Brexit to change UK's world role

THE British government on Wednesday triggered Article 50 of the Lisbon Treaty, commencing formal exit talks with the European Union (EU). While much attention has inevitably focused on what new relationship the United Kingdom will forge with Europe, Brexit will also change the nation's wider world role, especially in the context of trade relations.

Prime Minister Theresa May has asserted that she wants to rediscover the UK's heritage "as a great global trading nation", including with industrialised countries such as Australia, Canada and the United States, plus emerging markets such as India, China and Gulf Cooperation Council states. To this end, UK Secretary of State for International Trade Liam Fox has confirmed that the government is already discussing informally trade deals with at least 12 countries.

At the same time that informal talks have begun with multiple nations on these bilateral trade agendas, Mr Fox has also opened discussions with the 164 member-strong World Trade Organization (WTO) over post-Brexit terms of membership. The UK's current membership is governed by its status within the EU with Brussels making commitments on trade tariffs and quotas on behalf of the 28 governments.

In two years of potentially tough forthcoming negotiations, Mr Fox is seeking to replicate as much as possible the UK's current schedule of commitments to the WTO. Upon leaving the EU, probably in 2019, these obligations would then serve as the baseline from which the nation would seek to negotiate new trade agreements.

While these WTO negotiations contain significant opportunity, they also have risk too. For if the UK fails to achieve a new schedule of WTO commitments, the nation's trading arrangements will be severely disrupted, with a proverbial cliff edge scenario a danger.

A central challenge for Mr Fox with both these potential bilateral trade deals and his WTO agenda is that no agreements can be formally negotiated, let alone finalised, before the UK actually leaves the EU. Thus, while there was much fanfare over a potential new UK-US trade deal when Mrs May met US President Donald Trump on Jan 27, any such agreement could probably not be secured until at least the second half of his four-year term when the administration could have lost significant traction in Congress which would also need to vote on a deal.

Moreover, while there are key areas ripe for agreement between the two nations in such a pact, including lowering or eliminating tariffs on goods, there are potential disagreements too. These include over harmonising financial services regulations, while other possible icebergs lie on the horizon too, not least given the US president's commitment to "America First".

Likewise, Mr Fox can engage in informal talks with other WTO members only until a final Brexit deal is in place. Until then, many WTO members are adopting a cautious, wait-and-see approach, waiting to see the exact terms of the UK's exit arrangements.

Outside of trade, Mrs May has re-affirmed that post-Brexit, the UK will continue to play a major role in international security, including through its membership of Nato. While London will play a genuinely global role through continued membership of forums such as the UN Security Council, its continued commitment to Europe will also be very important going forward.

Mrs May has sought to emphasise that while the UK is departing from the EU, it is not leaving Europe. Instead, she has stressed her desire to continue, if not intensify, cooperation with EU partners in areas including crime, counter-terrorism and foreign affairs.

WORKING RELATIONSHIP

To this end, the prime minister wants the UK's future relationship with the EU to include practical law-enforcement partnership working arrangements, plus those for sharing intelligence given the apparently growing threat of jihadi terrorism across the continent. She also has highlighted that she wants close liaison with EU allies on foreign and defence policy to keep the continent secure, including the prospect of UK military personnel remaining for some time in eastern Europe given the perceived threat from an emboldened Russia under President Vladimir Putin.

Now that the UK is leaving the European Single Market, this potentially extensive web of security and defence relationships would be strongest if moulded upon the type of "bold, ambitious free trade agreement with the EU" with "the freest possible trade on goods and services" that the UK has set out as one of its key Brexit negotiating objectives. In Mrs May's own words, this would allow for "tariff-free trade with Europe and cross-border trade that is as frictionless as possible", while leaving the Common Commercial Policy and no longer been tied to the Common Commercial Tariff, thus permitting the UK to pursue its own trade agreements.

At this early stage, the EU has not yet formally commented on post-Brexit security and foreign policy cooperation with the UK. However, it is likely that many national leaders, including in Germany, France and eastern Europe, will particularly favour a continued strong working relationship given the growing array of external security challenges facing the union.

Indeed, it is reported that at least one key EU country, Germany, will sign a new post-Brexit bilateral defence cooperation deal in areas including maritime patrols and cybersecurity. Mrs May and German Chancellor Angela Merkel are not agreed on the need to show a common front just in eastern Europe, but also internationally, in the campaign against so-called Islamic State terrorism in theatres such Iraq and Syria where Germany is supplying reconnaissance aircraft, alongside bombing missions of the UK's Royal Air Force.

Taken overall, Brexit offers a new opportunity for the UK to reinvent its world role, especially in the context of trade relations. While the government is already putting significant UK energy into this, it may not be clear until the 2020s exactly how successful this "great global trading nation" agenda proves to be, given that no new deals can be agreed until after the UK leaves the EU.