4Trade opportunities after Brexit
37.The UK aerospace space industry stands to benefit from substantial growth opportunities beyond the European Union in the coming years. Airbus forecasts that there will be 34,000 deliveries of new aircraft worldwide between 2017 and 2036, bringing the total size of the global fleet from 21,000 to 46,000. Of those new deliveries, 14,000 will be in the Asia-Pacific region, and a further 7,000 will be in other regions outside of Europe and North America.56
38.Witnesses told the Committee that access to the European market and global markets is not an either/or, but that the UK’s presence in the European manufacturing hub and supply chain boosts access to and competitiveness in extra-EU markets:
Global demand for aircraft is buoyant and growing. That demand, by and large, is in South East Asia and other parts other than Europe and the UK. We are fortunate in that we are able to exploit that, but we in the UK are a supplier of equipment to global aerospace companies, the largest being Airbus. We are dependent on them being able to sell competitively their products in global markets.57
39.The fact that the plurilateral WTO Agreement on Trade in Civil Aircraft eliminates tariffs on most trade in civil aerospace (the signatories include the UK, the EU, the United States and China) means that the aerospace sector has very little to gain from the UK making free trade deals on tariff reduction beyond the EU.58 Instead, the industry’s “route to market is very much facilitated by the regulatory regime. Without that… [it does] not have a route into global markets, whether Europe, US or China, because of the mutual recognition arrangement. Not having that arrangement will make it more difficult for us to be able to access those important markets.” In particular, EASA’s Bilateral Aviation Safety Agreements (BASAs) with its counterparts in the United States, Canada and Brazil enable mutual recognition of certification and opportunities to trade competitively in those countries. Although there is an older BASA between the UK and US that may apply after Brexit, it is less comprehensive (for example, it does not cover the repair and maintenance of US-registered aircraft in the UK). The Government’s priority in terms of opportunities for aerospace to trade beyond the EU after Brexit should be to secure the roll-over of EASA’s existing BASAs. This could be achieved by maintaining the UK’s membership of EASA in some form.59
40.Moreover, EASA is close to formal agreement on a BASA with its counterpart in China and is negotiating with its counterpart in Japan. The Government should also aim to secure UK participation in these and any other future agreements.
41.In the case of aerospace, the trade-off between regulatory harmonisation and as frictionless a customs arrangement as possible, against the ability to strike trade deals globally, is decisively in favour of the former, which should be the Government’s priority. Indeed, EASA’s agreements with the likes of the United States and China suggests that the two aims are complementary, and that close harmonisation with the European and global aerospace regulatory regimes are likely to enhance, rather than diminish, the UK’s access to all global markets.
Published: 19 March 2018