Former WTO Director-General and EU Trade Commissioner Pascal Lamy spoke today at the launch of the Trade Knowledge Exchange (TKE) in London. The TKE is a new initiative, led by Frontier and 5 partner organisations, that brings together world-leading experts on international trade. Frontier Chairman, Lord Gus O’Donnell, hosted the event, which also featured Professor L. Alan Winters of Sussex University and Dr. Swati Dhingra of the London School of Economics (LSE).
Mr Lamy’s speech focused on the importance of regulation, which is central to trade negotiations but very difficult for trade negotiators to deal with. Good regulation is the product of often complex cost-benefit analysis that have to take into account social preferences regarding risk. It is particularly challenging to fit this calculus into the traditional ‘bartering’ framework negotiators use for classical trade measures. He highlighted that while this is true for all trade negotiations, it will be particularly challenging for UK-EU negotiations as the EU has achieved a significant amount of regulatory convergence, underpinning the operation of the single market. Trying to renegotiate aspects of this regulatory convergence – “extracting the UK egg from the EU omelette”- was likely to be economically costly and politically fraught.
Summarising the discussion, Lord O’Donnell noted the difficulties of dealing with technically complex negotiations in a politically heated environment. In such a context, objective and reliable analysis is required, and this is the need the TKE is designed to meet.
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