UK trade options beyond 2019 Contents

5UK Free Trade Agreements with non-EU countries


163.The Government has made clear that part of its overall Brexit strategy is to build closer trade relations with non-EU countries. In her Lancaster House speech, the Prime Minister said that:

A Global Britain must be free to strike trade agreements with countries from outside the European Union too. Because important though our trade with the EU is and will remain, it is clear that the UK needs to increase significantly its trade with the fastest growing export markets in the world […] it is time for Britain to get out into the world and rediscover its role as a great, global, trading nation.206

Forming new trading relationships with non-EU countries is the primary task of DIT and much of this Committee’s work over the remainder of the Parliament will involve scrutinising the Department’s performance in this task. We will not, therefore, discuss in detail in this report the Government’s strategy for forging new FTAs with non-EU countries, but we set out below some of the issues that have emerged during this inquiry that the Government will need to resolve early in its work. The terms of individual trade agreements, including but not limited to, the level of tariffs, rules of origin, and dispute resolution, will need to be considered in detail as trade agreements develop. We will undertake further work in this area over the course of the Parliament, and in this chapter will consider only the most immediate questions the Government will face. These are: to what extent the Government can negotiate new FTAs while it is negotiating its exit from the EU; the capacity of the Department for International Trade to negotiate new Free Trade Agreements; the extent to which the UK can continue in the FTAs the EU currently has with third countries; and the Department for International Trade’s strategy for selecting future partners for FTAs. In this section we finally consider as a case study the UK’s potential future trading relationship with other Commonwealth countries.

Timing and sequencing of negotiations

164.While the UK remains a member of the EU, it cannot legally negotiate new FTAs because it is bound by the EU’s Common Commercial Policy. However, the Secretary of State indicated to us that the Government was already undertaking some work preparing for new agreements:

The legal position is that any country that is in the European Union and is bound by common commercial policy has to abide by certain duties […] we will be discussing and scoping out future agreements with [other] countries. We will not be signing any negotiation, but we will want to be taking legal advice as we go on about what we think the parameters are for our freedom of movement.207

165.While there seems to be broad consensus that the UK can, legally, undertake informal discussions with non-EU countries about future trade relationships, it is not clear how far the Government can go towards negotiating new agreements on the spectrum from having informal discussions to having a deal ready to sign the day after the UK leaves the EU.

166.Regardless of its ability to conclude formal trade agreements, we heard some evidence that the UK could undertake activity to support trade with non-EU countries. The British Chambers of Commerce told us that:

the importance of Free Trade Agreements should not be overemphasised. There is a range of non-tariff barriers (NTBs) that are often unaddressed by FTAs, such as: licensing requirements, capital controls, ownership rules, discrimination in public procurement, among others. In our survey, for future terms of trade between the UK and non-EU “third countries”, NTBs came out as the most important area of concern for businesses.208

167.Lord Marland told us that:

The fact is businesses do trade. They trade very actively with a lot of these countries without any trade agreements. As I have quite frequently commented, we do not have a trade agreement with America, who is our biggest trading partner, obviously, in terms of a country, yet we do an enormous amount of business there.209

168.The Secretary of State told us that work was underway to establish what could be done without an FTA to improve trade relations with India. He said that:

We said, “[…] we would like you to set out on paper your perceived impediments to doing trade and investment in the UK and we will do a parallel exercise. We will come together […] and see where we think those main impediments lie and where we might be able to start to remove them”, whether, for example, we need to go to a full free trade agreement, whether we can use mutual co-operation agreements and so on; those are the tools that are available to us to do that.210

169.In the services sector, as stated above, barriers to trade occur due to regulatory issues rather than tariffs. The impact of FTAs on the services sector would therefore depend on the extent to which these deals addressed these regulatory issues. Mr Savill of the ABI was sceptical about the potential in this area:

[I]nsurance is a regulated industry and it is the regulators that say whether or not you can have permission to do business in a particular country. They normally fall outside FTAs. I don’t think there is a single FTA that offers market access. There is also a tradition: FTAs normally deal with goods. If we are going to follow some of our major competitive advantages in financial services, we are going to have to change that.211

Mr Browne of the BBA argued that regulatory issues could be better addressed outside FTAs:

The opportunities are not just necessarily on free trade deals, they are actually in market access arrangements that could be done before or outside free trade deals […] The sorts of obstacles we are talking about are restrictions on ownership of subsidiaries. There are often countries with quite strict ownership rules. It would be good to make it easier for UK-based banks to own subsidiaries in other countries. Restrictions on appointment of staff such as board directors: quite a lot of countries have strict quotas for the number of local citizens who must be members of boards […] There are quite often restrictions on employment of local staff and intercompany transfers from the UK outside. It is all of those sorts of agreements; we would like to remove all those issues. You can do that outside a free trade deal.212

“Grandfathering” EU FTAs

170.The EU is party to some 50 FTAs;213 and, consequently, the UK’s access to the markets of the countries concerned is currently mediated through those agreements. The Secretary of State told us that DIT’s second priority (after establishing the UK’s position at the WTO) was “the ability to adopt the EU FTAs that currently exist”.214 He clarified his position on both the UK’s priorities and the process for doing this:

“EU-Korea and EU–Switzerland […] account for about 80% or so of the trade by value—others are much smaller countries in terms of trade value—and they are clearly the ones that we would prioritise. But we would like to get them [all] done.215

171.The idea that the UK should seek to inherit (or “grandfather”) the rights the EU had acquired under its FTAs was supported by a number of people who gave evidence to us. For example, the British Chambers of Commerce told us that:

an important next step is to grandfather existing deals that we benefit from thanks to our current membership with the EU (with a proviso to re-examine their terms at a later stage). This is important to ensure that British businesses do not face less advantageous terms than those on which they currently trade with the many third countries where the EU presently has a trade deal.216

The ABI said that the Government should: “Grandfather existing EU Free Trade Agreements (FTAs) to preserve the value they present to the UK economy and ensure a smooth transition on EU exit.”217

172.Some uncertainty remains about whether the UK will have rights under the EU’s existing FTAs. The Secretary of State appeared confident that the securing of these deals would be relatively straightforward. He said that:

[I]t is relatively easy to do so […] rather in line with our process of technical rectification at WTO, we see them as simply being transitions from the current agreement […] [W]e have made it very clear to countries that we would like to see a transition of their agreements to a UK agreement at the point that we leave the EU. So far, we have not yet had a country that did not want to do that.218

173.Other witnesses told us that there was unlikely to be continuity under these agreements. Roderick Abbott told us that:

these agreements are between the EU and member states and a third country. The acquired rights belong to the EU and member states and the third country. As soon as the UK is not an EU member state, it has no acquired rights.219

We likewise heard from Dr Ortino that:

The legal question specifically has not been answered. This is somewhat a novel issue because the UK and each EU member is a signatory of most of those FTAs so technically they are party to the agreement, but on the other hand the agreements are constructed as bilateral between the third party, and the EU and the member states.220

And the Law Society regarded the issue of establishing identical agreements with the EU’s existing FTA partners as “political rather than legal”.221

174.If the UK and the countries with which the EU has an FTA were simply to start applying the terms of the FTA, this is likely to be against the rules of the WTO. The Agriculture and Horticulture Development Board told us that “If the UK and other countries were to simply continue allowing each other tariff-free market access without a formal new trade agreement, other WTO members might claim they should have the same rights. WTO rules countries are not supposed to discriminate among trade partners.”222

175.The practicality and desirability of grandfathering EU trade agreements with some developing countries was also called into question. The Fairtrade Foundation argued that Economic Partnership Agreements (EPAs), EU trade agreements with developing countries, should not be replicated. They told us that:

If the government were to replicate or seek to grandfather the EPAs it is likely to face criticism and public mobilisation against these deeply unpopular agreements. The government would be wise to apply the learning from the challenges facing the EU and avoid staking political capital on unpopular, discredited deals.

