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Brexit: trade in goods Contents

Chapter 7: The EU and preferential trade with third countries

Existing EU preferential trade arrangements

231.The EU currently has more than 36 preferential trade agreements covering 60 third countries,408 which the UK benefits from as an EU Member State. Rather than providing completely free trade, FTAs provide preferential market access relative to a situation in which no such agreement exists.

232.Countries with which the EU has a FTA accounted for 17.2% of UK exports in goods on average in the period 2013–15.409 The purpose and scope of the EU’s FTAs vary considerably, so this report considers different examples in the context of Brexit: the EU-Korea FTA as a recent agreement with a developed country; and the EU’s agreements with developing and the Least Developed Countries (LDCs) under the Generalised System of Preferences (GSP) and the relationship with African, Caribbean, and Pacific (ACP) countries.410

EU FTAs with developed countries

233.Recent FTAs between the EU and developed countries generally tackle not only tariff but also regulatory barriers. Box 8 outlines one example, the FTA between the EU and South Korea.

Box 8: The EU-Korea FTA

Described by the European Commission as “the most ambitious FTA implemented by the EU so far”,411 the EU-Korea FTA was provisionally applied in 2011 and entered into force in December 2015.

The FTA liberalises 98.7% of tariffs between the EU and Korea and commits to preventing a rise in tariffs on either side in the future.412 The Department for International Trade (DIT) told us that almost all tariffs on industrial goods have now been eliminated.413 Tariff duties for products deemed sensitive, such as some agricultural and fisheries goods, will only be eliminated over longer staging periods of seven years and over.414

The FTA addresses non-tariff barriers in four sectors specifically: motor vehicles and parts, pharmaceutical products and medical devices, chemicals, and electronics. It also aims to increase market access in services and investments.415

Motor vehicles and parts

The EU and Korea have agreed to align their regulations with the World Forum for Harmonisation of Vehicle Regulations (WP.29). The WP.29 is in the framework of the United Nations Economic Commission for Europe (UN ECE). Both sides have also committed to providing full market access by eliminating tariff and non-tariff barriers.

Compliance with these commitments is being monitored by a working group established under the FTA. Korea has agreed to accept ‘EURO VI’ certificates for heavy duty commercial vehicles, as well as simplified electronic documentary procedures for imports of E-marked tyres in 2016.

Pharmaceutical products and chemicals

The EU and Korea have agreed to make immediately available to the other party any laws, regulations, procedures, administrative rulings and implementing guidelines related to pharmaceutical products. Such laws and regulations will take into account, as appropriate, international provisions, practices, and guidelines.

For chemicals, there are a number of initiatives including protection of public health and the environment, implementing appropriate regulatory mechanisms, and developing best practices on chemicals assessment and management.

For both pharmaceutical products and chemicals, working groups have been established to monitor areas of the agreement and to exchange updates on regulations.

Electronics (part of capital goods and machinery in this report)

For electronics, the EU and Korea agree to recognize three international standard-setting bodies, which are to be used as the basis for any standards, technical regulation or conformity assessment procedures: the Internationa l Standards Organisation (ISO), the International Electrotechnical Commission (IEC) and the International Telecommunication Union (ITU). To facilitate conformity assessments, a list of approved testing laboratories must be notified to the other party under the FTA. Unlike the sectors above, no working group has been established on electronics.

Source: Written evidence from the Department for International Trade (FTG0025)

234.Lord Price CVO, Minister of State for Trade Policy, Department for International Trade (DIT), told us that the EU-Korea FTA had boosted UK exports to Korea by 111% from 2010/11 to 2014/15, and imports by 74% in the same period.416 Secretary of State for International Trade, the Rt Hon Liam Fox MP, said in a speech on 29 September 2016: “In the year before the FTA was agreed, the UK sold just over 2,000 cars to South Korea. In 2014 that number reached over 13,000.”417

235.The removal of the oil tariff has led to an annual increase of UK oil exports of 47% between 2011 and 2015. In 2015 oil accounted for one third of total goods exports.418

236.Table 5 gives an overview of the changes of UK trade with Korea before (2010/11) and after (2015/16) the implementation of the EU-Korea FTA. It should be noted, however, that it cannot be said with certainty that these changes are the direct result of the EU-Korea FTA.

