Can the EU Trust Anglo Countries to be Faithful in their Trade Agreements?

I recently attended a business forum held by the European Services Forum and the EU Centre for Global Affairs, to learn more about the status of trade agreements between the European Union (EU) and Australia and what the future may hold for them considering Brexit and the US election.

One of the things we know about trade agreements, and this was confirmed in the presentation, is the huge amount of time and energy spent (not to mention money) on crafting, negotiating and bringing a trade agreement to life. Then there is the time and energy required to maintain it and ensure it is communicated and leveraged (though I’m not sure this happens so well, but perhaps that’s a topic for another time!). But what we don’t know is that whilst this new relationship is being created in good faith by both parties, one half of the marriage is most likely getting itchy feet and thinking about moving on already! You know, the whole ‘it’s me, not you’ scenario?  The sad thing is that neither party is aware of this process, or that it is already bubbling away below the surface before the relationship has even commenced!

Let’s look at why I think this, and why I’m not quite as optimistic as some of the speakers that morning on the future of trade agreements between the EU and anglo-sphere countries. Having worked for several years in culture and its intersection with business and politics, I can see how Prof Geert Hofstede’s two dimensions of Uncertainty Avoidance (how a society deals with or prevents uncertainty) and Long vs Short Term Orientation (how we view time, a long term open orientation or a short term normative view) can help us understand why the marriage may be on the rocks before even starting!

Let’s start with the EU. The EU is not a country, but almost all its member countries are moderate to very high in Uncertainty Avoidance.  In other words, there is a preference to avoid uncertainty and ambiguity and to prevent such situations. It’s also about securing the future by removing uncertainty today and seeking to understand where uncertainty may lay along the journey. They are also mostly quite Long-Term outlook countries, preferring a future-oriented approach rather than a Short-Term normative perspective. So, despite not being a single country, the grouping of EU member countries is certainly strongly influenced by these factors.

Let’s contrast this with the UK and the US who have a cultural preference for throwing caution to the wind and being more spontaneous, or perhaps unpredictable, as they are each tending towards lower Uncertainty Avoidance. The US cultural norm is middle of the road on the Long-Term/Short-Term orientation, but certainly there is no strong preference toward a Long-Term outlook, and the UK rates as very Short-Term oriented on this cultural dimension. Considering this we can see some possible links between the Brexit decision (many observers commenting that it is a short-term/near-sighted decision) and the unpredictable decision in the US polls in what is as much about throwing caution to the wind and taking a chance on an unknown. Right now it’s quite an ambiguous and unsure time for both the UK and the US.

Now, let’s bundle Australia, New Zealand and Canada in with the US and the UK. We all share similar cultural norms; no real preference for avoiding uncertainty and all of us having a very short-term, normative orientation.  With this in mind, how much faith can be placed in any trade agreements with anglo-sphere countries? Especially if there is every chance that in the future we may fall back on our natural cultural norm of being Short-Term oriented, possibly scrap or work back any global trade agreements and replace them with more protectionist driven domestic policies that echo the 'your with us or against us' nature of Short-Term orientation? And whilst this may appear to the EU as a spur of the moment decision, we will feel ok about this because of our ability to create and deal with uncertainty; it doesn’t mean we like it, but at the same time it feels ok. You only need to look at the Australian political landscape over the last nine years to understand that dynamic!

So, the big question. Will we be faithful to our EU partner over the mid to long term in our various trade agreements? 
I’m not sure; but perhaps it would be wise for the EU to build in a pre-nuptial agreement. One that ensures accountability and commitment, and that requires up front marriage counselling to ensure as much transparency and understanding about ‘who’ it is that we’re jumping into a relationship with. Because at the end of the day, it’s not just about the parents, it’s also about the kids.  In this case, the thousands of businesses who stand to gain or lose based on the quality and efficacy of the trade agreement. And whether it's a global focused trade agreement, or a domestic driven agenda, it doesn't matter because either way will work. Both have advantages and disadvantages. Short-term societies know how to make things work as much as long-term. It's the loss of momentum, energy and fatigue that comes with the significant change in direction (the 'separation') that slows us down more than anything else and creates an impasse as us kids try to work out who we'd rather live with!


First posted on LinkedIn, 9th December 2016.