The Brexit debate moved further along this week when Northern Ireland business leaders visited Brussels for discussions with Michel Barnier’s team. This was specifically in relation to Northern Ireland and what their future trading relationship with the EU would be like in the event of a no-deal Brexit or a ‘backstop’ as it is referred to. Indications are that the EU will be extremely flexible in allowing Northern Ireland trade with the rest of Ireland and the EU, but there is no way that this will be extended to Scotland or the rest of the UK.

No special arrangement for Scotland

For Scotland this is particularly difficult because the vote to remain in the EU was even higher than it was in Northern Ireland. From an agricultural perspective, trade with the rest of the EU is important for the sheepmeat sector and while it is of lesser importance for beef, it is still a market for offal and parts of the carcase not popular in the domestic market.

Outside world

In the wider world, global trade debates tend to be dominated by the US President Donald Trump at present. When he came into office in January 2016, one of his first actions was to pull the USA out of the Trans Pacific Partnership (TPP) trade deal. This involved the USA and 11 other countries either side of the Pacific Ocean. He also put a stop to the Trans-Atlantic Trade and Investment Partnership (TTIP) talks with the EU, threatened to tear up the NAFTA deal with Mexico and Canada and unilaterally imposed tariffs on imports, particularly of steel to protect US industry.

America first

President Trump presented trade deals as a major threat to the USA economy, particularly those that involved his predecessor. His rhetoric was “America first” with threats to build walls on the border with Mexico, but in practice his administration has been much more engaging with their neighbours with first a deal being concluded with Mexico and now Canada.

Officially NAFTA is no more, replaced by the US-Mexico-Canada Agreement (USMCA) and while much of the new deal resembles its predecessor, there is enhanced US access to the heavily protected Canadian dairy market which is claimed by President Trump as a major victory.

Japan on the rebound

One country that was left standing when the TPP deal collapsed was Japan. However, after concluding the deal with Canada, the USA and Japan have announced that they are to begin bilateral negotiations. US Agriculture Secretary, Sonny Perdue describing the US ambition that this would be a TPP plus deal, the inference being that this administration would deliver a superior deal than what was delivered by the previous Obama administration.

Interestingly, the benchmark for the USA is to secure the same or better deal for agriculture in negotiations with Japan as the EU did last year. The US Agriculture Secretary bases this on the fact that he considers the US to be a better ally of Japan than the EU is, and there is no doubt that the EU secured good terms for agricultural produce with tariffs on beef to be cut from 38.5% over 15 years and cheese including cheddar where there is an almost 30% tariff at present, will be eliminated completely, again over 15 years.

The other clever twist that is included in the EU’s trade deal with Japan is that if any other country negotiates more favourable terms than the EU have at present, then they must also be applied to the EU also.

UK-Japan

The Japanese Prime Minister Shinzo Abe has this week indicated his willingness to make a trade deal with the UK after Brexit.

While this will be of interest at a political level, particularly to those in the UK who favour leaving the EU in practical economic terms it would return the UK to the point where they are on departure. In fact the UK will lose access to the current EU deal on departure if there isn’t a deal concluded and establishment of a separate trade deal between the UK and Japan will take some time to negotiate. As with the US negotiation, any future deal between the UK and Japan would be on no better terms than the present EU-Japan deal.

TTIP still dormant

One trade negotiation that remains dormant is the TTIP negotiation between the US and EU.

This had reached stalemate prior to the Trump presidency on the unwillingness of the EU to compromise on production standards involving hormones and chlorine washing of carcases. The EU has however partially replaced China as an outlet for US soya following the retaliatory tariffs they imposed in response to US tariffs on steel.

US soya coming to the EU was in place of Brazilian and Paraguayan supplies which are likely to have gone to China instead, replacing US soya in that market.

By negotiating on what he calls his terms, Trump has managed to maintain and develop trade deals that didn’t look possible when he came into office.

While much of the substance will remain the same, Trump will have specific examples of where the US have done better on his watch such as dairy access to Canada.

He may be a divisive figure politically but his business instinct means that he is a dealmaker and has delivered deals.