Table 5: UK Trade with Korea

 

UK exports to Korea (£)

UK imports from Korea (£)

 

July 10 –

June 11

July 15 –

June 16

% increase

July 10 –

June 11

July 15 –

June 16

% increase

Food and beverages

179,545,522

173,392,166

-3%

11,142,601

27,969,245

151%

Chemicals and

pharmaceuticals

353,768,784

378,251,309

7%

53,843,225

141,213,109

162%

Machinery and

electrical

788,580,890

1,295,581,833

64%

1,247,817,413

1,338,707,030

7%

Automotive

141,016,439

649,566,957

361%

352,384,545

1,134,755,636

222%

Aerospace, arms

and ammunition

45,907,274

224,998,690

390%

46,567,620

188,312,937

304%

Source: Written evidence from the Department for International Trade (FTG0025)

EU FTAs with developing countries

237.EU trade arrangements with developing countries and the LDCs mostly offer preferential EU market access to these countries. Market access for developing countries is usually not reciprocal and such agreements include a large political and development element. These arrangements include FTAs and the EU’s GSP programme, which is described in Box 9.

Box 9: The EU’s trade with developing countries

The Generalised System of Preferences419

The Generalised System of Preferences (GSP) is based on an exception to the MFN clause, referred to as the ‘Enabling Clause’.420 The GSP allows developed countries to offer non-reciprocal preferential treatment to products originating in developing countries. The preference-giving country (in this case the EU) decides unilaterally the countries and products included. 421

The EU’s GSP allows developing countries to pay less or no duties on their exports to the EU in the specified sectors. This gives them important access to EU markets, and contributes to their economic growth.422

There are three main variants of the EU’s GSP Scheme: 423

  • The standard/general GSP arrangement offers tariff reductions to developing countries. This means partial or entire removal of tariffs on two thirds of all product categories.
  • The ‘GSP+’ enhanced preferences arrangement involves the full removal of tariffs on essentially the same product categories as those covered by the general arrangement. These are granted to countries that ratify and implement core international conventions relating to human and labour rights, environment and good governance.
  • The ‘Everything but Arms’ (EBA) arrangement for LDCs grants duty-free and quota-free access to the EU market for all products, except for arms and ammunitions. These 48 countries are classified by the United Nations’ Committee for Development Policy, based on their gross national income per capita, the human asset index, and the economic vulnerability index.424

EU trade with ACP countries

Another framework is that between the EU and African, Caribbean, and Pacific (ACP) countries:

  • Until 2007, EU trade with ACP countries took place on basis of the 2000 Cotonou Agreement. Following the expiry of the trade pillar, a number of African states have signed regional Economic Partnership Agreements (EPAs) with the EU.425 The EU decided to remove trade preferences for 17 countries that had not ratified an EPA by 1 October 2014. Preferences were reinstated for eight of these countries after the ratification of the EPA.426
  • As a result of overlap between ACP countries and those included in the LDC grouping, countries that are both LDCs and ACP countries continue to receive preferential access to the EU market for their exports under the ‘Everything But Arms’ agreement.

238.The UK’s trade with developing countries is very small relative to total UK trade. UK exports to the LDCs accounted only for 0.6% of total goods exports on average between 2013 and 2015, and goods imports accounted for 1.1%.427 UK trade with ACP countries is also limited. Among the sectors included in our inquiry, food and beverages and oil and petroleum are the largest trading sectors for the UK: in 2015 4.5% of the UK’s food and beverages trade was with ACP countries, and 5.6% of its trade in oil and petroleum. In total, trade with ACP countries accounted for 2.1% of the UK’s trade in the six sectors in 2015.428

239.Beyond the simple balance of trade, the EU’s FTAs with developing countries serve as an important tool of the UK’s foreign and development policy. The Rt Hon Lord Bates, Minister of State for International Development, wrote in February that the UK “remain[ed] committed to ensuring developing countries can reduce poverty through trading opportunities”, and that the UK had “made clear [its] potential interest in future partnership, working under aspects of the new EU-ACP framework”.429

