Summary
While somewhat contradictory, the UK’s 12 point ‘Plan for Britain’ appears to suggest the UK intends to leave the single market and the EU customs union, so as to be able to pursue its own bilateral trade agreements with faster growing economies outside the EU. Within this approach little consideration is being given to the consequences of UK policy choices for developing countries within the ACP Group and beyond. The UK’s departure approach will make it more difficult for the UK to become an associate signatory to the existing EPA agreements and increases the urgency of ACP governments establishing with the UK authorities a mechanisms to avoid ‘a disruptive cliff edge’ in ACP access to the UK market. It would also appear to increase the urgency of ACP governments establishing dialogues with the UK and EU authorities on how to address the adjustment challenges which will arise from the erosion of the value of ACP preferences as a result of Brexit.
On 17 January the UK Prime Minister Theresa May set out a 12 point ‘Plan for Britain’ related to the Brexit process (see box). From an ACP perspective the most relevant points of this Plan are dealt with under points 8 (establish free trade into the European market through a free trade agreement), 9 (conclude new trade agreements with other countries) and at the level of principle, points 1 (provide certainty about the process of leaving the EU) and 12 (ensure a smooth and orderly Brexit).
| The 12 Point ‘Plan for Britain’ 1. Provide certainty about the process of leaving the EU. 2. Re-establish national control of all laws. 3. Strengthen the union between the four constituent parts of the United Kingdom. 4. Maintain the common travel area with Ireland. 5. Re-establish controls on immigration from within the EU. 6. Guarantee rights of EU national in Britain and British nationals in the EU. 7. Protect workers’ rights 8. Establish free trade into the European market through a free trade agreement. 9. Conclude new trade agreements with other countries. 10. Continue collaboration on science and innovation with European partners. 11. Continue cooperation in the fight against crime and terrorism. 12. Ensure a smooth and orderly Brexit. |
The commitment under point 8 means the UK will leave the EU customs union and the single market, with the UK government hoping to establish a ‘bold and ambitious free trade agreement with the European Union’ unlike any pre-existing agreement. However there were contradictory elements in the Prime Ministers presentation of the UK governments 12 point plan.
While the Prime Minister asserted the UK government is not looking for any ‘half-in, half-out’ arrangement, she also stated the UK wanted to ‘have a customs agreement with the EU’. It was left open as to whether the UK would need to ‘reach a completely new customs agreement, become an associate member of the Customs Union in some way or remain a signatory to some elements of it’. The Prime Minister maintained the UK had ‘no preconceived position’ on this issue, with the end being seen as more important than the means.
The UK governments orientation under point 9 means the UK will look to ‘strike trade agreements with countries outside the European Union’, which strengthen the UK’s global ties and encompass ‘a bolder embrace of free trade with the wider world’. The Prime Minister noted how ‘since joining the EU’ the UK’s trade with the rest of the world ‘as a percentage of GDP has broadly stagnated’. In this context it was argued ‘it is clear that the UK needs to increase significantly its trade with the fastest growing export markets in the world’. While the US, China, Brazil and the Gulf states are seen as important markets, emphasis is placed on the UK’s ‘unique and proud global relationships’, particularly through the Commonwealth. In this context specific reference was made to Australia, New Zealand and India.
According to Prime Minister May the UK government is looking to ‘remove as many barriers to trade as possible’, with the UK being ‘free to establish our own tariff schedules at the World Trade Organisation’ and ‘reach new trade agreements…with old friends and new allies from outside Europe’.
Under point 1 Prime Minister May committed the UK government to providing ‘certainty wherever we can’. In this context the Prime Minister highlighted how in repealing the European Communities Act, the UK had converted the ‘acquis’, that is the body of existing EU law, into British law. The Prime Minister emphasised how through this action ‘the same rules and laws will apply on the day of Brexit as they did before’.
Under point 12 Prime Minister May committed the UK government to ensuring ‘a smooth, orderly Brexit’. In terms of UK-EU27 relations, according to the Prime Minister, ‘the purpose is clear: we will seek to avoid a disruptive cliff edge’.
