A partner and co-chair of Dechert’s international trade and government regulation practice since 2012, Gonzalez spent just under a decade in the late 1990s and early 2000s helping the European Commission negotiate trade deals globally on behalf of the EU.
She spoke with FN about the challenges ahead for a divided City.
Financial News: How should the City approach Brexit negotiations when it’s not sure what it should be asking for?
Miriam Gonzalez: It is very difficult to get into specific negotiating objectives until the government decides what kind of model they wish to have for relations with the European Union. So far the only line we have got from the government is that Brexit means Brexit.
Everybody is hoping to hear more about what broad model they think will be the best to negotiate [with]. As soon as we know [that], it would be easier to crystallise the opinions of the different sectors on financial services and start trying to see [what] the majority wants and also [where there can be] trade-offs. Because there will be trade-offs.
What needs to happen while the City waits for further clarity on what access model the government will opt for?
When you negotiate trade agreements, [those involved] need to have a good understanding of where they are on the offensive and where they are on the defensive [so] they can then start doing trade-offs. It is quite important that the financial services sector explains very clearly [to government] what their absolute priority objectives are and also what the red lines are so that they don’t find themselves in an unfortunate situation.
Companies need to be working out what is of utmost importance to them, what is less important and what they can live without [so as to feed into] the various models of negotiation that we have on the table.
Also ideally, they need to be working out what they think their objectives are, [and how they would be] good not only for the UK but also for the European Union, because we are going to have to convince the others that it is also in their interests.
Bilateral trade agreements require give and take. The whole point of negotiations is that you need to have trade-offs, so in order to get, for example, maximum access for financial services you need to work out what the Europeans are going to want from that.
What is important is for every sector to understand that they will all be one piece of a much, much bigger puzzle. There are many other services in London which are very important and which are not financial services and that needs to be recognised as well.
What tips might you have from your own negotiating experience?
Even for those of us who have been exposed to actual, practical trade negotiating work, nobody has done anything of the extent of what the UK has on the table in the next few years. Because whenever we were negotiating, we already knew what regulatory model we had, and we already broadly knew the geographical priorities that we had, so we didn’t need to have a complete rethink of the regulatory model. It is therefore very difficult to draw parallels.
Would it be better to rush through or take time over these negotiations?
My own view is that if you’re in a negotiation, what is important is to get it right.
[This will be] a complex negotiation, involving not only financial services but every single sector of the economy and therefore the likelihood that this will get done very quickly is very small, I would have thought.
That is why input from [financial services] companies is very important because the process is huge and very complex. The sooner there is feedback from companies as to what they think needs to happen the better. Then, the government can understand where people are and where the majority of interests are.
What happens if negotiations aren’t going the way the City wants, is making threats ever a good idea?
What I think that any negotiator will tell you is that you do not need unnecessary provocation. When something as important as this is at stake, at the end of the day what you’re looking for is a positive sum game so that both sides are convinced this is in their best interests. And if one of the sides starts provoking the other and [the conversation] starts to spiral downwards then everybody loses.
The EU has given the signal that they are prepared to be flexible on Article 50. If the EU really wanted to make life very difficult, they would insist on exit first and then negotiate a replacement arrangement. The way in which they have immediately spoken about negotiations in parallel for exit and replacement is the right thing to do, [but it also means] we have every interest not to upset everybody so that they don’t put that into question.
So what headline dos and don’ts should City firms bear in mind in the coming months?
Do try to put together a clear understanding of your priorities as a firm and try to do it as early as possible. [Firms should] also try to look at their set of priorities against each model on the table and not just against their preferred approach.
The government is putting together the teams [to lead these negotiations] as we speak, they will obviously need to have good knowledge as to what is going on with [these] organisations. The sooner companies can express clearly what they need, the more of an advantage they will have.
I think it is important they [communicate their priorities] not only through associations but also as a company. Otherwise, the UK government will get very filtered information if it is coming [solely] from the industry association. I would think [the government] would like to see [information from] both.
Do look at the arguments from the European side as well. Don’t provoke. Don’t pick on public targets unnecessarily. Be constructive. And empty threats in any directions are never good. We are where we are, we need to make the best of it.