Sectoral views on post-Brexit preferential terms with third countries

240.We asked witnesses how important it was to maintain access to the EU’s preferential trade arrangements with third countries. For the pharmaceuticals industry, Dr Virginia Acha, Executive Director of Research, Medical and Innovation, Association of the British Pharmaceutical Industry, described the EU’s FTAs with third countries as “very important”. She said that losing access to them “would obviously potentially lead to higher duties on imports as well as in those destination countries”.430 Mr Steve Elliott, Chief Executive Officer, Chemical Industries Association (CIA), identified the FTAs with Switzerland and Korea.431

241.From the perspective of capital goods, Mr Fergus McReynolds, Director of EU Affairs, EEF—The Manufacturers’ Organisation (EEF), said the EEF would like existing FTAs “to be rolled over”.432 Mr James Selka, Chief Executive Officer, Manufacturing Technologies Association, named Switzerland, Korea, Turkey, and Mexico as countries with which the EU had particularly important arrangements.433

242.With regard to food and beverages, Mr Peter Hardwick, Head of Exports, the Agriculture and Horticulture Development Board (AHDB), highlighted Canada434 and Korea as important for UK food exports. The AHDB told us that North Africa, West Africa, and Vietnam435 were most important to the UK’s food and drink sector. The AHDB also noted that the UK “currently imports over £0.5 billion of food and drink imports from Sub-Saharan Africa”,436 and Mr Hardwick said that “most of our trade with ACP countries is with West Africa”.437

243.Mr Hardwick highlighted the EU’s association agreement with Egypt as important to certain parts of the food and beverages sector. The UK exports half of its total exports of seed potatoes to Egypt, and the association agreement included a “10-year degressive tariff arrangement”, which reduced the tariff by gradual amounts, that was “certainly … of interest” to the UK food sector.438 He also identified South Africa as an important market for AHDB members.439

244.Mr Richard Eglin, Senior Trade Policy Adviser, White and Case LLP, noted that leaving the EU’s ACP arrangements would have implications for the UK’s ability to use trade as a tool of development policy. For example, the EU currently offered duty-free access to sugar imports from ACP countries. If the UK reverted to WTO terms for trade with ACP countries, it would have to grant the same tariffs on sugar on an MFN basis to all countries, unless it adopted a GSP scheme for developing and LDCs or signed FTAs with these countries. In the absence of such preferential agreements, the Government “would not be able to choose who we get it from”.440

245.Considering the automotive sector, Mr Mike Hawes, Chief Executive Officer, The Society of Motor Manufacturers and Traders (SMMT), said that existing EU FTAs with third countries were “very important”; the SMMT “would like to see some sort of … continuation of those trade agreements.” The SMMT called for “urgent clarity … on the UK’s ability to access third country markets where an existing EU FTA is in place or currently being negotiated”.441

246.Mr Hawes said that the Government “should explore every option for retaining the trading arrangements that currently apply to it as a result of free trade agreements signed by the EU with third countries.”442 Current EU FTAs provided “a £15 trillion market”, which the UK would “clearly want to make sure we maintain access to”. He identified the FTA with Korea as a “significant example”.443

247.Lord Price told us that DIT was currently “trying to find the best way in which we can have a continued trading relationship on the same terms with the countries that we currently have access to through an EU FTA … In total, that includes 60 countries through 36 agreements.”444 By the time of Brexit, this number could rise to 64, as new agreements with countries including Singapore, Japan, Vietnam and Canada came into effect.445 Lord Price said: “Our broad principle in the WTO and in existing FTAs is to carry on in the most straightforward way what we are doing today.” We note that the withdrawal of the UK, a large Member State, could also have an impact on EU FTAs with third countries.

248.Acknowledging that the UK could only negotiate and sign FTAs after the two-year Article 50 period, the DIT’s current engagement was “about promoting British business exporting to those countries today”.446 The EU’s existing agreements and those under negotiation, particularly with Japan, may provide a useful template for bilateral agreements with the UK. Ambassador Tsuruoka told us that “having a Japan-EU EPA will be quite useful” for FTA discussions with the UK.447

249.Reflecting on whether the UK could replicate, on a bilateral basis, the terms of existing EU FTAs with countries such as Korea, Lord Price said: “Some are very straightforward and others are more complicated. It is about the extent to which they are bound into EU legislation and regulation.” DIT had “worked through every one of them to understand the level of complexity”.448 The UK also wanted “to continue … if not improve” access given to developing countries under economic partnership agreements signed by the EU. DIT and the Department for International Development were “working on what regime could be put in place”.449