Source:
Prime Ministers’ Office, UK Government, ‘The government’s negotiating objectives for exiting the EU: PM speech’, 17 January 2017
https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech
Foodnavigator.com, ‘Mays vision for Brexit Twelve point plan or glorified wishlist’, 20 January 2017
http://www.foodnavigator.com/Policy/May-s-vision-for-Brexit-Twelve-point-plan-or-glorified-wishlist
Daily Telegraph, ‘The 12-point Brexit plan explained: Theresa May warns EU she will walk away from a ‘bad deal’ for Britain’, 17 January 2012
HTTP://WWW.TELEGRAPH.CO.UK/NEWS/2017/01/17/THERESA-MAY-WARNS-EU-WILL-WALK-AWAY-BAD-DEAL-BRITAIN/
| Comment and Analysis While the UK Prime Minister has emphasised how in repealing the European Communities Act, the UK had converted the ‘acquis’ into British law, thereby ensuring ‘the same rules and laws will apply on the day of Brexit as they did before’, this will not automatically apply to trade agreements with ACP countries. With regard to imports from ACP countries, if ‘the same rules and laws’ are to apply ‘on the day of Brexit as they did before’, the UK governments will need to set in place specific new regulations. This is an issue to which ACP governments will need to pay particular attention in the coming months.In dialogue with the UK government emphasis should be placed on the Prime Ministers’ commitment to ensuring the UK government ‘will provide certainty wherever we can’ and to ensuring, in terms of trade relations with ACP developing countries, that ‘the same rules and laws will apply on the day of Brexit as they did before’. In this context the importance of extending the concept of the need to avoid ‘a disruptive cliff edge’ in the import regime applied to ACP exports to the UK market should be emphasised. Avoiding ‘a disruptive cliff edge’ is important for a wide cross section of Commonwealth non-least developed ACP countries which, either overall or in specific sectors, have an excessively high dependence on the UK market in products where current EU preferential arrangements are vital to exports. For these ACP countries avoiding ‘a disruptive cliff-edge’ in their export trade to the UK will require specific regulatory initiatives from the UK authorities in the pre-Brexit period. A further important consequence of the UK’s policy approach, is that it will likely to lead to a fairly rapid and extensive process of erosion of ACP margins of tariff preferences, as the UK more boldly embraces free trade with the wider world. This will be a particular source of concern in ACP exporters in sectors such as sugar, bananas, citrus fruit and other horticulture exports. Given existing international trade rules, the UK governments’ 12 point ‘Plan for Britain’ appears somewhat contradictory. For example, PM May called for the UK’s departure from the EU customs union and the single market, with the UK being ‘free to establish our own tariff schedules at the World Trade Organisation’ and ‘reach new trade agreements…with old friends and new allies from outside Europe’, while at the same time looking for ‘a customs agreement with the EU’. While it was left open as to whether the UK would need to ‘reach a completely new customs agreement, become an associate member of the Customs Union in some way or remain a signatory to some elements of it’ this rather ignores an essential pre-requisite for a customs union, the maintenance of a common external tariff. The question arises: how can the UK be free to establish its own tariff schedule at the WTO and its own free trade agreements, whilst being part of a customs union with its common external tariff? While the UK may have ‘no preconceived position’ on what this new type of customs union should look like, it will need to take account of, and respect, WTO rules on what constitutes a customs union (and even what constitutes a free trade area). This suggests that some very stormy discussions will lie ahead between the EU27 and the UK, with the ‘certainty’ which Prime Minister May placed emphasis on, likely to prove elusive. This would not be good news for the ACP, if ACP governments were to either: a) leave issues related to their future access to the UK market to the process of UK-EU27 bilateral discussions; or b) adopt a ‘wait and see’ approach to dealing with the market access consequences of Brexit, with specific initiatives being deferred until the outcome of UK-EU27 discussions were known. Ensuring ACP trade interests are taken into account will require ensuring the UK government commits from day 1 of Brexit, to implementing a new trade regulation which, on a transitional unilateral basis, extends bilaterally the current market access terms and conditions enjoyed by ACP countries under agreements concluded while the UK was a part of the EU. However, to encourage the UK authorities to adopt such a course of action and also to ensure this arrangement is seen as ‘transitional’ (thereby averting any challenge to such unilateral preferences in the WTO), it will be necessary for ACP Commonwealth governments to commit to a process of the early ‘re-fitting’ of the existing reciprocal trade arrangements with the EU into bilateral agreements with the UK. |
| 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 |