Unstable politics may make trade deals uncertain

Subject

Politics and trade talks.

Significance

Understanding the factors that determine how long trade negotiations take will help businesses navigate the uncertainty, as the UK government prepares to negotiate trade agreements once it leaves the EU. The Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU took seven years to finalise. Less comprehensive renegotiations of international agreements can be shorter, including the US-Mexico-Canada agreement, which took less than two years.

Impacts

• UK sectors highly exposed to the EU or United States, including automotive and financial services, face prolonged investment uncertainty.
• Timing of national elections, lobbying and the ideological divergence between trade partners will determine post-Brexit trade deal talks.
• Continued polarisation of major economies' electorates will delay or stop other global deals, including on foreign aid and climate change.