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With days until the Brexit transition period expires, the clock is ticking for Trade Secretary Liz Truss to put a British stamp on the EU’s trade deals with the rest of the world.
The efforts of the Department for International Trade (DIT) on rolling over more than 60 deals worth over £200bn a year have been no small feat, especially with most negotiations conducted by webcam due to Covid.
But this is only a fraction of the 750 agreements the EU has negotiated with other nations around the world. Truss says that “Global Britain is just getting started” as she seeks to “turn the page on our past in the EU”. But questions remain over whether some of the deals, like the UK’s bespoke deal with Japan signed in October, live up to the hype.
The Government aims to use trade policy to “level up” the left-behind regions of the UK, but the DIT’s own assessment of the agreement with Japan shows that areas like the North East, North West and the West Midlands “are estimated to expand the least” compared to London.
Despite repeated pleas from shadow international trade secretary Emily Thornberry, the department has only published a comparison of the new deal versus trade on World Trade Organisation (WTO) terms, instead of the status quo.
Likewise, the biggest bonus of the Canada rollover deal with Ottawa, agreed last month to triumphant fanfare, was that British businesses that trade £20bn a year with Canada won’t face a cliff-edge of trading on WTO terms from Dec 31.
A mobility agreement with Switzerland, the UK’s fourth biggest trading partner, means professionals won’t need work permits to travel there for business – just as they didn’t pre-Brexit.
A £5bn continuity agreement with Mexico ensures trade will not be disrupted by Brexit, and an £18.6bn rollover agreement with Turkey maintains tariff-free trade terms the UK already enjoys.
In a recent speech at Chatham House, Truss said it was “the Government’s ambition to secure free trade agreements with countries covering 80pc of UK trade by 2022”.
But the jewel in the crown of the Government’s post-Brexit “Global Britain” project – a US-UK trade deal – remains elusive.
Government insiders believe they are in a “good position” to move forward with the Joe Biden administration. But despite talk of a “mini-deal” from outgoing trade representative Robert Lighthizer before Donald Trump leaves the White House, huge hurdles remain for something more expansive.
Not only are the politically explosive and trickiest chapters to agree going nowhere – food standards and pharmaceuticals, to name but two – but the President-elect has warned that the Good Friday Agreement should not “become a casualty of Brexit”.
Any trade deal with Washington will be “contingent upon respect for the agreement and preventing the return of a hard border. Period.”
He didn’t stop there, banging a nail into the coffin of hope for a quick deal in an interview with The New York Times, in which he claimed: “I want to make sure we’re going to fight like hell by investing in America first. I’m not going to enter any new trade agreement with anybody until we have made major investments here at home and in our workers.”
Going Down Under
The UK signed a number of deals as 2020 wound down. It inked a continuity agreement that means its automotive sector will avoid 20pc tariffs on exports of cars and trucks to Mexico, worth £160.4m last year according to HMRC data. And it has secured a deal with Turkey that will protect automotive supply chains worth £174m to UK exporters in 2019.
But then there’s the matter of a deal Down Under. The appointment of former Australian prime minister Tony Abbott as an adviser to the Board of Trade was intended to put pressure on Canberra to agree a deal, which, he told MPs on the international trade select committee last month, would ideally “involve no tariffs, no quotas, as full as possible mutual recognition of standards and qualifications and as free as possible movement of people for well paid work, not welfare”.
The sectors most likely to benefit include financial services, telecoms and technology. However, Abbott’s claim that “on both sides there is an eagerness to try and get the Australian deal done before Christmas” has failed to materialise after a third round of negotiations in December.
Given that an Aussie deal is seen as a stepping stone to accession to the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership, that goal looks further in the distance.
Nonetheless Truss has pledged to formally apply to join the CPTPP early next year, whose member countries accounted for £111bn worth of UK trade in 2019.
Officials hope that Britain’s automotive sector will be a key beneficiary, as it exported £3bn in cars to the 11 CPTPP countries last year. However, to put that in context, the UK sold £11.9bn in cars to the EU last year.
Truss adds that there are “a range of gold standard agreements to pursue on the horizon, including with our friends in the United States, Australia and New Zealand among others”. How long it takes to reach that horizon will be the key to the success of the Government’s “Global Britain” ambitions.