UK WTO representative seeks to clarify future UK trade treatment of developing countries

Addendum to Article
UK government commits to extending EBA access for LDCs post Brexit

Following on from the 24th June 2017 UK government statement entitled ‘Government pledges improved post-Brexit access to UK markets for world’s poorest countries’(1), the UK representative to the UN and Other International Organisations in Geneva sought to clarify UK policy towards non-LDC developing countries.  In a letter to fellow representatives to the UN, which was copied to WTO Director General Roberto Azevedo, Julian Braithwaite declared the UK government’s commitment to ‘avoiding disruption for our trading partners as we leave the European Union’. It was stated ‘the UK has decided to replicate its existing trade regime in the WTO in new UK-only schedules’. This was announced on response to questions from WTO members as to ‘what will happen to the nearly £20 billion of exports to the UK from developing countries who benefit from special tariff preferences’.

The letter went on to reiterate the commitment to extending duty free-quota free access for LDCs, which was announced in the 24th June 2017 statement and further committed the UK governments to maintaining ‘the access that other developing countries currently have through the Generalised System of preferences and the Economic Partnership Agreements’.

Comment and Analysis

This statement appears unequivocal in committing the UK to extending the current access enjoyed by ACP countries to the UK market under the EPAs. However this may not be quite so straight forward as this statement implies. Indeed, the question arises: on what legal basis is this current access to the UK market for ACP countries to be maintained?

The letter in its second paragraph speaks of the UK’s decision to replicate its ‘existing trade regime in the WTO’, while the March 2017 House of Lords report spoke of the UK governments desire to ‘grandfather’ existing reciprocal preferential trade arrangements. This was seen as essential to ensuring ‘British businesses do not face less advantageous terms than those on which they currently trade’ (2).

However the House of Lords International Trade Committee recognised ‘if  the  UK  and  the  countries  with  which  the  EU  has  an  FTA  were  simply  to  start applying  the  terms  of  the  FTA,  this  is  likely  to  be  against  the  rules  of  the  WTO’, and hence could face serious challenges from WTO members (2).

This led the International Trade Committee to conclude uncertainty existed over whether the UK could simply ‘grandfather’ existing preferences, with the UK government being urged to:

a)      to ‘seek the earliest possible clarity’ as to whether ‘such grandfathering is legally possible’;

b)      initiate ‘early discussions with the WTO about the degree of proactive support they can provide to promote such a smooth transition’.

This possibility of the ‘grandfathering’ of reciprocal preferences being challenged in the WTO could create considerable commercial uncertainty in the agro-food sector, where ‘inherited’ UK GSP and MFN tariffs are high in areas where ACP countries have substantive trade interests.

From an ACP perspective the preferred option, which would be less likely to be subject to challenge by WTO members, would be for the UK to adopt the EU’s interim approach enshrined in EU market access regulation 1528/2007. This measure on a transitional basis extended non-reciprocal duty free-quota free access to ACP countries engaged in ongoing EPA negotiations. This regulation through which, on a transitional basis, a group of developed economies extends non-reciprocal trade preferences to a group of developing economies while trade negotiations are completed, has been largely tolerated by WTO members over the past ten years of its operation.

A similar approach could be adopted by the UK government while the complex task of refitting the existing EU economic partnership agreements into bilateral arrangements with the UK (in ways which take on board the commercial consequences of future UK trade and agricultural policies) is initiated and completed.

This would enable any new trade arrangements with the UK to take on board the preference erosion challenges ACP exporters are likely to face under revised UK trade and agricultural products. These revised UK trade policies could affect ACP agro-food exports as diverse as bananas (3), sugar (4), rice (5), and citrus fruit (6).

It would also allow time to take on board the consequences of the regulatory uncertainty which will arise through the lapsing of over 5,000 pieces of EU legislation set in place through EU Regulations, the legal validity of which will lapse in the UK with the repeal of the 1972 European Communities Act (7). This legal vacuum could prove particularly telling in the sphere of food safety and SPS controls, an issue of vital importance to the uninterrupted conduct of the ACP agro-food export trade to the UK.

(1), ‘UK government commits to extending EBA access for LDCs post Brexit’, 30 June 2017
(2), ‘Capacity constraints and complexities of ‘grandfathering’ highlighted by Parliament Report’, 27 March 2017
(3), ‘ACP banana exporters and Brexit’, 19 June 2017
(4), ‘Multiple challenges pending for ACP sugar exporters’, 1 May 2017
(5), ‘ACP rice exporters and Brexit’, 26 June 2017
(6), ‘ACP Citrus Exporters and Brexit: Part 2, The Case of Smaller Scale Exporters’, 22 June 2017
(7), ‘Salient points for the ACP from a review of legal implications for the agro-food sector or Brexit’, 21 July 2017, forthcoming

Key words:          BREXIT,
Area for Posting: BREXIT, EPA General