Politics Explained

Why Brexit means Britain’s chances of getting a good trade deal with India are slim

Modi’s negotiators can be expected to drive a harder bargain with little Britain than even Michel Barnier did, writes Sean O’Grady

Tuesday 04 May 2021 21:30
<p>Boris Johnson meets his Indian counterpart Narendra Modi for bilateral talks during the August 2019 G7 summit in Biarritz</p>

Boris Johnson meets his Indian counterpart Narendra Modi for bilateral talks during the August 2019 G7 summit in Biarritz


enerally, it stands to reason that the larger you are, the more chance you will have of securing an advantageous trade deal. This certainly seems to be holding true in the case of the UK and the (rather larger) EU’s attempts to secure closer economic relationships with the United States and with the emerging global industrial superpowers of India and China. Britain finds it fairly easy to adapt existing EU deals with the likes of Kenya or Jordan, and the talks with New Zealand seem to be going well. But, with respect, they are not going to fuel the British economy as it loses its old advantages in continental Europe. Britain needs to hitch itself to bigger, more dynamic powerhouses. It is stumbling.

So far the EU is well ahead of the UK in the race for China, partly for political reasons. With Joe Biden pursuing much the same protectionist agenda as his predecessor – his vast $1.9 trillion stimulus is firmly focused on American jobs – neither the British nor the Europeans are likely to make much headway. The most “available” prize is thus India. Here, the British are a few months behind. EU negotiators will be at work by the end of the week; the UK side will have to wait their turn in the autumn. No surprise, that, given that the EU market is around 10 times as large as the British, but a sobering corrective to the buccaneering dreams of “Global Britain” some still seem to cling to.

Of course the British trade secretary, Liz Truss, is proud of securing some £1bn of Indian investment and the prospect of some 6,000 jobs being created (according to government claims) in the next year or so. Yet two hypothetical, but important questions, arise: how much of that investment would have materialised if Ms Truss and her department didn’t exist; and how much would have been precluded or delayed if the UK were still part of the EU, with all of its negotiating heft? It is at least possible that Indian companies, like the Japanese before them, would have preferred to have Britain as a base inside the EU single market, and would have invested more if that was still the case.

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