Trade Watch - January 2024

Dear RIA colleagues, Welcome to this RIA Trade Watch update, a summary of all the relevant policy, political and technical developments around the UK trade over the past six months.

Scroll down for a number of items which we hope will be useful, including: •

Progress on UK Free Trade Agreement (FTA) negotiations, including updates on the UK's trade talks or agreements with CPTPP, India, Turkey, Canada, GCC, Mexico, Switzerland, South Korea and Maldives;

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EU updates: key updates on Horizon Europe, and the Retained EU Law (Revocation and Reform) Act 2023; and

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Useful resources, including a link to the factsheets collection on trade and investment between the UK and individual trading partners overseas.

You might be particularly interested in RIA's map of the UK's current existing and upcoming Free Trade Agreement negotiations – which you can access here.

We at RIA hope you enjoy this update and that you find it useful! Please do feel free to forward this to colleagues.

Vaishnavi Krishna Kumar Policy Executive

If you have any feedback or intelligence that we can share and/or suggestions for future editions please contact me at Vaishnavi.KrishnaKumar@riagb.org.uk and 020 7201 0777 / 07399 042 446.

Please note that this Trade Watch is for RIA Members only and we ask that you do not share it beyond your organisation.

Progress on UK Free Trade Agreement negotiations Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP) The Government introduced the Bill needed to bring the CPTPP deal into force to Parliament as part of the King’s Speech in November 2023. The Government has said it expects the agreement to come into force in the second half of 2024 once the UK and the other CPTPP members have completed the necessary legislative processes. Singapore and Japan have already formally ratified UK’s accession.

In November 2023, CPTPP members, including the UK, reaffirmed their commitment to a General Review (period of public engagement) of the agreement. The UK Government is now seeking views from businesses, individuals, and other interested stakeholders on how the deal could be enhanced through this General Review process. Please share your views here.

What is CPTPP? In July 2023, the UK formally agreed to join the CPTPP - an Asia-Pacific trade bloc made up of 11 other countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Through the deal, over 99% of UK's current goods exports to CPTPP member countries will be eligible

for zero tariffs, improving goods market access for British firms. Business guidance, treaty information and other documents to help you understand the UK’s accession to the CPTPP are available here.

Trade with India The 14th round of negotiations with India is underway with majority of the issues in the proposed FTA at advanced stages of talks. There are 26 chapters in the agreement, which include goods, services, investments and intellectual property rights.

There is currently no trade agreement between the UK and India. The Government estimates that UK exports to India could increase by between £8.8bn (+50%) and £16.7bn in 2035.

Trade with Turkey In July 2023, the Government announced plans to update the free trade agreement with Turkey. The two countries have an existing trade deal which covers goods but not services, digital or data. A call for input was launched to help inform the UK’s negotiating objectives on November 2023. Negotiations for the updated agreement are expected to start in 2024.

Trade between the UK and Turkey reached £26.2 billion in the 12 months to June 2023, making Turkey the 17th largest trading partner for the UK. UK services exports to Turkey in sectors such as transport, financial and other business services increased by 57% in current prices in the 12 months to June 2023.

Trade with Canada The UK has decided to suspend negotiations on a new FTA with Canada due to disagreements over access to agricultural markets.

The UK and Canada had launched negotiations on a new FTA in March 2022. The UK and Canada already have a trade agreement, the UK-Canada Trade Continuity Agreement, signed in December 2020. Canada is also a member of the CPTPP.

Trade with the Gulf Co-operation Council (GCC) Five rounds of negotiations have taken place so far and good progress has been reported. The next round will take place this quarter in London.

The GCC represents six countries: Bahrain, Kuwait,Oman, Qatar, Saudi Arabia and the United Arab Emirates. The UK is negotiating GCC wide - however, once an FTA is agreed with the GCC, the UK can then deal directly with single GCC markets to improve any aspects of the deal for that market.

If members have a strong interest or a clear idea of what you would like out of this FTA and haven't been in contact with the Department of Business and Trade yet, please do get in touch with: alistair.walker@businessandtrade.gov.uk and adrien.couderc@businessandtrade.gov.uk.

