This Brunswick note looks at the different scenarios for post-Brexit trade and distills some of the key advice from recent Brunswick events with trade negotiators so companies can prepare their engagement strategies and ensure the best outcomes for their business and sector, no matter the shape of the final deal.

1. Episode2:Global Britain –
AFreeTrading Future?
Brexitinperspective
March 2017

2. © Brunswick 2017 | 2
Thetradenegotiations
arisingfromBritain’sexit
fromtheEU willprovide
businesseswitha unique
opportunityto helpsetthe
termsof theirtradewiththe
restof theworldfor a
generation.
The UKGovernment’sBrexit WhitePaper
makesclearthatBritainwill leavethe
Single Market:theEU’sprojecttodeepen
economiccooperationthroughthe‘four
freedoms’ofgoods,services,workersand
capital.
ThedocumentalsosuggeststhatBritain
willleavetheCustomsUnion,which
allowsUKgoodstocirculatefreelywithin
theEUwithouttariffsorcustomschecks
forconformitywithEUstandards.
Thesechangesrequirea new legal
frameworktobe putin place,one whichis
compliantwithexistingWorldTrade
Organizationrules,andclearlyestablishes
theUK’snew tradingrelationshipwiththe
EU.
Tradenegotiationstakearoundfiveyears
onaverageandagreements areonlyre-
visitedevery20-30years.Itistherefore
criticalthatbusinessesconsidertheir
tradinginterestsandpresentthem clearly
andstronglytokeypolicy-makersonall
sidesofthenegotiationstoensuretheir
futuresuccess.
Alongsidetheseopportunities,however,
areunprecedentedrisks.Increasingly
engaged activists,controversyaround
traditionaltradeagreement clauses
includinginvestorstatedispute
settlement,intellectualpropertyand
agriculturetariffs,combinedwiththe
electionofanti-tradepopulistleaders
aroundtheworldmean thatglobaltrade
liberalisationcannolonger be takenfor
granted.
Forbusinessestosucceedinthis
environment, itisessentialthattheyhave
therightsupportfromthebeginning of
thenegotiationprocess.
Theyneed tostartthinkingactivelyabout
howtoengage Westminsterand
Whitehall,aswell astheEuropean
Commissionandforeign governments,on
theirprioritiesandcannotassumethat
theseactorsunderstandtheirsectoror
theirneeds.
Companiesandsectorsthatfailtoget
theirprioritiesintothegovernment's
negotiatingbriefwill be playingcatchup
forthenext fiveyearsormore.
TohelpclientsprepareforBritain’spost-
Brexittradingenvironment,Brunswick
hasan unparallelednetwork ofEuropean
andinternationalofficestoprovidecritical
adviceandsupportbefore,duringand
afterthenegotiations.
Thisnote looksatthedifferentscenarios
forpost-Brexittradeanddistilssomeof
thekeyadvicefromrecentBrunswick
eventswithtradenegotiatorsso
companiescanpreparetheirengagement
strategiesandensurethebestoutcomes
fortheirbusinessandsector,no matter
theshapeofthefinaldeal.