Priority countries for new FTAs

250.The Government’s Green Paper, Building our industrial strategy, listed Canada, China, India, Mexico, Singapore and South Korea as countries interested in discussing future trade relations with the UK.450 On 19 January 2017 the Rt Hon Liam Fox MP wrote in the Daily Telegraph that Britain was “conducting trade audits with a number of countries to see how we can remove barriers to trade and investment”.451 Lord Price explained that ‘trade audits’ were discussions about trade barriers, which could include customs arrangements, or access to particular sectors.452 This was not new: “For the last 43 years we have been conducting trade audits”.453 Trade audits took place at “a more formal level”, whereas working groups were “looking to explore how we can continue to trade with those countries in a post-Brexit world”.454 The Prime Minister had “announced a working group with China and high-level talks with the USA [on trade]”.455 In total, the UK was currently engaging with 15 countries on post-Brexit trade relations. Some of these countries “do not have EU FTAs, but a lot of them do”.456

251.We note that such discussions with 15 countries in parallel, in addition to withdrawal negotiations with the EU, seem to be far beyond the Government’s current staff resources.457 We discuss resourcing further in Chapter 10.

252.Such trade discussions with third countries, though not formal negotiations and therefore not necessarily in breach of the Common Commercial Policy, might be politically sensitive during the Article 50 period. Lord Price said: “We feel that, within the context of what we can do today, having discussions with countries about continuity of trade with the UK is perfectly acceptable.”458 During visits to Japan, Vietnam and Canada, the Government had conveyed that “we support the EU and we support the EU FTAs. We want those to succeed, as we always have done—that is our position”. EU FTAs could then “become the base of the UK arrangement going forward”.459

253.The witnesses to this inquiry also considered which non-EU countries would be most important for future UK trade agreements after Brexit. Mr Elliott said that for the chemicals industry, Canada,460 Brazil, and the US “would be particularly significant”;461 Dr Acha said that China was also “very important” for pharmaceuticals.462 For the capital goods and machinery sector, EEF members’ priority countries were the US, China, India, and Canada.463 For the food and beverages sector, the FDF said the US, alongside China and Japan, “could provide significant opportunities if ambitious deals can be secured that address both tariff and regulatory barriers”.464

254.From the automotive sector, the SMMT took a more cautious approach: it recommended that the Government should “clarify the status” of current EU FTAs as well as “the rules under which companies can access these third markets before pursuing new bilateral trade negotiations”.465

Substituting EU trade with non-EU trade

255.On 17 January 2017, the Prime Minister stated:

“Many in Britain have always felt that the United Kingdom’s place in the European Union came at the expense of our global ties, and of a bolder embrace of free trade with the wider world … it is time for Britain to get out into the world and rediscover its role as a great, global, trading nation”.466

256.The UK Trade Policy Observatory (UKTPO), University of Sussex, noted that there was potential to increase trade in goods with non-EU markets. Countries with which the EU has launched, or agreed to open negotiations on, a FTA or investment agreement (the US, Japan, India, China,467 Australia and New Zealand) accounted for 21.7% of UK goods exports in 2015, and 21.9% of the UK’s imports.468 This indicates that, if the UK were to negotiate agreements with these countries bilaterally, these deals could have a positive impact on more than 20% of the UK’s trade in goods.

257.We have previously noted, however, that the conclusion of new FTAs would be likely to take a number of years, and would be contingent on the trade arrangements reached with the EU and the UK’s WTO schedules. The Government should thus first focus on trade conditions with the EU and on the UK’s WTO schedules.469 Mr Hawes echoed this view: “The bottom line is that we have a massive market on our doorstep and we want to make sure we continue to be part of that.”470

258.An important factor will be whether any shortfall in trade with the EU could easily be made up by trade with non-EU countries (including those currently covered by EU FTAs). We discussed sector-specific issues in this regard in Chapter 4. The UKTPO too thought this would be difficult, noting that the UK tended to export different products to countries with which the EU has FTAs, compared with the goods exported to the EU-27. This indicated that UK exports to the EU would not be easily substituted by other markets following Brexit. As for imports, those from the EU-27 and from EU FTA countries were “quite different”. This would make “finding alternative sources of supply [for both EU and FTA originating products] harder / more expensive for the UK”.471 Mr Hawes added that there might be a risk in relying on emerging markets, such as China, Russia, and Brazil, to make up for any shortfall, because they could “be quite volatile”.472

Conclusions and recommendations

259.As we concluded in our report on Brexit: the options for trade, it is unlikely that the UK will be able to maintain access to the EU’s FTAs with third countries after Brexit. The UK will also not be able to conclude new FTAs with third countries until after it has left the EU.

