by a UK cabinet minister since the referendum a month ago. It is also potentially significant that Fox does not foresee the UK continuing an institutional relationship with the EU in the future.

Fox is on a three-day tour of the US and seeks to reassure American investors that the UK economy can thrive outside the EU, forge closer trade links with the US, and is opposed to protectionism.

“The first thing is to dispel the idea that Britain leaving the European Union was somehow an anti-free market decision,” Fox said. “In fact it was the reverse: in my view, it was about Britain becoming a much more outward-looking country.”

In remarks that are not directly quoted by the Wall Street Journal, Fox also reportedly says that early next year could be the best moment to trigger article 50 because the UK wants to figure out its new relationships before the general election in 2020.

He added that London would probably seek to enter a free-trade agreement with the EU, rather than a closer “customs union” that could restrict its ability to negotiate lower tariffs with other trading partners.

In a speech in Chicago on Tuesday, Fox said the European Union would have an economic self-interest in ensuring Brexit occurred smoothly, pointing out that most member states had a trade surplus with the UK and could not afford to lose access to UK markets.

Promising there would be no backtracking on the UK referendum decision, he outlined a vision of the UK negotiating a phalanx of bilateral free trade deals.

Saluting what he called the bravery of the British people, he said the Brexit vote was driven by a range of motives including sovereignty, governance, immigration, as well as economics and trade. He pointed out that of the 10 export markets where the UK had a trade surplus, only one, Ireland, was in the EU.

He claimed EU countries had built a net trade surplus with the UK worth £70bn, partly because the UK had been an expanding market. The size of the EU trade surplus, he said, “is why it is in the interests of fellow European Union members that we leave in a way that creates minimal disruption for the continent”.

Fox said the world was moving away “from an era when multilateral agreements dominate the landscape to one where bilateral free trade agreements (FTAs) and plurilateral agreements between small numbers of countries are becoming more common”.

The new trade agreements would be between economies that were functionally similar rather than geographically proximate, he said.

Fox also suggested that, once outside the EU, the UK could reshape and liberalise its domestic economy. “We will have the opportunity to make our tax systems even more competitive, take an axe to red tape that can hinder businesses, and shape a bright future for the UK as a beacon for open trade,” he said.

In Washington, Fox and the UK ambassador, Kim Darroch, met the commerce secretary, Penny Pritzker, and the US trade representative, Mike Froman.

Although Fox is eager to scope out bilateral trade agreements with major economies such as the US, he knows that EU rules prevent him from negotiating a detailed agreement until the UK has left that union.

Froman emphasised this point, saying: “The United States will be prepared to engage in conversations with the United Kingdom about how to develop our trade and investment relationship in the best way at the appropriate time.

“As a practical matter, it is not possible to meaningfully advance separate trade and investment negotiations with the United Kingdom until some of the basic issues around the future EU-UK relationship have been worked out.”

Froman is still trying to negotiate a major trade agreement with the EU, despite opposition in Europe and America, and is due back in Brussels this week.

The proposed US-EU framework, known as TTIP, is potentially a deal that the UK could join later. Some US officials have floated the idea of making parallel progress with the UK in an attempt to put pressure on the EU to take a more flexible approach.

The US is the UK’s single biggest export market, accounting for £100bn, or about 20%, of its £510bn of goods and services exports in 2015, according to official data.

Completing a free-trade deal requires not only reducing or eliminating any tariffs on goods but also dismantling services barriers and regulatory impediments to trade.

Powered by Guardian.co.ukThis article was written by Patrick Wintour Diplomatic editor, for The Guardian on Tuesday 26th July 2016 19.22 Europe/London

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