3. Brunswick Group
Brexit in perspective
© Brunswick 2017 | 3
Investor
State Dispute
Settlement
(ISDS)
ISDS isa standardprovisionin FTAs
and BilateralInvestmentTreaties
(BITs),thatallowscorporationsto
takegovernments to binding
arbitrationin the event of legislation
thathurtsexpectedfutureprofits or
interest,if there is expropriation,
discriminationor denial of justice
withinthe country of investment.
Whilstthe broadframework is
standard,ISDS provisionsvary
considerably amongagreements.
ISDS hasbecome increasingly
controversial asNGOsand protest
groupshaveaccusedcompaniesof
exploitingarbitrationprovisionsin
FTAsand BITsin order to overturn
domesticlegislation,in oppositionto
publicinterest.Much of thestrong
oppositionthathelpedderail the
proposed EU- USFTA(TTIP)was
basedon concernsaroundthe
proposed ISDSprovisions.
Trade rules at aglance
The UK entered the WTO as part of the EU and will need to
disentangle its current membership as part of the Brexit process.
The UK’s tariff levels for goods and services are currently agreed
and listed as part of the EU’s schedules. Britain has committed to
replicating its current schedules as far as possible to ensure a
predictable and comprehensive outcome.
The WTO uses members bound tariff rates and the most favoured
nation (MFN) clause to keep tariffs down. Members may apply
tariff rates below their binding agreements, but cannot raise them,
and members must offer all others the same tariff rates they offer
to their MFN partner.
Countries may, however, enter into bilateral and regional FTAs
without offering the same tariff reductions to all WTO Members
provided that they have established free trade on substantially all
trade within the FTA, and that the parties do not raise their tariffs
or other barriers against countries outside the agreement.
In the event of a country breaching WTO rules, it can be taken
before the WTO’s dispute resolution system by another member.
Dispute resolution decisions may involve the application of
punitive tariffs.
The UK’s new schedules will need to be agreed by all of the other
163 WTO Member States as part of the WTO’s consensus decision
making process.
In the absence of EU Membership and ratified Free Trade
Agreements (FTAs), Britain’s ability to trade around the world is
governed by the World Trade Organization (WTO).
The UK is leaving the EU Single Market and Customs
Union. What is the global trade framework?
World Trade Organization

4. Brunswick Group
Brexit in perspective
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European Union Free Trade Agreement
17,571
19,484
20,098
21,307
44,343
Volume of trade in £ million
14,004
14,343
15,580
22,424
22,823
Volume of trade in £ million
The UK’s proposednegotiationof an
FTA withthe EU is unique in trade
negotiationhistory.Bothsidesare
alreadystartingwithzero tariffson
goodsand a commonregulatory
framework.
The UK Government’sWhite Paper
confirmsthatBritainwill be seeking
continuedtariff-freetradein goods,
meaning thattheprimaryfocusof the
negotiationsislikelyto be servicesand
regulations,althoughagricultural
productsand movement of labourare
alsolikelyto provecontentious.
Implementing a customsborder
between the UK and the EU will posean
enormouslogistical challenge,almost
certainlynecessitatinga transition
periodasthe new arrangementscome
into force.
Expectations arefor the final deal to
resemble the EU Canada‘Comprehensive
Economicand TradeAgreement’ (CETA),
the EU’smostrecentlynegotiatedand
ambitioustradeagreement. CETA
provides fortradeliberalisationand
reducedbarriersacrossareassuch as
investment,government procurement,
labourand the environment as well as
goodsand services.CETAdoesnot,
however,coverfinancialservices –a key
negotiatinginterestfor the UK in itsdeal
with theEU.
Given the startingpoint,the UK islikely
to seek a deal with the EU thatimproves
on CETA’soutcomes,particularlyin
services andagriculture,an outcome
commonlyreferred to as ‘CETAPlus’.
The final deal will alsoneed to agree a
mechanismfor addressingdisputes
between the parties,anotherpotential
flashpointgiven UK determinationto
‘take back control’of itssovereignty, as
well as the currenthostilepublic
environment towards ISDS.
As withCETA,any tradeagreement
between the UK and the EU will almost
certainlyneed to be ratifiedby all
member states,includingby nationaland
sub-nationalparliaments,aswell asthe
EuropeanParliament.Thisisa
complicatedprocess whichcan takeup
to a year depending on parliamentary
schedules andisvulnerableto opposition
from special interests.In particular,the
deal risksattractingthe ire of anti-trade
groupswhichhavebeen vocalin their
oppositionto CETAand to the proposed
EU FTA with the USA (TTIP).
It will thereforebe extremely difficult to
concludeand ratifya comprehensiveUK-
EU FTA before March2019,when it is
expectedthatBrexit will take effect.
Top 5 UK Exports to the EU (2015) Top 5 UK Imports from the EU (2015)
Other Business
Services
Financial Services
Motorvehicles,trailers
and semi-trailers
Chemicalsand
chemicalproducts
TravelServices
Motorvehicles,trailers
and semi-trailers
Computer, electronic
& opticalproducts
Pharmaceutical
products& preparations
Foodproducts
Chemicals&
chemicalproducts

