For many people, 2020 is synonymous with the COVID-19 pandemic, a brutal election campaign in the United States, and ongoing tension between the US and China. But there’s one major event that seems to have slipped from the radar: Brexit, Britain’s historic exit from the European Union.
Trade talks kicked off again Tuesday after stalling earlier in the year, only now the deadline is far closer at hand with leaders potentially needing to cut a deal at breakneck speed. At the end of December, the country’s transition agreement for continued unfettered trade with the bloc expires. Without a new trade agreement, Britain’s exports to the EU would be subject to tariffs (a.k.a. import taxes), making their goods less competitive.
The stakes are high because the EU is a huge market of more than 400 million people, and GDP for 2020 is projected at around $13 trillion or almost three-fourths the size of the $19 trillion US economy. It’s a huge potential market for the United Kingdom. “Britain has most to lose,” says Rory Singleton, a Korn Ferry senior client partner for industrial markets. “The UK might be the biggest single importer, but we are not bigger than all of the rest combined.”
The pressure is also on for the Brits for a couple of other reasons. There’s little likelihood that the country could cut another significant trade deal with either the US or China in the foreseeable future. “It will be difficult given the current state of geopolitics,” Singleton says.
There’s also the added pressure of time, which is running out faster than many realize. The official end of the transition period is December 31, but realistically a deal needs to get cut within the next two to three weeks, experts say. However, as many leaders know, negotiating under time pressure isn’t optimal, says Christina Harrington, Korn Ferry’s head of advisory for Sweden. “There’s the risk of derailment when you are under high pressure from time or from getting the outcome that you want,” she says.
Negotiations often get derailed when the focus is too much on your own goals, Harrington says. “If you do that, you’ll find it hard to move forward.” Instead, she says the best way is to try to understand the other negotiating party’s perspective deeply. “I think sometimes we forget what it is that the other person is trying to do,” she says.
The negotiations taking place over the next few weeks could also be marred by past failures to agree. To circumvent that problem, new people with new approaches may need to be brought into the discussions, Harrington says. “I see many failures from not taking new perspectives,” she says.
And of course, the whole matter is complicated by the huge cultural differences across Europe’s member states. Britain’s culture is vastly different from that of France or Italy. That matters because a proposed solution that might work in Italy or France might fail in the UK. “What works in practice is quite different in different countries,” Harrington says. And that’s where things can get extra sticky if the negotiators don’t keep an open mind.