Theresa May is in Delhi today “to pave the way for the UK’s first post-Brexit trade deal“. But can she really say anything meaningful to her Indian counterparts? And will she like the issues they raise in return?
When Theresa May sits down in her first meeting, I am willing to bet that the first question she will be asked is – What kind of post-Brexit trade relationship are you going to have with the EU? Most importantly, are you going to stay in the Customs Union and the Single Market? This is of crucial importance because if the UK remains part of these, it won’t be doing trade deals with non-EU countries like India because it will not be able to offer reductions in tariffs and all the other goodies that such countries want from the UK.
Assurances given by the UK government to Nissan last week, led Vince Cable to argue that the UK must be planning to stay within the Customs Union. This would be the only way of assuring Nissan that there would be no extra border taxes for them to pay and that its supply chain would not be subject to rules of origin checks (border officials looking at where the car has come from – which adds extra costs and complexity to importing it). He has got a strong point. And the assurances to Nissan seem very hard to square with the trade trip to India.
If Theresa May gets past this initial stumbling block in the conversation, she will quickly find herself talking about migration issues – from the large numbers of students who want to travel to the UK to study, to the business people who want to work and invest here. Because trade agreements these days are about much more than just taxes at borders. One aspect to trade is the people who move between countries to do business and receive services, like education. And the UK government’s tough immigration policies are likely to be a key stumbling block in future negotiations with India. Its effect on Indian students is clear – study visas issued to Indian nationals have fallen from 68,238 to 11,864 between 2010 and 2015.
So first of all the UK government really needs to work out some pretty fundamental aspects of its trade policy before any of its potential future trade partners, including India, are likely to take it very seriously. After that, the government is going to have to grapple with the fact that the post-Brexit trade policy world is going to involve many issues (like migration) that were so toxic in the Brexit Referendum itself. Negotiating trade deals abroad is no escape from existential issues that must be tackled at home.