ONLY A TORTOISE COULD NEGOTIATE

SO FEW FREE TRADE DEALS ANY SLOWER!

From 1972, when Heath dragged them into the Common Market, our elected MPs and governments did not need to bother themselves with negotiating independent free trade agreements (“FTA”s). From then on, until the 2016 independence referendum, they just sub-contracted the job to Brussels, and then sat back, went to sleep, and accepted whatever the EU (in its infinite wisdom) decided to dish-out.

Nevertheless, UK Independence Party MEPs, members and supporters always believed that the UK would be better off outside the EU so that it can make its own trade deals and pursue an independent trade policy.

Now the subject of FTAs dominates UK foreign affairs and domestic business policy, and the UK has some 70+ international trade agreements in our own right. Some merely replaced existing EU trade agreements so did not make much difference but there are some major deals worth mentioning. 

On 31st May, two important FTAs with Australia and New Zealand became effective. They help some UK businesses but not others, especially those in the agricultural industry.

Combined bilateral trade with these two countries amounts to over £15bn per year. Inward direct investment from them into the UK is £16.6bn, and outward from the UK is a combined £42.1bn. Estimates suggest that by 2035, the Australian deal could boost our economy by £2.3bn per year, and the New Zealand deal by £0.8bn, over the long-term, with benefits across the UK.

In particular, the FTAs offer beneficial terms for UK firms exporting green goods and services to New Zealand. According to the World Trade Organisation, the UK could potentially double its green trade exports by 2030.

The downside is that there is not much in them to benefit the UK farming community. They eliminate tariffs for agricultural products so sectors like beef, lamb, dairy and horticulture will face fiercer competition. There will be no limit on Australia and New Zealand agricultural imports. As farmers in UK already face significantly higher production costs than do farmers in Australia and New Zealand, our own farmers are the losers, and their bottom-line is sadly likely to come under increasing pressure.

Not an ideal situation, but obviously doing deals requires some give and take and the Conservative government sold-out the farmers.

On 16^th July, the UK acceded to Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This is a much larger FTA between 11 countries around the Pacific Rim i.e. Canada, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, Vietnam and Japan. The UK and each existing member state still needs to ratify the agreement in accordance with their domestic law. The UK will formally become a CPTPP member 60 days after the last of the current members gives notice that it has completed its domestic legal procedures.

CPTPP accounts for a substantial share (about 13%) of world GDP. When the UK formally joins the CPTPP that will rise to around 15% and is likely to expand bringing further trade advantages for the UK. The Government estimates that joining CPTPP would increase UK GDP by about 0.08%. There is no suggestion that this figure will significantly change but the benefits may grow if new countries join the CPTPP or if trade develops in a way for which the CPTPP rules are helpful.

The good news is that there are no ‘CPTPP regulations’ as were the case in the EU, so the UK will not have to change its standards to join. Unlike the EU, CPTPP is an economic organisation with no aspirations to ever-closer political union. CPTPP members do not pursue a common foreign policy, common currency, or common citizenship. CPTPP is a comprehensive FTA, rather than a customs union or single market. Visa requirements apply for workers from one CPTPP country to go and work in another, so there is no issue with “freedom of movement”. There is no ‘CPTPP law’, ‘CPTPP directives’ nor a ‘CPTPP Parliament’. All decisions taken by CPTPP member states are by consensus and there are no provisions for qualified majority votes, as there were in the EU. There is no ‘CPTPP Court’ equivalent to the European Court of Justice (ECJ). In the implausible event that the UK were ever wanting to re-join the EU, it would have to leave the CPTPP, since having separate free trade agreements is incompatible with being a member of the EU’s single market and customs union.

Negotiations for an FTA with India are ongoing, and they are making slow progress. There is little hope of sealing a deal before Indian elections next April. Efforts are underway to finalize negotiations as swiftly as possible, but issues exist in particular over immigration, intellectual property rights, rules of origin and services. There are some unresolved "red lines" on both sides.

UK negotiators are trying to get India to liberalize its highly-protectionist services markets to allow more City of London firms to set up shop there.

On the Indian side, negotiators want the UK to grant more visas to Indian workers. India has made access to the U.K. jobs market through internal company moves and access to the services sector for its citizens a key part of its demands and is asking for easier access to the U.K. for workers in occupations such as nursing, care and consultants. Immigration is putting a strain on negotiations, which are dragging on.

In this regard, the UK Independence Party has a clear stance. Trade deals must not be an excuse for yet more immigration.

UK businesses still experience obstacles to exporting and they come up against trade barriers in some countries. There are ongoing negotiations with some smaller countries and trading blocs. The major exceptions are with the USA and China. A trade deal with China looks unlikely due to foreign policy and security considerations. Likewise, a trade deal with the USA is a remote possibility under the current US administration. Overall, despite slow progress by the Conservative government since the 2016 referendum, we are now (7 years later), only just beginning to see the benefits coming to reality.

Being realistic, negotiations do take time, but it is looking increasingly likely that the current UK government will be gone before they get round to finishing the job. 

Steve Grimes

UK Independence Party - Foreign Affairs Spokesman