5. Brunswick Group
Brexit in perspective
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8,338
10,450
16,313
19,762
100,273
Volume of trade in £ million
EUtradeagreements inplace
/provisionally applied
EUtradeagreements finalised
butnotyetapplied
EUtradeagreementnegotiations
stillongoing (atleastpartially)
As well asunfettered accessto theSingle
Market, leavingthe EU will mean thatthe
UK will loseitsaccessto preferential
tradewith the over 60 states withwhich
the EU currently hasFTAs.
Althoughthe UK could attempt to
transposeitssharein theseagreements
into nationallaw,disentanglingquotas
and tariffrates,particularlyon
agriculturalproducts,may prove
substantiallymore complicatedthan
negotiatingnew agreements from
scratch.As theexisting EU FTAsalso
reflectcompromiseoutcomesbetween
all 28 Member States,the UK shouldbe
able to seek better targetedoutcomesfor
itsbusinessesand consumersthrough
new bilateral FTAs.
Whilstthe UK is technicallyprohibited
from negotiatingseparatebilateralFTAs
aslong asit remains an EU Member,
Britain’sGovernment hasstatedits
desireto begin exploratorydiscussions
with keybilateralpartnersto enable it to
rapidlynegotiateFTAsfollowingits
formal exit from the EU.Agreements
havebeen proposedwith the US, Canada,
Australia,New Zealand,SouthAfrica,
India and China,among others.
Despitestrong politicalsupport,bilateral
agreements cannotbe finalised until
thirdcountriesknow the outcomeof the
UK/EUnegotiations and theUK’s final
WTO schedules.
Top UK non-EU Export Goods and Services
Partners (2015)
USA
Switzerland
China
Japan
Australia
Top UK non-EU Imports Goods and
Services Partners (2015)
USA
China
Switzerland
India
Japan
Existing EU Agreements
9,605
9,793
12,125
39,288
60,955
Volume of trade in £ million
Bilateral Free Trade Agreements

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Brunswick Group
Brexit in perspective
Brunswickhasheld a
numberof recentevents
withcurrentand former
tradenegotiators.Here is
theiradvicefor business.
1. Businesses need to start thinking
now about howto engage key
governments on trade
negotiations. Do not wait for
negotiating stances to become
clearer as it may be too late.
2. Companies cannot assumethat
negotiators understand their
business or sectoral needs. They
must spend thetime and
appropriate resources to do
necessary analysis themselves.
3. Businesses shouldwork with their
sector to ensure that– where
possible –theyhavea coordinated
approach to thenegotiations.
4. Businessshould ensure thatthe
specific disruption caused by lack
of trade is communicated and
understood.
5. Companies and sectors need to
map key stakeholders in the
negotiations both within
ministries and parliaments.
6. Businessneeds to engage at every
level of each government involved
in thenegotiations in order to
ensure thebest possible outcomes.
7. Businesses and industry groups
are more likely to seetheir
priorities represented in trade
negotiations if theyformulate clear
and practical proposals that
negotiators can feedinto thedraft
agreements.
8. Businesses need to understand the
scope of thenegotiations, in
particular where other sectoral
interests may impact their
priorities.
9. Businesses shouldconsider
whetherto influence thedebate
publicly via themedia.
10. Companies need to be prepared
for potential public opposition to
trade agreements and make sure
theyhaveclear and effective
responses.
Securing YourTrading Future
10 tips fromtrade negotiators
© Brunswick 2017 | 6

7. Brunswick Group
Brexit in perspective
© Brunswick 2017 | 7
Brunswick Group
Offeringatrulyglobal perspective
Brunswick is an
advisory firm
specializingin critical
issues and corporate
relations.
Aglobal partnership with 24 officesin
14 countries. Founded in 1987,
Brunswick hasgrown organically,
operating as asingle profit centre –
allowing usto respond seamlessly to
our clients’ needs, wherever theyare in
theworld.
Ourtrade expertise includes partners
across our global network toensure
clients engage with key stakeholders at
every level across countries and
institutions. Ourteams work closely
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