Further there is no guarantee that the relevant contracting parties to existing EPAs would agree to the grandfathering of these agreements without further negotiation. Free-trade agreements need to be supported by both partners and the UK cannot expect partners to simply continue to apply existing treaties when the political and economic dynamics have changed.223

Re-joining the European Free Trade Association

176.As well as fundamentally altering the UK’s trading relationship to the EU, Brexit will likewise affect the UK’s relationship to the non-EU EEA countries and Switzerland (which is currently mediated through the EU). Any UK-EU FTA would not automatically be replicated by those countries and the UK would need to negotiate new trade relationships with them.

177.All of these countries belong to the European Free Trade Association (EFTA), of which the UK was also a member from the Association’s foundation in 1960 until 1973, when the UK joined the predecessor of the EU (the European Economic Community). It would be possible after Brexit for the UK to re-join EFTA; and doing so need not entail joining the EEA or constructing a Swiss-style bilateral relationship with the EU (both of which options have effectively been ruled out by the Government). The Freight Transport Association told us in evidence:

Considering trade with non-EU countries, joining EFTA would presumably allow the UK to accede to the Free Trade Agreements (FTAs) and other types of trade preferences and relationship established by EFTA with non-EU countries, although legal advice would be needed on whether the UK accession to EFTA would require renegotiation of these agreements and arrangements.

Under this scenario the UK would avoid having to start from scratch in negotiating FTAs with other countries. The EFTA States have 27 free trade agreements (covering 38 countries). From the perspective of avoiding a “cliff edge” and continuing trade relationships with the world following Brexit, this option appears attractive.224

178.We also heard from the Law Society that:

An advantage of being within the European Free Trade Association is that the UK would be able to undertake its own free trade agreements with third countries. The EFTA provides for a trading platform, participating in which the UK would be able to trade with the four EFTA States (in addition to the EEA States, this includes Switzerland). The EFTA agreement is fully intergovernmental and its application is based on international law. Like the EEA agreement, only national governments can start a claim whereas under EU law a private party can do so.225

179.Re-joining EFTA would put the UK in reach of FTAs covering 19% of UK exports. Indeed, just five further FTAs (with the EU, the US, Japan, China and Australia) would be needed to cover 89% of UK exports.226

Capacity of DIT to undertake negotiations

180.Negotiating new FTAs is not something the UK has needed to do since joining the EU’s predecessor in 1973. The British Exporters Association wrote that:

BExA is concerned that, having outsourced our trade negotiations to the EU, we do not have a body of trained negotiators for establishing trade arrangements both with the EU and to other countries and trading blocs. It has been reported that a bilateral trade agreement requires a trade team of between 50 and 100 experienced individuals. Although some of this number could conceivably work on simultaneous trade deals, it is fair to say that in order to negotiate the number of trade deals required, that the DIT and DExEU will require in excess of this number of trade specialists.227

181.DIT officials told us in November 2016 that the Department was building up a cadre of skilled staff who could undertake trade negotiations:

[W]e started from a core that was strong on trade policy, so we had about 45 people in June who were focused on trade policy, albeit within the context of that being a support position for the European Commission in the EU. That is the core that we are building from. We are about 100 up from that.228

182.They indicated that a negotiation team for an FTA might consist of between 50 and 100 people, but there could be “double-hatting”, with one person covering the same specialist area across more several sets of negotiations in parallel; and “sector specialists” might be drawn in from other Government departments. Other countries could typically undertake four or five sets of negotiations at once—but the DIT officials were unable to say how many the UK would be able to manage simultaneously, given that some negotiations would not be starting “from scratch”.229

