Source: Global Times
The UK is unlikely to strike a post-Brexit trade deal with the EU as time is running out on British Prime Minister Boris Johnson’s July deadline for an outlined agreement, according to The Telegraph.
The UK has been trying to shape a new trade relationship with the world for the post-Brexit era, and has thus started free trade talks with a number of countries including the US, China, Japan and Australia. By all measures, the EU is the UK’s most important economic partner, which is why a specific post-Brexit trade deal with the EU has always been a top priority for the UK government. Failure to reach a new free trade deal with the EU after the current transition period expires at the end of this year will undoubtedly deliver a huge blow to the UK.
The reported assumption that UK-EU trade could be conducted on WTO terms actually points to the possibility of a major adjustment to the UK’s economic relationship with the outside world. At this time of transformation, deepening economic and trade cooperation with its second-largest non-EU trade partner China is bound to rise in importance for the UK’s trade prospects post-Brexit.
According to media reports, the UK and Japan are hoping to finish their free trade negotiations by the end of July, with a formal trade agreement expected to be signed in September. The likely conclusion of the first post-Brexit trade deal may, to a certain extent, indicate the UK’s inclination toward strengthening cooperation with Asian economies.
Yet it needs to be pointed out that China is at the heart of the entire Asian industrial chain, thus free trade deals with individual Asian economies may not reap significant benefits or may not be sufficient to reflect the economic clout of Asia’s industrial chain without China’s participation. Many commodities produced by the regional industrial chain may not be subject to a free trade deal due to the rule of origin, which usually requires goods to be entirely produced in one of the participating countries or have a minimum percentage of its value produced there. As such, a free trade arrangement with China is essential for the UK.
We are aware of the recent progress in US-UK free trade talks, as US Secretary of State Mike Pompeo said on Tuesday that a deal would be finalized “as quickly as possible.” But we are skeptical about whether a US-UK deal, even if it is concluded soon, could really be of much help to the UK’s post-Brexit economic transformation.
Whether in terms of its consumer market or its manufacturing capacity, China is the trade partner that can really boost the UK’s trade potential post-Brexit. But it is regrettable that the UK sees its deal with the US as an alternative to Chinese cooperation amid the current deep freeze of China-UK relations, which may slow down trade talks.
Of course, there is still the possibility of a China-UK free trade deal in the long run, but that would require sincerity from the UK side, which needs to understand that China has bottom lines that cannot be touched.