It is vital to the future of the UK that before the end of the Brexit ‘transition period’, the Government has established the future trading relationship with the EU and, in parallel, agreed ‘trade deals’ with nations around the World. Without agreements in place, there is risk to disruption of to food supplies and essential industrial supply-chains. Having a wide set of global agreements in place is required if the UK is to open up the ‘global opportunities for growth’ that was a core promise of the Brexit manifesto.
The reality – with 50 days left until the UK leaves both the EU ‘single market’ and ‘customs union’ – is a long way short.
The EU presently accounts for 47% of UK international trade. Talks are going down to the wire – but a ‘deal’ between the UK and EU – should one be reached at all – can only be a ‘thin’ one – and restricted to trade in goods. There is now little chance of a deal on services, energy, finance, education, security, data, justice, fishing and governance – and many other areas of cooperation such as scientific research, fighting crime, and the environment.
The Government approach beyond Europe has been to attempt to ‘roll-over’ as many EU and ‘third-country’ deals as they could. With the exception of negotiations with Japan, there has been no attempt to redress the balance of terms that apply to British businesses under the auspices of the EU trade deals.
With 50 days until the UK can no longer trade on EU terms – with any of the 27 EU member states or more than half of the existing trade deals with non-EU countries, British businesses face disruption to as much as £80bn of global trade.
According to the Gov.UK website on 11 November 2020, 15 agreements remain to be re-negotiated and signed with the UK as a standalone sovereign state. Countries such as Mexico, Singapore and Canada. The list, below, details the countries and the 2019 trade volumes. Without a specific agreement in place, trade with these nations relies on the baseline ‘World Trade Organisation’ terms.
Shadow International Trade Secretary, Emily Thornberry, has written to Trade Secretary, Liz Truss, pointing out that unless these deals are concluded and published by today, 11 November, there is insufficient Parliamentary time under the law for MPs to ratify them.
WTO terms means imposition of tariffs and quotas amounting to £38bn of British exports – and £41bn of imports. The deficit – 5.5% of UK total trade – comes on top of the hit of leaving the EU single market and customs union. There is no official estimate of the impact of no-deal with the EU, as goods flow freely today without reporting and recording.
Table 1: 2019 value of UK trade with countries with which EU deals not yet rolled over – £m
|Country or bloc||
|Bosnia & Herzegovina||
Source: UK Government, ONS
The Government has negotiated ‘rollover’ for 24 EU trade deals totalling £146bn of UK trade – around 10% of total. Note that ‘rollover’ has not been like-for-like in some cases, for example, Switzerland – to the disadvantage of UK businesses.
The Government has ‘extolled the virtue’ of rollover deals, whilst industry bodies – and Parliamentary scrutiny committees – have been expressing increasing concern about the Government’s tendency to exaggerate their economic benefits. Liz Truss hailed the UK – Japan trade deal as a “landmark moment for Britain” which “shows what we can do as an independent trading nation”. On examining the detail, her department’s own economists found it would deliver a long-term boost to UK GDP of just £1.5bn – or less than 0.07” of the UK GDP.
Table 2: The ‘trade gap’ as at 11 November:
|Percentage of UK Trade||Status|
|Trade with EU||
|Negotiations stalled on 3 key issues|
|Continuity deals not done||
|No agreement reached|
|Trade with rest of world||
|Negotiations not yet begun|
Continuity deals done
The Conservative manifesto claimed that new post-Brexit trade deals would allow Britain to “enrich ourselves” – and cited ambitions to do free trade deals covering 80 per cent of UK trade within the next three years, starting with the USA, Australia and New Zealand.
It is generally accepted that the global trade benefits from Brexit will be small. More importantly, with so many deals coming to a sudden end at 23:00 GMT on 31 December – is business continuity. Speaking for the Institute of Directors, Allie Renison is reported as saying that business priority is not new deals – rather it is preserving existing arrangements. “Most company directors consider an EU agreement their top trade priority – but rank continuity with others as more important than new trade deals, particularly in manufacturing with countries like Turkey where we have enjoyed longstanding preferential access through the EU customs union.”
We are posting this article on 11 November 2020 because it is a significant date in the Brexit timetable
Under the 2010 Constitutional Reform and Governance Act, International Treaties have to be laid before Parliament for 21 ‘sitting’ days before they can be ratified. Emily Thornberry, in her letter to Liz Truss, said Labour had been informed by the relevant Parliamentary authorities that – as the House of Commons is due to break for Christmas on 17 December – 11 November is the last day that the deals can be submitted and still receive the minimum 21 days of scrutiny.
She added in her letter that: “What makes this abysmal and shambolic state of affairs all the worse is that when we look at the length of time your department has had to get these agreements in place, ensure proper parliamentary scrutiny, and protect our continued free trade, it has been so totally avoidable.”
Reference: (website updated to 11 November 2020) https://www.gov.uk/guidance/uk-trade-agreements-with-non-eu-countries#trade-agreements-that-have-been-signed