Summary
The scheduled inaugural meeting of Commonwealth Trade Ministers from 9-10 March 2017 would appear to provide an ideal opportunity for a coordinated push by Commonwealth ACP governments for an early and concrete commitment from the UK government to ensuring no disruption of pre-existing access to the UK market, as a result of the UK’s formal departure from the EU. This is particularly important for those Commonwealth ACP countries which have a higher than average dependence on the UK market in their trade with the EU, either overall or at the sector specific level.
Ignoring this opportunity and allowing existing arrangements for ACP access to the UK market to be interrupted, would provide a far from ideal basis for the UK to seek ‘more favourable asymmetric liberalisation on the ACP side’.
A report from the Free Enterprise Group (FEG), authored by the Conservative MP James Cleverly and Tim Hewish, the Director of Policy Research for the Royal Commonwealth Society, entitled ‘Reconnecting with the Commonwealth: the UK’s free trade opportunities’, (1) has highlighted the potential significance of the forthcoming inaugural Commonwealth Trade Ministers meeting, scheduled to take place in London from the 9-10 March 2017. (2) The report suggests the meeting could be used by the new UK International Trade Secretary to discuss collectively with Commonwealth Trade Ministers the strategic orientation of UK trade policy post Brexit. (1) Indeed, the meeting is seen as providing an opportunity to develop and define an enhanced Commonwealth Trade Strategy. (2)
The FEG report argues ‘Brexit offers the UK an opportunity to pursue an independent and world-wide trade liberalisation and tariff elimination agenda’. It acknowledges the UK’s priorities will be negotiating deals with the EU, the USA and China, which respectively represent 44%, 17% and 3.6% of the UK’s total exports. (1)
Within the Commonwealth, the report calls for the UK to give priority to the negotiation of free trade area agreements with India, Australia, Canada, Singapore and South Africa. (1)
The report recognises the importance of the UK market to a range of developing Commonwealth countries in their trade with the EU28, including ACP members South Africa, Kenya, Malawi, Zambia, Jamaica and Papua New Guinea (and non-ACP Commonwealth countries such as India, Pakistan, Sri Lanka, Bangladesh, Singapore and Malaysia). It is argued the importance of the UK market to a range of developing countries will ensure the governments of these countries ‘have a motive for completing a trade deal’ with the UK. (1)
The paper argues ‘FTAs which offer free market access into the UK would be attractive for Asian, African, and Caribbean economies’, since this would avoid ‘painful EU tariff barriers to the UK’ market. (1)
The authors advocate a ‘trade-only’ approach to the negotiation of FTAs with Commonwealth countries, ‘with no non-trade bolt-ons’, so as to avoid ‘protracted delays’ in negotiations. It also suggests the adoption of a ‘negative list’ approach, with everything being traded freely unless explicitly excluded. (1) With more open economies the briefing calls for the adoption of a mutual recognition approach to standards. (1)
Overall the paper advocates the UK should follow a five phased approach to future trade relations with Commonwealth countries:
- Phase 1, the conclusion of FTAs with open Commonwealth economies, such as Australia, Canada, Singapore and New Zealand, ‘in time for Brexit’. In this context the former Australian Prime Minister, Tony Abbott, has called for the conclusion of a 1 page FTA with Australia. (1)
- Phase 2, an FTA with India, which it is recognised could take 5 to 6 years to negotiate.
- Phase 3 and 4, the negotiation of a number of deals with ACP countries which ‘mirror’ or are ‘better than existing EU options which it will undoubtedly lose post Brexit unless it can secure grandfathering rights’. It argues the UK should offer duty free-quota free access with a view to securing ‘more favourable asymmetric liberalisation on the ACP side’. It is argued ‘special attention and priority should be given to South Africa given its strategic trading importance to the UK’.
- Phase 5, the ‘UK should join the under reported Trade in Service Agreement (TiSA)’. (1)
Sources:
Free Enterprise Group, ‘Reconnecting with the Commonwealth: the UK’s free trade opportunities’,
https://gallery.mailchimp.com/708e119fa74cd33e6a28f949a/files/FEG_Commonwealth_Trade_web.pdf
Commonwealth Enterprise and Investment Council, ‘Event Summary: Commonwealth Trade Ministers Meeting’, 9-10 March 2017, London, United Kingdom
http://www.cweic.org/event/commonwealth-trade-ministers-meeting/
| Comment and Analysis
For the six ACP countries referred to (South Africa, Kenya, Malawi, Zambia, Jamaica and Papua New Guinea) as well as a multiplicity of other Commonwealth ACP countries (see box), the analysis appears to ignore the pre-existing duty free-quota free (DFQF) access enjoyed to the UK market since 2008 (qualified DFQF access in the case of South Africa), under the EU28 agreed EPAs or EBA scheme (which provides DFQF access on a unilateral basis for least developed countries). This means these countries face no ‘painful EU tariff barriers’ in trading into the UK. The analysis also ignores the prior non-reciprocal market access arrangement which covered these countries access to the UK market between 1975 and 2008, which allowed substantial tariff free access, with only limited quantitative restrictions.
This is an important historical legacy, since for the UK to negotiate FTAs with ACP countries which ‘mirror’ or are ‘better than existing EU options’, would first require the UK to withdraw such long-standing pre-existing preferential market access, until such time as new arrangements could be negotiated. The economic disruption this would cause, given the high dependence of some of these countries on the UK market in their overall trade with the EU, would hardly be conducive to these governments being open to extending favourable treatment to the UK to enable UK exporters to secure ‘more favourable asymmetric liberalisation on the ACP side’. The analysis also overlooks the constraints on ACP governments which have concluded EPAs with the EU, arising from the MNF clause which has been included in all of these EPAs. This requires signatory governments to automatically extend to EU exporters any more favourable treatment which they may extend to any developed country trade partner. This means the simple comprehensive 1 page FTA proposed by the former Australian PM, Tony Abbott, would be a non-starter for ACP countries. However it should be noted the inaugural meeting of Commonwealth Trade Ministers does provide an opportunity for a coordinated push by Commonwealth ACP governments for an early and concrete commitment from the UK government to ensuring no disruption of existing access to the UK market. This is particularly important for those Commonwealth ACP countries which have a higher than average dependence on the UK market in their trade with the EU, either overall or at the sector specific level. South Africa would appear to have a potentially important role to play in this regard given the importance of the South African market to EU exporters (currently over €1 billion per annum) and the significance of pre-existing preferential access which UK exporters have enjoyed to the South African market, first under the EU-South Africa Trade and Development Cooperation Agreement (TDCA) and most recently under the SADC Group-EU Economic Partnership Agreement, which replaced the TDCA in October 2016. However, it should be borne in mind that any UK commitment to a unilateral globally focussed liberalisation agenda would be likely to accelerate processes of preference erosion which ACP exporters already face in a range of traditional agricultural products. |
| Key words: BREXIT Area for Posting: BREXIT, EPA General, SADC EPA, West African EPA, central African EPA EAC EPA, ESA EPA, Caribbean EPA, Pacific EPA |