Sunday, December 5

UK firms face £80bn hit due to failure to roll over EU deals


 

 

British businesses are facing disruption to as much as £80bn of global trade because of Boris Johnson’s failure to roll over 15 EU trade deals with other countries in time.

While the UK’s talks with over a deal Brussels garner most of the attention, the government also has just 50 days left to sign free-trade agreements with countries such as Mexico, Singapore and Canada to replace the ones it will otherwise lose access to on 31 December.

Adding to the atmosphere of crisis, the shadow international trade secretary, Emily Thornberry wrote to trade secretary Liz Truss on Tuesday to point out that unless these deals are concluded and published by 11 November, there will be insufficient Parliamentary time under the law for MPs to ratify them.

An analysis by The Independent has found that the missing deals which also include accords with Turkey, Egypt and Algeria could see tariffs and quotas imposed on £38bn of British exports and £41bn of imports, potentially causing havoc for some firms.

The hole accounts for 5.5 per cent of UK total trade and would represent a second blow to Britain’s terms of trade with the rest of the world, at the same time as it takes the hit of leaving the EU single market and customs union.

Allie Renison, head of Europe and trade policy at the Institute of Directors, said it was vital for UK businesses that these other deals are rolled over. While the government is doing a lot of running just to stand still, the value of continuity in a world full of uncertainty should not be understated, she said.

Businesses need as much stability on trade as possible, and countries jealously guard access to their markets, so these rollovers should not be taken for granted. The government is in discussions to roll over all the deals.

We are considering all possible options to maintain continuity of existing trade terms and will look to sign further agreements in the coming weeks, said a Trade Department spokesperson.

We are working with our partners to ensure that signed continuity agreements with all 52 partner countries are able to enter into force after the end of the transition period.

Many trade experts believe most could still be replaced at the last minute. Yet the frenzied dash to preserve the status quo on trade contrasts with ministers’ boasts of a swashbuckling Global Britain freed from the constraints of EU membership.

It now seems likely that the UK will manage to roll over the majority of the EU’s trade agreements by the end of the year. Of those outstanding, Canada, Singapore and Vietnam will probably be done in the coming weeks, but Mexico will be a struggle, said Sam Lowe, senior fellow at the Centre of European Reform.

Perhaps the most important one of those left to do is also among the trickiest: Turkey. Turkey is in a customs union with the EU, which means that it can only strike a trade deal with the UK if the EU also does so. Assuming the EU and UK do reach agreement, this still doesn’t leave a lot of time to get everything sorted with Turkey.

Turkey’s trade with the UK was worth £18bn alone in 2019, making it one of the biggest missing links on the list of deals yet to be signed. It is beaten among the countries holding out only by Canada’s £22bn and sits just ahead of Singapore’s £17bn trade haul.

Since the Brexit vote the government has managed to roll over 24 EU trade deals, covering £146bn of UK trade, around 10 per cent of the total, with countries ranging from Switzerland to South Korea.

But Alan Winters of the UK Trade Policy Observatory at the University of Sussex warned that some of these are not a full like-for-like replacement because they do not replicate agreements on avoiding rules of origin checks on imports and various Mutual Recognition Agreements (MRAs).

They’re things you can’t do anything about because they rely on the EU agreeing basically, he said. They are slight disadvantages relative to the previous situation [and] in a couple of cases it might matter, he said, citing UK firms exporting to Switzerland which could face disruption from 1 January.

Trade experts are also increasingly concerned about the government’s tendency to exaggerate the economic benefits of the rolled over deals, as well as the benefits of any genuinely new trade deals.