UK will treat trade in goods and services as inseparable: Davis
UK Brexit Secretary David Davis will warn the EU that it cannot cherrypick a trade deal. Speaking after EU figures outlined their stance for post-Brexit trade talks, a top Whitehall official said the UK plans to treat goods and services as inseparable. The official also dismissed the idea that Britain will have to pick between a simple trade agreement, focused on goods, or a more extensive agreement within the single market and customs union. Instead, many foreign governments want a "fully functioning" economic relationship with Britain, beyond the more rigid suggestions put forward by the European Commission, the official added.

Brexit secretary David Davis will warn the European commission that it cannot “cherrypick some sectors” when negotiating a trade deal, according to a senior government official, who said the UK planned to treat goods and services as inseparable.

Responding to EU figures setting out their stall, the Whitehall source insisted that while trade talks would be complex, “they either want to have a broad economic relationship with the UK, or they don’t”.

The source dismissed the idea that Britain would have to choose between a simple free trade agreement, which would focus largely on goods but not on the services that make up almost 80% of the UK economy, or a more comprehensive arrangement inside the single market and customs union.

They also suggested that ministers across government had held meetings with a “full sweep of EU member states” and were confident some would be pressing internally for the commission to secure a bespoke and strong deal with the UK.



“We are regularly approached by foreign governments and businesses who tell us that they want a fully functioning economic relationship with Britain which goes beyond the more rigid and unambitious suggestions from the commission,” they said.

Ministers including Davis are thought to believe that countries such as Belgium, Ireland and the Netherlands see trade with the UK as particularly important to their economies. As such, they would be nervous of any moves that resulted in Britain crashing out of the EU on to World Trade Organisation rules.

The suggestion comes after Theresa May chaired a critical discussion of her “Brexit inner cabinet”, in which she and nine leading ministers discussed – for the first time – what “end state” Britain should be pushing for in the negotiations.

The prime minister told colleagues that the government must aim high in the next phase of EU negotiations. But she is likely to face some division within her top team, which includes former remainers such as Philip Hammond and Amber Rudd and the key Brexiters, Michael Gove and Boris Johnson.

Although the cabinet is united in swinging behind Davis’s suggestion that the UK will seek a “Canada plus plus plus” deal – adding services to the free trade agreement that exists – there are disagreements on how achievable that is.

Sources said Hammond and Rudd argued for close alignment with European-style regulation at the meeting, with Rudd, the home secretary, suggesting that jobs in Britain could be better protected by a close economic relationship with the EU.

However, Gove and Johnson were backed by the international trade secretary, Liam Fox, and the defence secretary, Gavin Williamson, over their desire to ensure the UK can diverge in the future.

May’s position is less well known, although she told the group – in a boost for the Brexiters – that the UK ought to be thinking less about conforming to European standards and more about conforming to international ones.

A key sticking point is likely to be whether the EU will allow Britain to have a deal unlike any other, which would include services to a high degree outside of the single market.

Senior British negotiators are likely to draw on statistics that highlight countries that trade services with the UK in order to press their case.

Internal government figures show that 10% of Polish exports in the professional and business services sector went to the UK in 2015, while in Italy, bilateral trade with Britain accounts for 15% of total trade in the accountancy and audit services sector. Meanwhile, 18% of Germany’s telecommunications exports were to the UK.

The challenge for the prime minister is the pressure she is facing from MPs across parliament with differing views on what Britain’s future relationship should look like.

During a Commons statement on the latest Brexit negotiations, May faced a string of interventions from Brexiters on her own backbenches who warned her against any move that could delay the date of Britain’s EU departure.

Jacob Rees-Mogg hit out at the EU, claiming its negotiating guidelines undermined the “principle of nothing being agreed until everything is agreed” and would leave Britain as a “no more than a vassal state, a colony, a serf of the European Union” during transition.

“I urge [the prime minister] to model herself on her predecessor, the late noble Baroness Thatcher, and show real mettle and steel in rejecting these hostile negotiating terms from the European Union,” he said.

Others asked about plans to maintain the status quo during an implementation period, leading May to confirm that she would back a position taken by Gove to leave the common fisheries policy and common agricultural policy in March 2019.

However, it is unclear how the UK would then honour its promise to abide by EU laws and regulations during transition.

On the other side, May was hit by question after question from Labour MPs who fear that the Conservatives will row back on workers’ rights after Brexit – in particular in relation to the working time directive. The prime minister said rights would be protected, but would not make a specific promise on that regulation in the future.

Labour leader Jeremy Corbyn hit back, saying: “These rights help prevent workers from being used and abused by their bosses. The Tories cannot be trusted to keep them. As we leave the EU, only Labour will protect jobs and our economy.”



May also responded to the EU warnings by saying that a member of EU chief Brexit negotiator Michel Barnier’s team – Stefaan De Rynk – had said the UK’s deal would be a “bespoke agreement in terms of trade”.

The key commission adviser told an event in London that every trade deal was bespoke, but also made clear that the advantages of the single market could only be secured by accepting the obligations.

De Rynk argued that the UK would have to accept the rules during transition, while losing a place at the table, and claimed that Brexit could not be a success because it was a “mutual weakening” in economic terms.

An academic, Dr Peter Holmes of the UK Trade Policy Observatory at Sussex University, said that ultimately the UK would have to accept what the EU offered, but added that Canada was not the only template.

“EU-Korea looks a bit more attractive than EU-Canada. It includes some services provisions and mutual recognition but offers less good market access than the European Economic Area,” he said.

“But none of these models would allow an open Irish border as most people seem to understand last week’s agreement to require.”