183.In oral evidence to us in February 2017, the Permanent Secretary at DIT, Sir Martin Donnelly, said the Department was “confident that we are building the expertise we need to run really effective trade negotiations” and working with other departments that had staff with relevant skills. Sir Martin told us about the Trade Policy and Negotiations Faculty, which the Department had established in collaboration with the Foreign and Commonwealth Office.230 DIT informed us that: “To date, over 400 officials across several Government Departments, including the Cabinet Office, DExEu, DEFRA and BEIS have undertaken training provided by the Faculty”.231

184.The Secretary of State was unable to say how many FTAs the Department could negotiate at once. DIT further told us in written evidence that: “Establishing and balancing [the interests involved in trade negotiations] is a complex task. The amount that we can do at any one time will depend upon budgets and resources.”232

Prioritising FTAs

185.Given that the resources of DIT are finite, the Government will need to prioritise countries or regions for new FTAs. Below we consider some of the options that have been suggested as possible places to start. The Government has already indicated that its first priority will be the countries with which the EU has existing FTAs.

186.The Secretary of State told us that the Government did not consider itself to be in a position of choosing between the EU and the rest of the world. If it does find itself if that position, there has been some debate over whether it will be possible to make up for lost trade with the EU with increased trade with other countries. The economic orthodoxy is that trade patterns follow the “gravity model”, which Dr Dingra explained as follows:

What we know from 50 years of trade data, and what has often […] been called social physics, is that the law of gravity holds on trade data, which is to say most countries, whether we look at any time period, any set of countries, tend to trade much more with their closer trade partners, bigger, rich, close-by countries. By close by, this is both geographically as well as culturally.233

187.However, Professor Minford challenged the gravity model, saying that “If you look at trade data and relate it to GDP and a bunch of factors, you get the gravity equation, which is a very good predictor but it is not telling you what is driving that stuff”.234 He said that the model was “completely wrong in the case of the UK because we have always had a very far-flung set of relationships.”235

Large and growing markets

188.Dan Lewis, Chief Executive of the Economic Policy Centre, told us that the UK should focus its attentions on trade with the fastest growing parts of the world. He said that:

The basic issue is that in some ways Brexit is about rebalancing the British economy, in terms of trade, to the faster-growing parts of the world. That is what you should be aiming to do over the longer term. Europe has been very slow growing and seems set to be slow growing for some time. It is a declining part of the world economy.236

189.Perhaps unsurprisingly, a number of witnesses and evidence submissions suggested that the UK should focus its attention on large and growing markets, although there was by no means consensus on where the Government should start. The USA is the UK’s largest single country trading partner and was mentioned by a number of witnesses as a priority.237 Despite a protectionist stance by President Trump, he has indicated that he wishes to conclude a trade agreement “very quickly” with the UK.238 We have already launched an inquiry to examine the pros and cons of a potential FTA with the US and will publish a further report on this in due course.

190.Other witnesses emphasised other large or growing markets. Mr Grech of TechCityUK said that:

In terms of size, Japan, China and the US are very big markets […] Then there are markets where they are English speaking, including Australia—29% of our companies operate in Australia—and Singapore, but obviously they use Singapore as a hub for operating in other parts of Asia.239

The ABI suggested that the UK should focus on high growth markets: India, China, Hong Kong, Indonesia, Japan, Malaysia, Singapore and South Korea.240 The London Chamber of Commerce and Industry told us that: “At least two in five London business leaders consider potential trade deals with the USA (54%), China (48%) or India (41%) a high or essential priority for the UK.”241

191.The Secretary of State told us that, beyond the countries with which the EU has FTAs, work was going on to investigate trade agreements with India, Australia, China, South Korea, New Zealand and “a collection of Gulf states”.242 Additionally some confidential discussions were taking place.243

