Minister says closer EU trade links could outweigh separate trade deals
Douglas Alexander said the UK could gain more from much closer trade ties with the EU than from retaining the freedom to negotiate separate trade deals. His comments suggest a shift in the government’s argument about EU relations, as Prime Minister Andy Burnham has called for serious dialogue that includes possible re-entry.
Speaking from a trade delegation in India, Alexander said the UK trades almost twice as much with the EU as with the US, and that the EU accounts for almost half of UK trade. He contrasted the estimated long-term GDP boost of less than 0.1% from joining the CPTPP with the economic damage attributed to Brexit, while noting that Scotch whisky prices in India have fallen by 10–15% since the UK-India deal took effect. Ministers are also working through implementation problems with that deal and hope to agree new arrangements with the EU covering emissions, electricity and agricultural products.
- Alexander says closer EU trade ties could bring a bigger economic prize.
- The EU accounts for almost half of UK trade.
- Ministers hope for new EU deals on energy, emissions and agriculture.
New here? Start with this
The EU is a group of European countries that trade with one another under shared rules. The UK left the EU in 2020, ending its membership of the single market and customs union, and now makes its own trade agreements with countries around the world.
The main players are the UK government and the EU, which negotiates trade arrangements on behalf of its member countries. The UK also belongs to the CPTPP, a trade partnership spanning countries around the Pacific, and has agreed a separate trade deal with India.
Trade rules affect the cost and ease of selling goods and services across borders. Changes to UK-EU arrangements could affect sectors such as farming, electricity and industries that face charges linked to emissions, while separate deals may offer different opportunities.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Closer EU trade ties could bring substantial benefits because the EU is a much larger trading partner for the UK than the US, and reducing barriers could help businesses and consumers across a wide range of sectors. The modest estimated gain from CPTPP membership, alongside reported economic costs from Brexit, supports the case that deeper access to nearby European markets may be worth more than retaining broad freedom to strike separate deals.
The case against
Keeping the ability to negotiate separate trade deals gives the UK scope to tailor agreements to partners and pursue opportunities beyond Europe, as illustrated by the UK-India deal’s reported reduction in Scotch whisky prices. Closer EU alignment could bring new obligations or limit that flexibility, while the benefits of future agreements may take time to emerge and should be weighed against the practical costs of closer integration.
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Originally published by The Guardian as “Closer EU trade ties greater prize for UK than making separate deals, minister says”.