260.Thus Brexit is likely to result in a cessation of the preferential conditions of trade with non-EU countries currently enjoyed by UK businesses. This is likely to result in significant tariff costs and other reductions in market access for many of the sectors we considered, until new preferential arrangements can be put in place post-Brexit.

261.We welcome the Government’s efforts to engage with non-EU countries to lay the groundwork for future FTAs. However, trade negotiations are time consuming and complex, and it is important that the Government focus its efforts where they can deliver maximum benefit. In particular, the Government should focus on countries where the EU already has FTAs in place, with a view to securing the current level of market access enjoyed by UK businesses. The terms of the EU’s existing FTAs and those under negotiation are likely to form a useful starting point for future UK agreements with these countries.

262.The Government needs to demonstrate that it has the capacity to negotiate with the EU, and simultaneously open preliminary discussions on FTAs with third countries. We are concerned that there may be significant delays to the Secretary of State for International Trade’s plan to agree new FTAs with 15 countries shortly after leaving the EU.

263.It is critical that the Government considers negotiating access to the EU’s preferential trade arrangements with third countries for a transitional period.

264.The EU’s frameworks for preferential trade are a valuable tool of the EU’s foreign and development policies. When the UK leaves the EU, it is likely to lose access to such agreements, which cover a wide range of developing countries, such as the ACP and LDC groupings. We therefore welcome the Government’s commitment to continue or improve access given to developing countries under economic partnership agreements signed with the EU.

265.We expect the Government to assess the full range of EU trade agreements, and their role in furthering the UK’s foreign and development policy objectives. We recommend that the Government consider recreating such agreements on a bilateral basis, including a UK General System of Preferences.


408 Q 123 (Lord Price) The EU has a large number of agreements that include an economic dimension with partner countries. When using the term ‘FTA’ in this context, it therefore also includes Economic Partnership Agreements (EPA), Association Agreements (AA), Partnership and Co-operation Agreements (PCA), and other EU agreements that include a free trade dimension. These agreements serve a mix of political and economic purposes. For the EU’s FTAs, see European Commission, ‘Agreements’: http://ec.europa.eu/trade/policy/countries-and-regions/agreements/index_en.htm#_other-
countries
[accessed 13 January 2017] and European Commission, Overview of FTA and other trade negotiations of the EU (February 2017): http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf [accessed 17 February 2017]

409 Written evidence submitted to the EU Internal Market Sub-Committee, 30 November 2016 (Session 2016–17) TAS0085 (UK Trade Policy Observatory, University of Sussex)

410 This report uses the terms ‘developed’, ‘developing’, and ‘least developed’ on the basis of the UN’s human development index (HDI) classification. The HDI consists of three indices: the life expectancy index, the education index, and the GNI index. It classifies countries into groups of ‘very high human development’, ‘high human development’, ‘medium human development’, and ‘low human development’. We note that the criteria used by the UN to identify the group of ‘least developed countries’ (LDCs) are slightly different from the HDI grouping of ‘least developed’ countries and therefore the two groups do not overlap completely. However, with a few exceptions, they are the same.

411 European Commission, Report from the Commission to the European Parliament and the Council: annual report on the implementation of the EU-Korea Free Trade Agreement (30 June 2016): http://trade.ec.europa.eu/doclib/docs/2016/june/tradoc_154699.pdf [accessed 4 January 2017]; We note that the Comprehensive Economic and Trade Agreement with Canada goes further than the Korea FTA, but has yet to be implemented.