Trade with Mexico The UK has set its sights on progressing a whole host of service-focused trade deals with countries including Mexico. The UK and Mexico already have a trade agreement which replicates the EU-Mexico agreement, but wants to negotiate an updated deal. Mexico is also a member of the CPTPP. The two counterparts are working towards a conclusion to the negotiations in 2024.

Until a new FTA comes into place, an extension to rules of origin has been secured to which help UK companies to remain eligible for reduced or zero tariffs.

Trade with Switzerland Negotiations for an agreement with Switzerland were launched in May 2023. The third round of negotiations took place from November to December 2023 – topics included procurement, investment, small-medium enterprises. The fourth round is scheduled for spring 2024.

Separately, in June 2023, the UK and Switzerland signed an agreement on the recognition of professional qualifications.

Trade with South Korea In November 2023, launched talks on new free trade agreement. Korean businesses have committed £21 billion of investment into the UK, backing renewable energy and infrastructure projects across the country and supporting more

than 1500 highly skilled jobs.

As with Mexico, until a new FTA comes into place, a two-year extension to rules of origin has been secured to which help UK companies to remain eligible for reduced or zero tariffs.

Trade with Republic of the Maldives The Government launched a call for input in on a goods-only free trade agreement with the Republic of Maldives which closed on 2 August 2023.

UK Trade negotiations – general progress The House of Commons publishes the progress in UK's negotiations for FTAs. You can find it here.

European Union Retained EU Law Parliamentary report (June to December 2023) The Secretary of State for Business and Trade Kemi Badenoch presented the six-monthly report on Retained EU Law (REUL) to the Parliament this month. Read the report here.

The Retained EU Law (Revocation and Reform) Act 2023 received Royal Assent on 29 June 2023. Over 2000 REUL

instruments have already been repealed or reformed. In 2024 the Government’s roadmap for REUL includes a further 500 reforms and revocations. The aim is to repeal or reform over half of the entire stock of REUL accrued in the more than 40 years that the UK was a member of the EU by June 2026.

What is REUL? REUL was a type of UK domestic law. It was created by the EU (Withdrawal) Act 2018 (EUWA) and came into effect at the end of the UK’s post-Brexit transition period (which ended on 31 December 2020). The primary objective of REUL was to provide legal continuity and certainty by preserving domestic legislation that had implemented EU obligations and by taking a “snapshot” of directly applicable EU legislation.

The Retained EU Law (Revocation and Reform) Act 2023: •

Ended the special status of retained EU law in the UK statute book.

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Grants Ministers powers to more easily amend, revoke and replace retained EU law.

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Included a list of retained EU law that was revoked at the end of 2023.

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Renamed Retained EU Law that remains on the statute book to 'assimilated law' from 1 January 2024.

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Facilitates domestic courts to depart from retained case law.

Read more about it here.

UK participation in EU programmes: Horizon Europe and Copernicus After a delay of over two and a half years, formal UK participation in two EU programmes began on 1 January 2024. The UK can now participate in:

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Copernicus – of the EU space programmes, covering earth observation through satellite, land, sea and air surveillance systems.

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Horizon Europe – the EU’s flagship programme for research and innovation for 2021-2027.

You can find out more about UK participation in the programmes here.

Further information, including practical support on how to apply is available on Innovate UK KTN’s website and UK Research and Innovation (UKRI) also host regular events that help guide businesses and researchers through the opportunities on offer and the application process.

General trade updates

Latest statistics on UK's trade performance In December 2023, the Government published the latest statistics on UK's trade performance. The UK had a trade deficit of £8.8 billion in the three months to October 2023, the same level as in the previous three months. The current account deficit was £25.3 billion in Q2 2023 (3.7% of GDP), up from £15.2 billion in Q1 2023 (2.3% of GDP).

Read the full briefing here.

Useful Resources

RIA Trade Asks

Trade and investment factsheets collection which summarises the most up to date statistics on trade and investment between the UK and individual trading partners overseas.

UK's approach to negotiating an enhanced free trade agreement with the Republic of Korea

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