Unravelling EU/UK trade like unscrambling omelette: ITC

, DAVOS, Switzerland - British Prime Minister Theresa May gave her most decisive Brexit speech to date on the day the World Economic Forum in Davos kicked off, confirming that she favoured a clean break from the European Union.

Arancha Gonzalez, Executive Director of the International Trade Centre, told the Global Markets Forum that May’s “hard Brexit” tone raises several questions over future trading arrangements.

Here are excerpts from the conversation:

Question: What has the reaction in Davos been to Brexit and what should be the priority when navigating this trade dynamic?

Answer: It’s not just about trade. This is the part that is causing pause in Davos because businesses have invested across the EU on the understanding that the rules of the game are the same across the entire EU. Undoing this would be like trying to undo the eggs after you have made an omelette.

Q: If the projected “hard Brexit” goes through, we will be seeing an overhaul of trade deals in the region. What can we expect this to look like and where do we even start?

A: Brexit will need to address three things. What trade regime between the UK and the rest of the EU? What trade regime between the UK and its current preferential trading partners, meaning the countries with whom the EU has today free trade agreements (FTA)? And what trade regime between the UK and those countries with whom the EU today has no FTAs?

Q: What is the biggest challenge?

A: The most difficult part of Brexit will be to figure out the trade regime between the UK and the rest of the EU because the level of trade integration between the members of the EU is the deepest in the world and integrates regulations that govern how products and services are produced and sold within the EU.

(This interview was conducted in the Reuters Global Markets Forum, a chat room hosted on the Eikon platform. For more information on the forum or to join the conversation, follow this link: here)