412 Written evidence from the Department for International Trade (FTG0025)

413 Ibid.

414 Ibid.

415 European Commission, ‘Countries and regions—South Korea’: http://ec.europa.eu/trade/policy/countries-and-regions/countries/south-korea/index_en.htm [accessed 4 January 2017]

416 Department for Business, Innovation and Skills, Explanatory Memorandum on European Union document—Report from the Commission to the European Parliament and the Council-Annual Report on the Implementation of the EU-Korea Free Trade Agreement (14 July 2016): http://europeanmemoranda.cabinetoffice.gov.uk/files/2016/07/EM_10847–16.pdf [accessed 6 March 2017]

417 Liam Fox MP, Speech on free trade, 29 September 2016: https://www.gov.uk/government/speeches/liam-foxs-free-trade-speech [accessed 3 February 2017]

418 Written evidence from the Department for International Trade (FTG0025)

419 The WTO agreement is called ‘Generalised System of Preferences’, whereas the EU calls its GSP ‘Generalised Scheme of Preferences’.

420 This clause allows WTO members to grant “differential and more favourable treatment” to developing countries without granting it to all members. One of the cases in which this is possible is in the case of preferential tariff treatment by developed countries to developing countries in accordance with the GSP as described in a 1971 decision. Countries decide themselves if they adopt a GSP scheme and how it is structured. There are currently 13 national GSP schemes notified to the UNCTAD secretariat. UNCTAD, ‘About GSP’: http://unctad.org/en/Pages/DITC/GSP/About-GSP.aspx [accessed 6 March 2017]

421 WTO, ‘Development: Trade and Development Committee—Special and differential treatment provisions’: https://www.wto.org/english/tratop_e/devel_e/dev_special_differential_provisions_e.htm [accessed 6 March 2017]; We note that the unilateral granting of preferential treatment includes a non-discrimination obligation which was interpreted by the WTO Appellate Body in EC—Tariff Preferences, WT/DS246/AB/R (2015): https://www.wto.org/english/tratop_e/dispu_e/cases_e/1pagesum_e/ds246sum_e.pdf [accessed 24 February 2017]

422 European Commission, ‘Generalised Scheme of Preferences (GSP)’: http://ec.europa.eu/trade/policy/countries-and-regions/development/generalised-scheme-of-preferences/index_en.htm [accessed 3 February 2017]

423 A full list of the countries included in each scheme is available in the Official Journal of the European Union. Commission delegated regulation (EU) 2015/1979 of 28 August 2015, OJ L 289/3 (4 November 2015)

424 European Commission, ‘Generalised Scheme of Preferences (GSP)’: http://ec.europa.eu/trade/policy/countries-and-regions/development/generalised-scheme-of-preferences/index_en.htm [accessed 6 March 2017]; United Nations, ‘Least developed countries (LDCS)’: http://www.un.org/en/development/desa/policy/cdp/ldc_info.shtml [accessed 6 March 2017]

425 European Parliament, African, Caribbean and Pacific (ACP) countries’ position on Economic Partnership Agreements (EPAs) (April 2014): http://www.europarl.europa.eu/RegData/etudes/etudes/join/2014/433843/EXPO-DEVE_ET(2014)433843_EN.pdf [accessed 17 February 2017]

426 European Commission ‘The Countries of Africa, the Caribbean and the Pacific (ACP)’: http://ec.europa.eu/taxation_customs/business/calculation-customs-duties/rules-origin/general-aspects-preferential-origin/arrangements-list/countries-africa-caribbean-pacific-acp_en [accessed 17 February 2017] and Regulation (EU) No 527/2013 of the European Parliament and of the Council of 21 May 2013 amending Council Regulation (EC) No 1528/2007 as regards the exclusion of a number of countries from the list of regions or states which have concluded negotiations, OJ L 165/59 (18 June 2013)

427 Written evidence submitted to the EU Internal Market Sub-Committee, 30 November 2016 (Session 2016–17) TAS0085 (UK Trade Policy Observatory, University of Sussex)

428 Written evidence from the Department for International Trade (FTG0025)

429 Letter from the Rt Hon Lord Bates to Lord Boswell of Aynho, 17 February 2017

433 Ibid.

434 Q 45 We note that the FTA with Canada has not yet been applied.

435 The EU concluded negotiations with Vietnam on a FTA on 2 December 2015. The FTA is currently under legal review and will then be presented for ratification. European Commission, ‘Countries and regions: Vietnam’: http://ec.europa.eu/trade/policy/countries-and-regions/countries/vietnam/index_en.htm [accessed 4 January 2017]