The Commonwealth

192.The Commonwealth, comprising 52 developed, emerging and developing nations, presents a range of potential trade options—and challenges—for the UK. Trade between the UK and the bloc declined markedly between 1948 and 1973, with UK goods exports to the group and Commonwealth goods imports to the UK both falling from 38% to 18%. From 1991 to 2011, however, UK exports changed from 9.2% and 8.8% (bottoming out at 7.4% in 2006); while Commonwealth imports rose steadily from 7.7% and 10.6%.244 Some observers have pointed out that the UK has much larger export partners outside the Commonwealth, noting also that other countries in the group such as Canada and Australia appear more intent on cultivating trade relations with the EU and China.245 While acknowledging the size and potential of UK markets in, for example, the US, the Department nevertheless sought to point out the growth potential represented by the UK’s 51 Commonwealth partner nations:

Around 80% of commonwealth countries benefit from preferential access to the UK market. This is a strong base from which to cultivate future trading arrangements with our commonwealth partners.246

The Royal Commonwealth Society also explained there was a trade advantage between nations in the bloc, noting that a recent study calculated that trade between two Commonwealth partners costs 19% less than between those that are non-Commonwealth.247

193.There are a number of ways in which the UK might seek to trade with Commonwealth countries, including via FTAs, through unilateral arrangements with developing countries and by increasing exports. We were told that a pan-Commonwealth FTA was unfeasible, at least in the short term, given the number and range of economies in the group.248 One suggested alternative is that the UK initially pursue agreements with open economies such as Australia, Canada and Singapore.249 Australia’s High Commissioner to the UK reportedly said recently that “The fewer industries Britain wants to protect, the faster a trade deal can be done”250—although it has also been noted that Australia’s priorities may lie with its own region and negotiating an EU deal.251 The UK is Canada’s largest EU export market and has a template deal in place through the CETA agreement with the EU,252 although opinions differ on how straightforward it will be to replicate this bilaterally.253 Ahead of Canada, Singapore was the UK’s leading Commonwealth export destination in the first three months of 2016.254 Its attractiveness as a potential gateway to business with other south Asian countries has been noted,255 as has its status as a hub for tech companies operating in the region.256 Singapore is also finalising an FTA with the EU.

194.India is also considered a key target, with recent forecasts suggesting that a deal could boost UK exports to the country by 50%.257 But India’s Government has taken a more tentative approach to deals recently, following domestic unease about increased foreign competition,258 and, like other prospective deals, a UK-India agreement may require negotiations on migration.259

195.While those submitting evidence agreed that the Government should pursue FTAs with developed and emerging Commonwealth economies, they also stressed that this should not take place to the detriment of developing countries. The UK has preferential trading schemes and agreements with such nations, and these would lapse if alternative arrangements were not made in time for the UK’s departure from the EU. Trading with the UK on WTO terms alone would add large sums to the import costs of some of the poorest countries in the world.260

196.Through its EU membership the UK participates in two main schemes with developing countries. First, there is the Generalised System of Preferences (GSP), a trade arrangement through which the EU offers certain foreign goods non-reciprocal preferential access to the EU market in the form of reduced or zero tariffs.261 Secondly, the EU has a number of Economic Partnership Agreements (EPAs)—at different stages of implementation—with the African, Caribbean and Pacific (ACP) regions.262 These are traditional FTAs which are intended to open up EU markets fully and immediately, but allow ACP countries long transition periods to open up partially to EU imports while providing protection for sensitive sectors.263

197.According to the Commonwealth Secretariat, a replacement UK GSP scheme should be achievable:

One straightforward option would be for the UK to devise its own GSP for LDCs [least-developed countries], providing duty-free and quota-free market access for all goods originating in LDCs, similar to that of the EU.264

But the Secretariat noted that future arrangements for grandfathering or replicating EPAs were more complex.265 A number of stakeholders agreed. Dr Peg Murray-Evans, Research Associate in the Department of Politics at York University, has explained that African opposition to the initial EPAs was a key obstacle to realising ambitious trade liberalisation, and questioned whether the UK’s negotiating capacity should be focused on such countries, “most of which are ultimately of marginal significance as UK export destinations.”266 The Fairtrade Foundation also pointed out that many developing countries resisted EPAs, signing them only under threat of tariff imposition:

developing countries were required to offer reciprocal access prematurely, undermining policy space and their ability to nurture emerging sectors. The inclusion of investor protection measures which allow investors to sue governments through unaccountable tribunals has been particularly problematic.

