Liam Fox, U.K. international trade secretary, arrives at Downing Street in London, U.K. (Photographer: Chris Ratcliffe/Bloomberg)

U.K.'s Fox Acknowledges Hard to Strike EU Trade Deal by 2019

(Bloomberg) -- Trade Secretary Liam Fox acknowledged it will be a stretch for Britain to negotiate a new trading relationship with the European Union by the time of their 2019 divorce in another sign that the U.K. government will seek a post-Brexit transitional period.

"There’s a growing consensus amongst the cabinet that we will leave the European Union, but we will have a transition and implementation phase,” Fox said on Monday during a trip to Washington. "It would be nice to think we could get a full trade agreement by the time we get to March 2019, but that would be an optimistic view of recent free-trade agreements.”

Prime Minister Theresa May’s government once maintained a trade pact would be possible by the time Brexit happens despite doubts within the EU and warnings it took Canada and the bloc seven years to negotiate a less ambitious agreement than the one she is seeking. Her failure to maintain a parliamentary majority in last month’s election and increasing calls from business to avoid a "cliff edge" are now forcing the government to rally behind a transitional period.

Fox’s noting of the time constraints came a week since he suggested politics rather than economics would be the main obstacle to any trade deal with the EU and a day after he shifted gears on the length of any implementation phase from a "few months" to potentially as long as 25 months.

Speaking on the BBC, Fox, who campaigned for Brexit, said that while the U.K. will be "out" of the EU’s single market and customs union, it may still "decide to implement some of the practices of those for a period of stability, which we believe is in the interest of U.K. business and our overseas investors.”

He nevertheless repeated that a deal with the EU should be straightforward to seal, given four decades of trade ties.

‘Slippery Slope’

Talk of a transition drew criticism from the pro-Brexit U.K. Independence Party, which accused the government of taking a "step on the slippery slope to not really leaving the EU at all.”

Meantime, the main opposition Labour Party has its own fissures over future trade links with the EU. The Guardian reported its top officials are at odds over whether the U.K. can remain in the tariff-free customs union when it leaves the EU.

Fox flew to Washington for talks with U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross in a bid to prepare the ground for a U.K.-U.S. trade deal to be signed following Brexit. He will meet with members of Congress on Tuesday.

Such a pact would open “a new and exciting chapter in our special relationship,” Fox said in a speech at the American Enterprise Institute.

Removing commercial barriers with the U.S. could generate an additional 40 billion pounds ($50 billion) in trade with the U.K. by 2030, according to the U.K. government. Fox will also tell lawmakers that 700,000 U.S. jobs are supported by trade with Britain, and he’ll present them with a U.K. government report that outlines the impact on each of the 435 congressional districts.

“We have a strong foundation on which to build,” Fox said on Monday after meeting with Lighthizer and a working group focused on trade. “The immediate priority is to give businesses on both sides of the Atlantic certainty and confidence” and “commercial continuity for U.S. and U.K. businesses as the U.K. leaves the EU.”

Still, economists and trade specialists say any deal will be difficult to deliver because U.S. negotiators have more experience and could bulldoze the U.K. on issues such as agricultural and financial regulation.

CBI Chief

Speaking in Brussels, Confederation of British Industry Director General Carolyn Fairbairn said a trade deal between the U.K. and the EU should be the priority rather than a trans-Atlantic accord. A poll by Ipsos Mori for the Evening Standard newspaper found 49 percent of voters saying the Brexit talks should focus on accessing the single market while 41 percent wanted to prioritize immigration.

There is already a split in May’s cabinet about allowing imports of chlorine-washed chicken from the U.S., according to Monday’s Daily Telegraph newspaper.

Questioned about whether he would eat such chicken, Fox said the media was "obsessed" by a "detail of the very end stage of one sector of the potential agreement.” Back in London, May’s spokesman, James Slack, said the report was premature and that any trade deal must work for farmers, consumers and businesses.

“You’re getting way ahead of yourself,” Slack said. “Maintaining safety and public confidence in the food we eat is the highest priority."