International trade – Five urgent issues at the top of the new PM’s In Tray

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August 03, 2022

The arrival of the summer holidays marks a period of respite for many (other than Conservative Party leadership candidates and members) from an intense period of policy-making affecting trade. With a new Prime Minister taking office on September 6, the inbox on international trade issues will be daunting.

First, the prospect of a full-fledged trade dispute between the UK and the EU is getting ever closer. The Northern Ireland Protocol Bill completed its stages in the House of Commons this week and was introduced in the House of Lords yesterday. This gives UK ministers the legal powers at national level to override the protocol and introduce unchecked and frictionless movement of goods east to west and west to east across the Irish Sea for Britain and North Ireland. The European Commission is expected to launch new legal action against the UK government within days over alleged breaches of the Withdrawal Agreement. If the bill becomes law – a prospect still several months away – the EU is expected to respond with further action, including safeguard measures (tariffs) on some UK exports to the EU, while the whole of the issue will be resolved through the dispute settlement mechanism provided for in the Withdrawal Agreement. and Trade and Cooperation Agreement. The BCC is prioritizing a negotiated solution, but potentially affected businesses should seek advice now to mitigate their exposure to further costs when exporting goods to the EU should the situation worsen.

Secondly, the British government yesterday launched its consultation paper on a Trade Single Window (STW) which is designed to be deployed from December 2023 under the new Target Operating Model (TOM). This will incorporate border control processes for goods entering Britain from the EU and the rest of the world, including incoming measures which have been delayed from entering into force until the second half of 2022 (requirements for safety and security certificates, export health certificates and documentary, identity and physical checks of products of animal and plant origin). Ultimately, the STW is designed to provide a single user portal for a range of border and customs processes and greater efficiency in cargo retention times. A range of other countries are also moving forward with their Customs Single Window plans, including the EU.

Third, a fall campaign on preference utilization rate among SMEs is being prepared for deployment. The BCC is involved in discussions with the UK Government on results and their delivery, following the findings of our member research that awareness and ways to use the new UK trade agreements with other other trading partners were very weak. The objective is to increase export volumes and the number of exporting companies. Initially, five markets will be given priority: Australia, New Zealand, Singapore, Japan and Norway. Free trade agreements between Australia and New Zealand are expected to be ratified later in the fall and come into force early next year following the passage of Westminster legislation on public procurement and customs tariff changes.

Fourth, an intensive series of rounds of negotiations will be needed to complete some and advance others key trade negotiations. Negotiations with India are expected to be completed in time for October 24 – the BCC is aware of a few negotiating plans in key areas. Canada’s negotiations for a bespoke trade deal are expected to conclude by the end of the year to tie in with the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Negotiations with the Gulf Cooperation Council, Mexico and Israel are ongoing but may not be completed in 2023.

Fifth, set up an export strategy that paves the way for stronger export-led growth will be key this year. The Office for Budget Responsibility projected in last fall’s budget export growth of between 8% and 9% this year. Trade data for the first half of this year puts UK exports below this growth trajectory. The BCC proposes to the DIT to remedy this and increase export volumes.

A busy autumn ahead, as well as unpredictable events such as the impact of the war in Ukraine on supply chains. Stay in touch with ChamberCustoms and the BCC as we guide you through this uncertain time and together achieve better times ahead.

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