The foundation concluded: “Attempting to copy EPAs would be a missed opportunity to improve on EU policies.”267 Others have been more optimistic about securing deals, however, noting that in market size and sector focus the UK represents a more equal trading partner than the EU.268

198.FTAs are not, however, the only route to market. Lord Marland, Chairman of the Commonwealth Enterprise and Investment Council, has said that the focus on FTAs hides the real issue, which is that not enough small businesses are exporting.269 Lord Marland added that the abuse of the rule of law and a lack of trust in trading partners were barriers to trade for UK companies, and the Government should focus on increasing its capacity to support businesses confronted by such obstacles.270

Plurilateral agreements

199.It should be noted that the UK need not be restricted to bilateral FTAs. The Government told us that “As it has been challenging to reach agreements at the global level, the UK is also a strong champion for plurilateral agreements”, citing as an example its support for the expansion of the WTO Information Technology Agreement.271

200.The Trade in Services Agreement (TiSA) is currently being negotiated on a plurilateral basis (including by the EU). The Brexit White Paper states that “The UK continues to be committed to an ambitious TiSA and will play a positive role throughout the negotiations”.272 We heard evidence from several quarters in favour of the UK pressing ahead with these negotiations after Brexit273—although it was also suggested in one submission that TiSA could pose a threat to public services.274

Conclusions and recommendations

201.Given that striking new FTAs is a major strand of the UK’s Brexit strategy, it is untenable that it should proceed in this work without clear knowledge of how far it can go towards negotiating new FTAs before it leaves the EU. Negotiators will need clear guidelines. While we accept that there is no precedent for this situation—and that the EU’s view could differ from that of the UK—the Government’s position must be clear. We request that the Secretary of State write to us setting out clearly the Government’s position on how far it can go towards negotiating new FTAs before the UK leaves the EU.

202.There is a further major element of uncertainty as the UK goes into the Article 50 process: how far is it possible for the UK to negotiate post-Brexit “grandfathering” arrangements in respect of FTAs to which we are currently a party in consequence of our EU membership? Here too, the Government must seek the earliest possible clarity. If such “grandfathering” is legally possible, particular effort should be put into this, with the setting out of a roadmap for this purpose, including early discussions with the WTO about the degree of proactive support they can provide to promote such a smooth transition.

203.We recommend that the Government now evaluate the implications of the UK re-joining the European Free Trade Association (EFTA), which would offer an opportunity for a smoother transition as the UK exits the EU in 2019. We were impressed by the potential benefits of EFTA membership, given there is close alignment between the UK’s economy and those of EFTA members, albeit the UK would be considerably the largest member were it to join. The lighter-touch dispute and arbitration system of EFTA offers a more flexible process than that in operation across EU member states under the ECJ. In addition, membership would give significant advantages in the pursuit of new FTAs across the global economy, in a framework more suitable to UK policy following the referendum decision to exit the EU. And amending EFTA’s 27 FTAs with 38 countries to include the UK could be a more straightforward way of substituting for the EU’s FTAs should a “grandfathering” process in respect of the latter be legally impossible, or prove complex and time-consuming. The prospect of UK membership of EFTA from 2019 onwards could clearly be to Britain’s advantage and we, therefore, recommend that the Secretary of State publish a White Paper on EFTA membership before summer 2017, so that negotiations can commence before the end of the year.

204.If it is legally possible to conduct negotiations regarding the “grandfathering” of EU FTAs and / or membership of EFTA and the adoption of EFTA FTAs during the Article 50 process, appropriate resources will need to be devoted to them. Yet these negotiations will be taking place at a time when the UK’s trade negotiators are likely also to be negotiating a comprehensive FTA with the EU, as well as FTAs with other countries which are neither EU members nor parties to FTAs with the EU. Clearly, there is a limit to how many FTAs can be negotiated at one time. There will have to be priorities (while taking account of issues related to the sequencing of negotiations). The Government must be clear about what those priorities are, what negotiating resources it is able and willing to procure, and how those resources will be deployed.

