Summary
A UK Trade and Business Commission consisting of cross-party Parliamentary and business representation has been launched. The aim is to review the UK’s new trade agreements and offer evidence-based recommendation for improvements which could facilitate frictionless trade. Given the Commission’s focus on food supply chains and the new rules of origin and SPS complications which have arisen since 1 January 2021, this initiative could offer an opportunity to raise the profile of ACP agri-food sector trade concerns linked to the Brexit process and advance practical solutions for the renewal of frictionless trade along ACP triangular supply chains used to serve markets in both the UK and EU.
A UK Trade and Business Commission has been formed composed of business leaders and a cross-party group of MPs with the aimed of gathering evidence on the impact of new UK trade agreements on UK business and making recommendations for practical improvements to the agreements concluded. The initiative is seen as a ‘unique forum for dialogue and cooperation over the big issues facing the UK economy’ as businesses seek to ‘recover from the pandemic’ and deal with complex post Brexit trade realities (1). The Commission ‘brings together eleven MPs from nine different parties and all four nations of the UK, along with business leaders and expert economists.’ It is convened by Labour MP Hilary Benn MP and the Chairman of Virgin, Peter Norris (2).
The UK Trade and Business Commission has launched an ‘open invitation to businesses to submit written evidence’ through a newly established website (2). The Commission intends to ‘take evidence from industry and other experts on the UK-EU Trade and Cooperation Agreement and other bilateral and multilateral trade deals with a view to recommending improvements and capturing lessons learned’ (1).
The Commission is particularly looking for inputs from businesses ‘with direct experience or expertise in international trade, or in businesses that trade internationally, or whose supply chains or business otherwise rely on international trade.’ There is a particular focus on food supply chains, with a special interest in ‘the impacts of sanitary and phytosanitary checks at borders on the UK’s food supply chain and new additional administrative costs for businesses’ (1).
The UK Trade and Business Commission notes how in particular ‘businesses now have to demonstrate the origin of their products’ ingredients, proving they originate from the UK to qualify for the tariff-free access.’ An additional area of focus is on the impact of EU SPS checks and other EU regulatory requirements on UK exports.
At the launch of the initiative Hilary Been highlighted how analysis from the Office of Budgetary Responsibility had ‘laid bare the economic consequences of the UK’s Trade and Cooperation Agreement with the EU, and the long-term implications for wages and growth’, and underlined ‘the importance of subjecting this agreement and other trade deals to independent scrutiny’ (2).
Commission member, Conservative MP Roger Gale, highlighted how the impact of the new trading arrangement was ‘being felt by businesses in every sector and communities in every corner of the country’, with small businesses ‘bearing the brunt of new red tape at our borders.’ He stressed how the work of the Commission was ‘about setting ideology aside and finding a pragmatic, evidence-based way forward’, for the promotion of ‘frictionless trade’ which aids the economic ‘bounce back from the pandemic’ (2).
The first evidence session of the Commission took place on 15th April and confirmed ‘small businesses are bearing the brunt of new barriers to trade with the EU.’ Submissions made by economists to the Commission suggested that while there is high level of uncertainty, ‘the long-term cost of EU exit could outweigh the damage done by Covid.’ It was noted how the Office of Budgetary Responsibility has forecast ‘the long-term loss of productivity in the UK will be something like 4%, which is higher than the Covid loss expected to be 3%’ (3).
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UK Trade and Business Commission Membership Parliamentary Commissioners Business and trade commissioners Advisors to the Commission |
Next evidence session on Thursday 29 April will focus on the food and drink sector, including the impact of new food checks across the Irish Sea.
Any businesses or organisations with evidence of experience can directly submit inputs online at: https://www.tradeandbusiness.uk/evidence (4).
| Comment and Analysis Given the UK Trade and Business Commission’s focus on food supply chains and the new rules of origin and SPS complications which have arisen since 1 January 2021, this initiative could offer an opportunity to raise the profile of ACP agri-food sector trade concerns linked to the Brexit process and advance practical solutions for the renewal of frictionless trade along ACP triangular supply chains used to serve markets in both the UK and EU. One important area where ACP concerns could be raised and where options exist for unilateral UK action is in regard to the rules of origin/MFN tariff issue, which means ACP goods shipped along triangular supply chains via the EU to the UK or via the UK to the EU now lose their duty-free access and face MFN tariffs, if this trade takes place outside of customs supervision. Such customs supervision under Common Transit Convention procedures, is extremely difficult to activate along ACP triangular supply chains, given the infrastructure, IT and staffing challenges currently faced. As discussed in the OACP sub-Committee on Trade on 25 March 2021, rules of origin/MFN tariff problems are undermining the commercial viability of ACP exports along triangular supply chains, with some smaller ACP exporters already having been driven out of fresh produce supply chains serving the UK market. The commercial challenges arising triangular supply chains, are affecting a diverse range of ACP agri-food export sectors. This includes: o Fresh fruit, vegetable, and horticulture product exports. o Fresh, chilled, and frozen fish product exports. o Bulk rum bottled in the EU prior to onward shipment to the UK. o Cocoa paste, cocoa butter and cocoa powder shipped to the EU prior to onward o Beef cuts exported for use in specialist processed meat products in the EU prior o The production of value-added Fairtrade products using multiple inputs from There is seen as being considerable scope for UK unilateral action to address these rules of origin/MFN tariff issue along ACP to EU to UK supply chains. Options discussed at the OACP sub-Committee on Trade included: a) Modifying the direct transport provisions of the various rules of origin annexes b) Establishing alternative arrangements for the verification of origin of products A further important area where unilateral UK action is possible for onward trade to EU markets is through expediting the re-issuing of phytosanitary certificates for ACP produce onward traded to EU market (notably to the Republic of Ireland). This is of considerable importance to ACP short shelf-life fresh horticultural product exports, where delays of from 1 to 3 days in the re-issuing of phytosanitary certificates can lead to a serious loss of value for the delivered product. UK political leadership on these issues, through the adoption of unilateral measures to ease trade frictions along triangular supply chains used by developing country exporters, could yield considerable commercial benefits. This would be particularly the case if it were to encourage the EU to adopt similar unilateral measures to ease trade frictions along ACP triangular supply chains passing through the UK. This raises the wider issue of the need to integrate ACP triangular supply chain concerns into discussions on mainland UK to Northern Ireland and UK to Ireland agri-food sector border clearance issues. This is an area where rapid progress could be made given the new impetus in EU/UK technical discussions around how to solve mainland UK to Northern Ireland agri-food sector border clearance issues and the Irish governments efforts to facilitate agri-food sector trade within the confines of the existing EU/UK Trade and Cooperation Agreement (see companion epamonitoring.net article, ‘Can Evolving EU UK Technical Discussions on Northern Ireland Trade Issues Help Ease Triangular Supply Chain Challenges?’, 27 April 2021). |
Sources
(1) ‘New Commission headed by Hilary Benn to hold Government to account’
https://www.tradeandbusiness.uk/
(2) UK Trade and Business Commission, ‘MPs and business leaders launch cross-party commission on trade with Europe and the world
https://www.tradeandbusiness.uk/news/mps-and-business-leaders-launch-cross-party-commission-on-trade-with-europe-and-the-world
(3) UK Trade and Business Commission, ‘Economists warn small businesses are bearing brunt of trade barriers from EU exit’, 15 April 2021
https://www.tradeandbusiness.uk/news/ons-trade-figures-show-businesses-need-help-to-bounce-back-from-covid-and-end-of-transition-lrsrp
(4) Link for submitting evidence’, 12 April 2021
https://www.tradeandbusiness.uk/evidence