Cabinet Office and No 10 ‘must help DIT avoid post-Brexit trade cliff edge’
Government “must not be naïve enough to assume that a verbal agreement to maintain the status quo constitutes a watertight guarantee” says select committee
An expanded cross-government effort is required to ensure that trade deals with over 70 nations continue to apply to the UK after leaving the European Union, according to MPs.
A report by the International Trade Select Committee has concluded that if the UK was to continue to benefit from trade deals signed between the European Union and third countries it would require government to work quickly to roll over the agreements.
The Department for International Trade has been tasked with ensuring there is “a transition of [these] agreements to a UK agreement at the point that we leave the EU”, but the committee highlighted that even the number of EU trade agreements seems to be a matter of some uncertainty. There appear to be around 40 trade agreements with about 70 countries, according to MPs, with 10 of the UK’s top 50 export markets covered by these agreements.
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Action is needed to ensure that these agreements do not cease to apply to the UK at the point of Brexit in March 2019, which would impose new barriers to trade.
However, the report warned that “there is a disturbing lack of precision and clarity about the legal mechanism whereby the government envisages EU trade agreements with some 70 countries being rolled over”. It called on the DIT to show, with support from No 10, the Cabinet Office and the Department for Exiting the European Union, that it has “a legally watertight and practically viable strategy for achieving ‘transitional adoption’ at the point when it will need to take effect”. This approach would need to be ready for the potential that the UK will leave the EU in March 2019 without a withdrawal or transition arrangements with the EU.
Committee chair Angus MacNeil said the government had been making much of the trade agreements it plans to make after Brexit, but first needed to give businesses and consumers confidence that the existing agreements could be rolled over.
“The government is therefore correct to have identified maintaining our rights under these agreements as a priority,” he said. “However, as the committee has found over the course of our inquiry, a number of thorny issues and significant risks remain unaddressed. The government must not be naïve enough to assume that a verbal agreement to maintain the status quo constitutes a watertight guarantee – contingency plans are required.”
He said that the DIT needed to set out a number of practical steps, including the publication of a detailed timetable for avoiding a cliff-edge, and the development of a risk register in relation to trade and trade-related agreements that need to be rolled over.
“This issue requires a cross-government response, and a fully transparent, cross-departmental approach to constructing the UK's overall long-term trade policy strategy,” said MacNeil.
Responding to the report, international trade minister Greg Hands said the committee had recognised the priority government has given to ensuring continuity of trade arrangements as the UK leaves the EU, including in providing certainty to businesses, consumers and investors.
He also stressed that the government had, “unlike the committee”, already held discussions with more than 70 countries, and none had displayed any interest in disrupting trade flows.
“We have always been clear that this work would take into account the terms and timing of any implementation period currently being negotiated with the EU,” he said.
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