Could UK Piggyback On US-China Trade Deal?

Britain is heading out of the European Union and will soon be free to seek its own trade deals.

There is now plenty of speculation it will soon seal its own pacts with all sorts of trading partners, from the US to China to, well, the EU.

And those talks are - informally at least - already under way.

While in China over the past few days, Philip Hammond had a few conversations with his Chinese counterparts that left him with the impression that they would be open to a UK-China deal.

However, the Chancellor hinted at another intriguing possibility when he spoke to me on the fringes of the G20 summit in Chengdu.

He said: "We have time to look at the options, to negotiate agreements, to discuss the terms on which we could enter existing agreements."

The final couple of words - "existing agreements" - are particularly interesting.

I had asked him whether he was mulling a bilateral trade deal with China (e.g. just us and them) or whether he was attracted to the possibility of joining an existing deal such as the US-China Trans-Pacific Partnership.

The fact he admitted such a move is being countenanced is significant.

At this stage you might be thinking this all sounds a little odd, but it turns out plenty of other countries, including Canada and Australia, have already piggybacked on the US-China deal.

There is little stopping Britain from following suit - after all the British Isles may not have coastlines on the Pacific Ocean, but some of its territories do.

But nor do Mr Hammond's comments preclude Britain from joining TTIP - the US-EU deal - though it may not get signed in the first place.

It's an important detail in the approaching saga about Britain's economic relationship with the rest of the world.

For the simple fact is that the UK hasn't had to strike its own deals since the 1970s; it has no experience or expertise in what is a highly-complicated, high-stakes field.

Meanwhile, the rest of the world has moved on.

So, there are some within Government who argue that it would make more sense for Britain to join an existing framework than go through the arduous and risky process of negotiating a fresh one itself.

Then again, time is of the essence.

Mr Hammond told me that he suspects the economy will weaken in the coming months, though it will take some time for the true picture of the post-crisis economy to become clear.

And the G20 finance ministers are clearly concerned.

When Mr Hammond said the world economy would face a two-year Brexit "shadow", it reflected those worries he has been hearing about from his counterparts over the past weekend.

As one (Other OTC: IUSDF - news) official who has been coming to these events for more than a decade told me: "We're used to helping the rest of the world with their economic shocks. This time, we were the shock."