The chair of the International Trade Select Committee has criticised the Department for International Trade towards securing terms for the UK’s World Trade Organisation membership after Brexit.
Angus MacNeil said the UK could not hope to have a certified WTO goods schedule in place before the UK left the EU, after it emerged that 20 countries had objected to the UK’s proposed schedule. The United States, China, Australia and New Zealand were among those that objected to the schedule, which would set out the baseline rules and tariffs for the trade of UK goods once it is outside the EU.
in a statement to parliament last week, international trade secretary Liam Fox said that “as expected, some trading partners have expressed reservations about our proposed treatment of tariff rate quotas”.
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The UK must now negotiate individually with each of the 20 countries to address their objections before the schedule can be certified. Fox said DIT was preparing a formal invitation to open negotiations and hoped to reach a “mutually satisfactory conclusion that maintains the balance of rights and obligations for the UK and our trading partners”.
With five months to go, the announcement meant there was “no chance the matter will be resolved in time for Brexit”, MacNeil said.
“Liam Fox was hoping for a quick and easy process to establish the terms of the UK’s WTO membership before Brexit takes place,” he said, adding that the plan was now “in tatters”.
He noted that the government had yet to begin the formal certification process for its WTO schedule for services, which make up a majority of the UK's economy. Earlier in the week, Fox had told the committee the government had informally shared its services schedule with WTO members and that DIT was preparing a final version.
The department would begin the formal certification process for the schedule “towards the end of the autumn”, after which WTO members would have 45 days to object, he said in a letter to the committee dated 20 October. “lf objections are raised, we will take a decision on suitable next steps, based on the nature of the objections,” Fox said.
In the letter, which set out DIT’s progress on its Brexit preparations, Fox had said the government expected support for its goods schedule, but expected some countries to object. He insisted that operating on uncertified schedules would not affect trade.
But MacNeil warned that although Fox had suggested it was a “mere technicality”, trading on uncertified schedules after Brexit presented “a number of potential problems for the government”.
“It’s likely to take years to resolve this issue – and if any of the objections are upheld at the end of that process, the UK government will be liable to pay compensation for any material losses that have been sustained under the uncertified schedules,” he said.
He warned that failure to agree WTO schedules could also hinder the UK’s pursuit of free trade agreements with other countries, as they form the baseline for these negotiations. “The question now is: will other countries want to negotiate trade deals with us when our baseline still hasn’t been fixed?”
In his letter to the committee, Fox said the government was “working to a timeline of being in a position to begin formal negotiations” on free trade agreements with countries such as the US, Australia and New Zealand after Brexit.
He also said the department was working with the Foreign and Commonwealth Office and Department for International Development to keep existing trade arrangements in place after Brexit with countries it now trades with as an EU member. He said discussions had been “positive”, citing joint statements the UK had published with Canada, Singapore, Ukraine, the Southern African Customs Union and Mozambique and others.
He said DIT hoped to have bilateral agreements in place by 29 March 2019 if no withdrawal agreement is reached, but said: “When we reach final agreements with partner countries will depend on our ongoing discussions with them.”