205.We accept that there is a balance to be struck between not revealing the Government’s hand on FTAs around the world and keeping Parliament informed. Nonetheless, DIT should publish a broad strategy document on negotiating FTAs, describing and justifying the outlines of its approach.

208 British Chambers of Commerce (UKT0022)

213 Q241 [Dan Lewis]

216 British Chambers of Commerce (UKT0022)

217 Association of British Insurers (UKT0006)

221 Law Society of England and Wales (UKT0048)

222 Agriculture and Horticulture Development Board (UKT005)

223 Fairtrade Foundation (UKT0042)

224 Freight Transport Association (UKT0033)

225 Law Society of England and Wales (UKT0048)

226 Office for National Statistics, Balance of Payments annual geographical data tables, February 2017; Free Trade Agreements, European Free Trade Association website; House of Commons Library

227 British Exporters Association (UKT0036)

231 Department for International Trade (UKT0049)

232 Department for International Trade (UKT0049)

240 Association of British Insurers (UKT0006)

241 London Chamber of Commerce and Industry (UKT0016)

244 UK-Commonwealth Trade Statistics, Standard Note SNEP6497, House of Commons Library, December 2012

246 Department for International Trade (UKT0049)

247 Royal Commonwealth Society (UKT0023)

248 Royal Commonwealth Society (UKT0023); British Influence, Brexit: the Commonwealth Dimension

250Free trade means free trade, to borrow a phrase”, Telegraph website, 6 October 2016

253 Oral evidence taken before the International Trade Committee on 17 January 2017, HC(2016–17)934-i, Qq7, 8, 22

255 The Free Enterprise Group, Reconnecting with the Commonwealth: the UK’s free trade opportunities; Royal Commonwealth Society (UKT0023)

257 Commonwealth Secretariat press release, “UK-India bilateral trade deal to boost UK’s exports by 26 billion, 9 November 2016

260 Commonwealth Secretariat, “Concern over Brexit in vulnerable Commonwealth states”, August 2016. The Secretariat notes, for example, that goods from Bangladesh could incur an extra £220 million in tariffs if the country were to trade with the UK on WTO terms alone.

261 Two further elements of the GSP scheme are GSP+, an incentive arrangement offering tariff reductions to vulnerable countries that have ratified and implemented international conventions relating to human and labour rights, the environment and good governance; and the Everything But Arms (EBA) initiative which guarantees duty-free and quota-free access to the EU for all products except arms and ammunition for 49 least-developed countries.

262 The Royal Commonwealth Society (UKT0023) notes that the EU currently has EPAs with the Caribbean Forum, Southern African Development Community, South Africa, Cameroon, Papua New Guinea and Fiji; and that the EU has finalised but not yet applied EPAs with the East African Community, Singapore, and West African Community.

264 Commonwealth Secretariat, “Staging Brexit at the WTO”, December 2016

265 Commonwealth Secretariat, “Staging Brexit at the WTO”, December 2016

266 Dr Peg Murray-Evans, “Myths of Commonwealth Betrayal: UK–Africa trade before and after Brexit”, Commonwealth Journal of International Affairs, 13 October 2016

267 Fairtrade Foundation (UKT0042)

269Lord Marland: people are obsessed with free trade agreements”, Guardian website, 13 January 2017

271 Department for International Trade (UKT0049)

272 HM Government, The United Kingdom’s exit from and new partnership with the European Union, Cm 9417, February 2017, para 8.20

273 See for example: Q368; Association of British Insurers (UKT006), Hook Tangaza (UKT0046)

274 StopTTIP uk (UKT0025)

6 March 2017