Thread by @AlbertoNardelli

Britain’s post-Brexit trade conundrum. A short story.

I had a meeting this morning with a Japanese diplomat who said Japan doesn’t want to simply replicate the same terms of its EU FTA with the UK (as reported by the FT here: ft.com/content/5ce60a…).

The diplomat said the EU FTA was a good basis, but Japan wants the FTA with the UK to be “more ambitious.” Asked what he meant by this, and examples, they mentioned the UK liberalising rules and regulations in some areas once it leaves the EU

The diplomat also said the two sides has been exchanging views, but hadn’t yet started negotiations proper.

Some hard truths:

1. The UK will have a lot less leverage negotiating trade deals on its own than as part of a bloc of 28. Market size matters, and big economies & blocs set the rules.

2. The more the UK diverges from the EU’s rules, the greater the trade barriers with its largest market and the hit to the UK’s economy, per the government’s own analysis. But the less the UK diverges, the harder it will be to conclude trade deals with major economies.

All this explains why the UK figuring out what relationship it wants with the EU in future –– and which trade-offs to prioritise –– is such an important question. Yet, it is one that the UK has so far avoided answering in much detail.

ps Separately, the diplomat said that no deal would have “devastating effects”