The UK has signed its first continuity trade agreements with a handful of trading partners in a last-minute effort to avoid falling back on WTO rules in a no-deal Brexit scenario.
But, speaking at a parliamentary inquiry today, trade minister Liam Fox was unable to confirm that all 40 free trade agreements that make up the UK’s existing deals as a member of the EU would still be in place when the UK leaves on March 29.
As it stands, the UK will switch to WTO rules with any trading partner it fails to secure a deal with by March 29, which would bring in new tariffs to a wide range of traded goods as the default status. If a deal is struck before the deadline then all 40 agreements are expected to be extended during the transition period, which ends in 2021.
The past week saw Chile, the Faroe Islands and Eastern and Southern Africa committing to continuing to trade with the UK on the same terms as they currently do with the EU.
Mutual recognition agreements, which recognise conformity assessments to ensure traded goods are up to both parties’ standards, have also been signed with Australia and New Zealand.
The UK’s department for international trade (DIT) tells GTR that continuity agreements with Switzerland and Israel are also expected to be completed soon, with the former already being “initialed” and the latter securing an “agreement in principle”.
Fox told the International Trade Committee, appointed by the house of commons to oversee the DIT’s activities, that he expects to sign an agreement with Switzerland on February 11, which he claims is a symbolic victory as it would represent the largest trade partner to sign a continuity agreement with the UK so far.
According to a DIT spokesperson, several other free trade agreements are also at an advanced stage.
Although the agreements are open ended, the UK is expected to utilise its new powers to strike deals independent of the EU to amend these arrangements in the future.
DIT, which began canvassing its global counterparts for trade agreements when it was formed in 2016, is seeking continuity with around 40 existing EU free trade agreements that cover more than 70 countries, representing around 12.1% of the UK’s total trade.
However, Fox today downplayed the committee’s concerns of missing the March deadline by saying that the DIT’s mission is “not a numbers game”. He emphasised that over half of the agreements the UK must renegotiate only account for less than 1% of total UK trade.
The committee was unable to gain an absolute assurance from Fox that all 40 trading partners would agree to a roll-over of their free trade deal even if a deal was reached with the EU.
Regarding the UK’s future trading in a no-deal scenario, Fox also refused to rule out the government resorting to a universal removal of tariffs associated with WTO rules, despite the potentially significant disruption scrapping such tariffs would inflict on the country’s manufacturing, agriculture and ceramics industries, putting 3.2 million UK jobs at risk.
Commenting on the hearing, Angus Brendan MacNeil, MP and chair of the international trade committee, says: “There are now just 51 days until Brexit and UK businesses are in desperate need of certainty. Our session with Liam Fox this morning demonstrates they can expect anything but.”
He adds: “Even more concerningly, the secretary of state offered my committee nothing but idealistic assurances that the UK will maintain the current trading arrangements that it enjoys with countries through existing EU agreements. Dr Fox was again unable to confirm whether these countries have agreed to roll over their trade deals so that the UK continues to benefit as it currently does.”
Fox is scheduled to update the International Trade Committee again on March 8.