New UK Trade Advisory Groups Launched

1) Agri-Food, 2) Automotive, Aerospace and Marine, 3) British Manufacturing and Consumer Goods, 4) Investment, 5) Life Sciences, 6) Tech and Telecoms, 7) Chemicals, 8) Financial Services, 9) Professional Advisory Services, 10) Transport Services, 11) Creative Industries

It also illustrates how much ground the UK needs to ‘catch up’ in terms of trade policy design and implementation. This brings to mind recent remarks from the New Zealand Deputy Prime Minister who rather colourfully spoke of how in terms of their trade negotiating skills  the UK wasn’t ‘match fit’ since ‘they’ve never had an outing lately, they’ve never had a test’ He argued ‘it’s like coming into an Ashes contest when you haven’t played for thirty years’.

This has implications for ACP developing countries, since it highlights the enormous strains the responsible UK trade negotiating bodies are likely to be placed under in the coming years.  This means ACP governments will only have one chance in the next decade to get their future trade relations with the UK right, with once Continuity Agreements have been concluded the UK’s Department for International Trade having little capacity to revisit issues of particular concern to individual ACP trade partners (e.g. addressing the issue of maintaining the smooth functioning  of triangular supply chains used to deliver goods to the UK market or specific rules of origin issues).

This could leave gaps in the operational practicality of these ‘rolled over’ trade agreements, which undermine their commercial value to ACP exporters.

More broadly it needs to be recognised that for the UK’s new trade advisory groups to work effectively, greater clarity is needed on UK trade policy. This needs to start with the recognition that reciprocal preferential trade agreement negotiations are not primarily about tariffs, but rather a host of non-tariff issues which now constitute far more significant barriers to trade than tariffs. Getting to grips with these non-tariff issues however will require the UK government to start making clear policy choices with reference to the wider economic, industrial, agricultural, and even public health policy objectives the UK government wishes to pursue.

The lack of appreciation of the full ramifications of this reality can be seen in the context of the EU/UK negotiations, where the UK is seeking to retain full duty free-quota free (DFQF) access without making parallel commitments on a host of non-tariff issues which are a necessary complement to the DFQF access sought. With the UK government focussing on maintaining its sovereign right of decision making in all areas, this is stalling substantive negotiations and increasing the prospects of a no-deal UK departure from the EU customs union and single market.

This will be extremely disruptive of current UK agri-food exports to the EU and will leave a host of agri-food exporters seeking out new export market opportunities.  In the context of the agri-food trade advisory group, this is likely to lead to strong pressure on the UK government for the rigorous application of the provisions of rolled over Continuity Agreements dealing with the removal of both tariff and non-tariff barriers to UK exports.

This pressure is likely to be particularly strong in areas where the loss of access to the EU market (which could easily last throughout 2021) will be particularly acutely felt, such as the export trade in poultry parts, which for the UK is heavily focussed on eastern European EU markets.

The lack of the UK governments appreciation of the need to look beyond tariff issues can also be seen in the inadequacies of the rolled over Continuity Agreements concluded with ACP countries. While these agreements have rolled over DFQF access to the UK market, they have left unaddressed a multiplicity of issues which are essential to the commercial process of exporting to the UK from ACP countries.

The first of these issues relates to the ramifications of the UK’s departure from the EU customs union and single market for the rules of origin applied to ACP goods exported to the UK market, via EU 27 member states. These range from: the treatment of Caribbean bulk rum, bottled in the EU, prior to sale to UK supermarkets as part of their country specific own label rum range; through the conversion of Pacific island tuna loins into canned products in Italy, prior to sale through German owned supermarkets across the whole of the EU (including the UK); to West Africa cocoa bean exports to the Netherlands and Belgium, where they are processed into cocoa paste, butter and powder prior to onward export to the UK.

In all these areas where supply chains have been developed to serve the UK market as an integral part of a single EU market, the question arises would such product upon landing in the UK still be eligible for the duty free access they currently enjoy, or will the existing processing in the EU be deemed to deprive them of their ACP status and hence the duty free access which has nominally been rolled over as part of the UK Continuity Agreements?

The second area relates to the border clearance treatment of short shelf life products exported to the UK via the EU, where these goods first enter the customs territory of the EU (e.g. East African cut flower exports to the UK sold via the Dutch flower auctions).

In the context of the border clearance issues and associated delays which are likely to be faced at newly created UK/EU customs borders, if no special border clearance arrangements are set in place for these ACP goods traded along triangular supply chains, then for such short shelf life products the commercial viability of these routes to serving UK markets could be profoundly undermined (for details of the border clearance issues faced and likely delays see companion epamonitoring.net article ‘Preparing for the Impact of a New EU/UK Border on ACP Exports to the EU’, 13 August 2020).

This would mainly affect least developed country based cut flower exporters in East Africa and to a lesser extent Kenya, with these disruptions greatly compounding recent Covid-19 freight disruptions, which have added additional costs to cut flower exports from East Africa to Europe.

The third major area of concern relates to certifications and authorisations, where transitional arrangements will be needed to make sure Covid-19 related travel restrictions do not put an end to trade in, for example, organic certified products, simply because certification from UK registered  bodies required to replace organic certification issued by EU based certification agencies have not  been obtained by 31^st December 2020 (see companion epamonitoring.net article, ‘Dominican Republic and Bananas Dominate ACP Organic Products Exports to the EU28’, 18 August  2020).

These are just the most obvious areas where the failure to look beyond the tariff dimension in ways which impinge on ACP countries exports to the UK are apparent.

The downgrading of existing UK trade consultation structure which give a voice to non-governmental development focussed organisations and their replacement by business led consultative bodies with a focus on exports, is only likely to exacerbate this trend of neglect of trade and development issues within UK trade policy.  This is particularly likely to be the case given the human resource capacity constraints in the DIT and the lack of a coherent and integrated UK only trade policy to date.

The absence of a coherent and integrated UK-only trade policy alongside the current desperate and unachievable search for alternative markets to replace the EU27 market, in the event of a no-deal UK departure, is likely to greatly complicate the work of the trade advisory groups. This could give rise to a situation where rather than  providing a framework for mobilising the technical and strategic  expertise of the UK business community  in support of a coherent and integrated international trade policy, the new advisory groups simply provide a platform for lobbying around specific corporate interests (e.g. in the poultry and sugar sector) and the simple compilation of a shopping list of ‘asks’ in both trade negotiations and the implementation of ‘rolled over’ trade agreements.