436 Written evidence from AHDB (FTG0007)

438 Q 45 The 2004 EU-Egypt Association Agreement commits to the establishment of a free trade area “over a transitional period not exceeding twelve years from the entry into force of this Agreement”. It grants Egypt tariff-free access to the EU market for “products originating in Egypt” and phases out tariffs for EU exports to Egypt. In 2014, Egypt ceased to benefit from the EU’s GSP due to its FTA with the EU. A dialogue on a deep and comprehensive FTA (DCFTA) between the EU and Egypt was launched in 2013. Euro-Mediterranean agreement establishing an association between the European communities and their Member States, of the one part and the Arab Republic of Eqypt, of the other part: http://trade.ec.europa.eu/doclib/docs/2004/june/tradoc_117680.pdf [accessed 9 January 2017] and European Commission, ‘Countries and regions: Egypt’: http://ec.europa.eu/trade/policy/countries-and-regions/countries/egypt/index_en.htm [accessed 9 January 2017]

439 45 We note that the EU-South Africa Trade, Development and Co-operation Agreement covers 90% of bilateral trade between the EU and South Africa. European Commission, ‘Countries and regions: South Africa’: http://ec.europa.eu/trade/policy/countries-and-regions/countries/south-africa/index_en.htm [accessed 6 March 2017]

440 Oral evidence taken before the EU External Affairs and Internal Market Sub-Committees, 8 September 2016 (Session 2016–17), Q 8 (Richard Eglin)

442 Written evidence from SMMT (FTG0009)

445 Ibid.

446 Ibid.

449 Ibid.

450 HM Government, Building our Industrial Strategy (January 2017): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/585273/building-our-industrial-strategy-green-paper.pdf [accessed 23 January 2017]

451 Liam Fox MP, ‘Britain is embracing the brave new world of free trade’, The Telegraph (19 January 2017): http://www.telegraph.co.uk/news/2017/01/18/britain-embracing-brave-new-world-free-trade/ http://www.telegraph.co.uk/news/2017/01/18/liam-fox-launches-brexit-trade-crusade-confirming-informal-talks/ [accessed 16 February 2017]

453 Ibid.

454 Ibid.

455 Q 123 (Lord Price)

456 Q 123 (Lord Price); These countries are: Australia, China, Israel, India, New Zealand, Norway, Turkey, South Korea, the Gulf Cooperation Council (six countries) and the US. Written evidence from Lord Bridges of Headley MBE and Lord Price CVO (FTG0027)

457 Lord Price told us that the DIT currently had around 185 staff (Q 121). He previously acknowledged that Canada had “100 people working on the Canada-EU FTA” alone. In comparison, the UK was in “the early foothills of where we need to get to”. Oral evidence taken before the EU External Affairs and Internal Market Sub-Committees, 13 October 2016 (Session 2016–17), 57 (Lord Price)

459 Ibid.

460 We note that the EU and Canada have agreed the Comprehensive Economic and Trade Agreement, which will provisionally be applied in 2017.

462 Ibid.

463 EEF, Britain and the EU: manufacturing an orderly exit (21 September 2016), p 3: https://www.eef.org.uk/resources-and-knowledge/research-and-intelligence/industry-reports/britain-and-the-eu-manufacturing-an-orderly-exit [accessed 20 January 2017]

464 Written evidence from FDF (FTG0021)

465 Written evidence from SMMT (FTG0009)

466 Theresa May MP, Speech on the government’s negotiating objectives for exiting the EU, 17 January 2017: https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech [accessed 19 January 2017]

467 The EU and China are negotiating a comprehensive investment agreement.

468 Written evidence submitted to the EU Internal Market Sub-Committee, 30 November 2016 (Session 2016–17) TAS0085 (UK Trade Policy Observatory, University of Sussex)

469 European Union Committee, Brexit: the options for trade (5th Report, Session 2016–17, HL Paper 72)

471 Written evidence submitted to the EU Internal Market Sub-Committee on 30 November 2016 (Session 2016–17) TAS0085 (UK Trade Policy Observatory, University of Sussex)




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