I really love the Janis Joplin’s recording of ‘Freedom’s just another word for nothing left to lose’, but last week it was one of those tunes that I just couldn’t get out of my head as I sat down to contemplate the knotty matter of the shape of free trade agreements after Brexit.
Right now we don’t know what Brexit will mean for trade with the EU and the rest of the world. However if we leave with freedom to strike free trade deals with the rest of the world we need to prepare for that eventuality and be ready to move quickly. More and more businesses are asking about the opportunities that will be afforded by free trade deals with countries outside the EU and whether they should be shoring up their intellectual property rights to be in a position to take advantage of the opportunity that may come.
The position on trade deals is of course not clear for the simple reason that these cannot be negotiated until the UK has left the EU and try as we must, third countries do not have great incentive to deal with the UK until the detail of Brexit is clear. There are however things we do know about the nature of free trade deals and the likely parties to trade deals with the UK that may be useful to businesses as they consider future trading opportunities.
In July, the Department for International Trade (DIT) launched four consultations to inform the UK’s future trade relationship and potential negotiations with Australia, New Zealand, the Comprehensive and Progressive agreement for Trans–Pacific Partnership (CPTPP) and the United States. CPTPP covers Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. So what can we hope to see in these agreements?
Free Trade Agreements are most closely associated with tariff setting but there is no prescribed format and the parties are free to be as creative as they like in what is set out in the body of the agreement and they can lay down both rights and obligations which go beyond what is legally required of a country under its own domestic legislation. They commonly include provisions to prevent dumping of goods as well as standards to be complied with in order to take advantage of the preferential tariff rates. On intellectual property there may be reference to the need to adhere to TRIPs – an agreement on trade related aspects of intellectual property which sets minimum standards of protection for intellectual property to be provided by domestic law in a country signed up to the Treaty as well as adequate levels of enforcement. The TRIPs agreement like any free trade agreement is a legal binding agreement which is administered and overseen by the WTO.
Free market traders believe FTA’s are a good thing. They increase consumer choice and ensure consumers are able to purchase product at the best possible price. Worries are around makings sure that products and services included in a FTA are of an acceptable standard and that the trade does not simply serve to undercut traders in their own domestic market.
Back to the question of what is the UK doing to get ready while their hands are tied, there appears to be three areas of activity.
- The first is to ensure that the huge number of free trade agreements which are already agreed with third countries but only as part of our members of the EU are preserved. This is a massive task with some 70 countries to approach and ask for rollover of agreements. We do not know the status of this but clearly some countries will just agree, others may ask for additional conditions in exchange for agreement and some may be even more difficult.
- As a second task the UK is exploring if there are any other areas of trade not regulated through our membership of the EU that we may benefit from discussing now.
- Finally as a third prong we are discussing (but definitely not negotiating) various possible items to be covered in FTA’s and learning of the approach taken on other countries so that we have the necessary intelligence to move quickly on free trade deals when we need to.
The Government is now in consultation phase and is inviting comments until the 26th of October. For more information contact us on email@example.com.
Written by Margaret Briffa