London was prepared to accept an “Australia-style” free trade agreement with the bloc

London was prepared to accept an "Australia-style" free trade agreement with the bloc

The UK’s Brexit negotiator Frost is crossing the wires and said that Britain aims to minimise as much as it can trade friction through customs facilitation, claiming that a deal can be achieved quickly. Frost said that London was prepared to accept an “Australia-style” free trade agreement with the bloc if its member states continue to have doubts about the terms of a no-quotas, no-tariffs deal.

Key notes

We want Canada-type free trade agreement with EU.
Ready to trade on Australia terms if EU doubts persist on FTA.
Says Britain will not be low-standard economy.
Says perfectly possible to have higher standards without our laws and regulations saying the exact say thing.
Says we’re going to have huge advantage over EU in ability to set rules and regulations quickly.
says even if there is the short-term cost to Brexit, it will be overtaken rapidly by mid-term gains.
Says we are not frightened by suggestions there will be trade frictions and barriers.
Says we are not ready to compromise on fundamental parts of our negotiating position.
Frost says we will treat n.ireland as any other part of the UK.

 

“The EU does not have a free trade agreement with Australia, and so such an arrangement would effectively be a trade relationship governed by World Trade Organization rules,” Reuters News was explaining:

David Frost told a university lecture in Brussels that Britain, which left the EU at the end of January, wanted a trade agreement similar to that which Canada has with the bloc when a transition period ends on Dec. 31, 2020. EU negotiators have said that for a Canada-style deal, Britain would have to adopt a level playing field with the bloc on state aid, environment, employment and other regulations to guard against unfair competition with the European single market. Frost said that whatever trade friction Britain faces when the transition period ends, his country would aim to minimise it as much as possible through customs facilitation.

FX implications

While we have a general underbelly of trade negotiation pessimism weighing on the pound, compromise ought to be possible but is not guaranteed by year-end, the UK Retail Sales, Consumer Price Index and PMIs are due for release this week which are more likely to garner the markets focus until we have something more concrete with regards to the UK/EU negotiations. 

 

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