Leading Asian economies stressed on Wednesday (8 February) their attention would continue to be focused on the EU-27 post-Brexit, ahead of any possibilities for the UK opened up by Brexit.
Ambassadors from India – one of the world’s top ten economies – and Vietnam, a rising economic star of the ASEAN bloc, were speaking at an event in Brussels entitled “Brexit -Implications for Asia: Boom or Bust?”
It was hosted by the European Institute for Asian Studies.
At stake is a major plank of the UK Conservative government, whose leading members have regularly cited fresh economic ties with the ‘Commonwealth’ (the former British Empire) as one of the new horizons opened up by Brexit.
But in fact, neither India (a former colony of the UK) nor Vietnam (poised to ratify a major Free Trade Agreement (FTA) with the EU) appeared to have a pro-active stance on economic relations with a non-EU UK.
Ambassador Manjeev Singh Puri, India’s representative to the EU, said “[We are] just observing two sets of sovereigns [the UK and EU].
“What we do in anticipation of 2019 [the Article 50 cut-off date for Brexit], I have nothing to say.”
He added: “[For India], 28 [EU member states] is better…but 27 is huge. Massive. It goes without saying.”
Singh Puri also pointed out that the UK has a huge balance of trade deficit with India, and that the “immediate fallout” of the Brexit referendum on 23 June last year was “India replaced Great Britain as the world’s sixth-largest economy, as the pound tanked.”
Whilst always diplomatic to the UK’s ongoing importance and strength, Singh Puri pointed out that, within the current EU, India’s number one export market was the UK, while the largest importer to India from the EU was Germany – hinting at the possible balance of power in any future UK-India trade deal.
He added that the EU was an “important player in ‘norms-setting’” and “critical to us”.
The Vietnamese Ambassador to the EU (and former ambassador to the UK), Vuong Thua Phong stressed that the UK was “not a traditional partner” of Vietnam.
The relationship only started in the 1970s, he added, since the UK was a “strong G7 economy”, saying that he hoped UK ministers were right when they said the UK “will leave the EU, not Europe”.
But he stressed that Vietnam was “very keen to have the FTA [with the EU] ratified before Brexit”.
And Thua Phong wondered out loud about the “integrity of the UK”, with the possibility of a “second Scottish referendum.”
The full complexity facing the UK’s nascent trade negotiation team (adverts for which are still being carried in last week’s Economist) was laid bare by Pascal Kerneis, Managing Director of the European Services Forum, also on the platform at the event.
He ran through four categories of EU FTAs, from ratified or existing, to ‘dormant’, to active, to forthcoming – pointing out that with ongoing negotiations (namely with Japan, Mercosur countries, Indonesia, the Philippines, Mexico and Tunisia), the UK would most likely have to continue to support them whilst still an EU member, then transcribe them into UK bilateral agreements.
Looking at the ongoing FTAs unlikely – in his view – to be completed by the 2019 Brexit date, such as with Turkey, Australia, New Zealand, Chile (a revision), Taiwan and Hong Kong, he pointed out that there are “not many places left in the world where the UK will have full 100% freedom to act”, i.e. ink new trade deals with no existing templates.
Concluding proceedings, the Director of International Trade Policy at the Foreign Trade Association, Dr Pierre-Michael Groening, looked at the level of exposure to Brexit risks for companies either UK owned or based, with a commercial presence in the UK, and those exporting to the UK.
“I feel very much that the UK will suffer some setbacks for those companies,” he told an audience of around 60 academics and business leaders.
Groening also warned that the UK, heavily reliant on services rather than manufacturing or energy, would find new trade deals heavy going.
Although in theory a bilateral UK trade deal with an Asian economy “could be quicker” than one with the EU, he added “services are the most complex to negotiate, rather than trade”.