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Trade deals blocked for at least two years after Brexit

Despite the restrictions, the pound is the strongest it's been against the dollar since the referendum

In his speech on Friday 19th January Brexit secretary, David Davis, announced that the British government will be unable to make a single trade deal with other countries until no less than two years after we leave the EU.

Britain is on course to leave the EU next year and government ministers had previously stated that Britain would sign up to 40 free trade deals with countries outside of the EU on ‘the second after midnight’ of March 2019. However, Davis has now said that while Britain will remain within the existing EU trade and customs rules during this transition, meaning that we would be cut off from implementing any of these deals until around 2021.

He stated that “maintaining access to each other’s markets on current terms means we will replicate the effects of the EU customs union during the implementation period. But participating in a customs union should not preclude us from formally negotiating – or indeed signing – trade agreements. Although, of course, they would not enter in force until the implementation period has ended”.

Davis went on to say that Britain would continue to trade with the EU on ‘current terms’ once the negotiations begin in the coming weeks. This includes the jurisdiction of European courts. This announcement comes after the government received backlash from conservative MPs who support Brexit. Saying that they appear ‘weak’ and accusing them of agreeing to make Britain a ‘vassal state’.

In spite of these accusations, Davis used his speech, made in Middlesbrough, to provide an optimistic outlook on the trading opportunities Britain will have after Brexit. In this speech he said that “as an independent country, no longer a member of the European Union – the United Kingdom will once again have its own trading policy”. He continued by saying that “for the first time in more than 40 years, we will be able to step out and sign new trade deals with old friends, and new allies, around the globe”.

It was said that Brexit would also allow Britain to shift its balance of trade to nations that are outside the EU. “Increasingly, we are trading with key emerging markets of the world in Asia and the Americas. The UK’s fastest growing export markets between 2005 and 2014 included countries like China and Brazil. And we will be able to do so much more with them, when we are an independent trading nation, outside of the EU,” he said.

He went on to defend the decision made by the government to agree to Brexit transitions. Davis described it as a ‘bridge to the future’ and it would “allow Britain to support their own future partnership”. This announcement comes after the news that the pound has reached its highest levels since before the Brexit vote. The sterling surged against the dollar, extending gains in the past month to reach more than $1.40 for the first time since the referendum that took place in June 2016.

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