Trade Watch July 2023

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. This includes negotiations with international partners, as well as RIA's work and activity in the international sphere.

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

• Progress on UK Free Trade Agreement negotiations, including updates on the UK's trade talks or agreements with Australia, New Zealand, CPTPP, India, Mexico, Canada, Switzerland, GCC, South Korea and Turkey.

• EU updates: key updates on Horizon Europe, the Windsor Framework, the Retained EU Law (Revocation and Reform) Act 2023 and an update about RIA's Brussels visit.

• Useful resources, including a link to the document detailing the benefits for the UK from the FTA with Australia and a guide to doing business with Ukraine.

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 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

Ifyouhaveanyfeedbackorintelligencethatwecanshareand/orsuggestionsfor futureeditionspleasecontactVaishnavi.KrishnaKumar@riagb.org.uk.

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Progress on UK Free Trade Agreement

negotiations

UK signs treaty to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

On 16 July 2023, UK Business and Trade Secretary Kemi Badenoch formally signed the treaty confirming the UK's accession to the CPTPP trade bloc. The CPTPP is a free trade agreement between 11 countries in the Asia-Pacific region: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The signature is the formal confirmation of agreement reached in March.

By becoming a member of the CPTPP, the UK becomes the first European country to join the trade bloc. The combined GDP of the CPTPP will now amount to £12 trillion, representing approximately 15% of the global GDP. As a result of this membership, over 99% of the UK's current goods exports to CPTPP countries will be subject to zero tariffs. Read more here.

UK-Australia and UK-New Zealand Free Trade Agreements entered into force

On 31 May 2023, two FTAs between UK and Australia and New Zealand entered into force. These had been signed in December 2021 and February 2022 respectively. The FTAs are

expected to increase bilateral trade with Australia by 53% and with New Zealand by 59% in the long term. The Australian deal is expected to unlock £10.4 billion of additional trade, and the New Zealand one should boost the UK’s economy by £800 million. For more details, see here.

Trade with India

There is no current trade agreement between the UK and India. An FTA with India is considered a priority from a commercial and political perspective. The tenth round of FTA negotiations with India took place in June. There has been positive progress on transport in the discussions. Trade between the UK and India was around £23bn in 2019, which both countries want to double by 2030. The Business and Trade Committee has published the Government responses to reports on trade negotiations with India.

Trade with the Gulf Co-operation Council (GCC)

The UK does not have a trade deal currently with the GCC, and it is trading under the WTO, which disadvantages the UK. A deal could increase trade by 16%. Three rounds have taken place so far. 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. The FTA is at an early stage of negotiations, with the next round due to start in July 2023. The Business and Trade Committee has published the Government responses to reports on trade negotiations with the Gulf Cooperation Council.

Trade with Mexico

The FTA negotiations with Mexico are at an early stage. Rail has not been discussed yet, however an opportunity to explore details in relation to rail are expected to come up as the negotiations progress further. The two counterparts are working towards a conclusion in 2024. Mexico has a growing population and can be a gateway into Latin America and Americas. The country has gone through a significant period of civil service reform, which has slowed things down. There is a joint ambition on Innovation, SME and EDI.

Trade with Canada

The UK and Canada launched negotiations on a new FTA in March 2022, and six rounds have taken place so far, the latest one having taken place in June 2023. The aim is to conclude talks in April 2024. The UK is Canada’s third largest trading partner and Canadian demand for imports is projected to grow by 45% by 2035.

Trade with Switzerland

Switzerland is a really important market for the UK, and a mutual recognition agreement has already been signed. This is a real opportunity to open the door for business and expanding scope of the agreement, including around all services, investment areas, and so on. There were 110 replies to the call for input with industry, which RIA responded to. The first round of negotiations was launched in May 2023. You can read more about it here.

Trade with South Korea

In 2021, there were £14bn worth of trade between the two countries. DBT will work on the input from the consultation they held (which closed in February 2023) and will reach out to those who have submitted consultation responses. Digital will be on the agenda, as this is an important area of trade for the UK and the current agreement with South Korea is outdated.

Trade with Turkey

On July 18 2023, the United Kingdom and Turkey declared their intention to initiate discussions regarding a new and updated free trade agreement. This forthcoming agreement aims to replace an existing trade deal between the two nations, which currently solely covers goods.

The primary objective of this new agreement is to enhance an already prosperous trade partnership between the UK and Turkey, which was valued at £23.5 billion in 2022. Read more about it here.

UK Trade negotiations – general progress

On 12 June 2023, the House of Commons Library published a briefing on the UK’s progress in its negotiations for free trade agreements (FTAs).

For more details, see here

RIA visits Brussels as part of a UK Transport in Europe (UKTiE) mission visit

In May 2023, RIA went to Brussels as part of a UK Transport in Europe mission visit. Policy Director Rob Cook was part of a small team who met the Commission (DG Move), the UK Mission to the EU, an influential MEP and also the Swiss mission to the EU. A short note is attached.

UK and EU formally adopt the Windsor Framework

The Brexit impasse caused by the Northern Ireland Protocol was finally broken, as the UK Government and European Commission negotiated the Windsor Framework in February, which aims to establish new customs, trading and governance arrangements in Northern Ireland and deal with concerns over the protocol. The Framework aims to scrap burdensome customs bureaucracy, as well as largely remove routine tests and checks. For more details, see here.

This week, a House of Lords inquiry found that the Windsor Framework is an improvement on the original Northern Ireland Protocol but does not resolve all its problems. You can read the findings from the inquiry here.

Retained EU Law bill becomes law

The Retained EU Law Bill was successfully granted Royal Assent in June 2023 and has become the Retained EU Law (Revocation and Reform) Act. The new legislation is designed to speed up the process of removing and replacing laws derived from the EU and help reduce uncertainty for businesses. Up to now, all EU-derived legislation was due to automatically expire at the end of 2023 unless a statutory instrument was passed to

preserve it. Many business groups, including RIA, raised questions with Government Departments about how the risks of unintentionally removing necessary legislation would be managed.

The Government tabled an amendment to its own legislation on 10 May to replace the sunset clause in the Bill with a list of the retained EU laws that the government intends to revoke under the Bill at the end of 2023. Therefore, the focus now shifts from identifying which laws are essential to preserve, to just identifying the laws which are appropriate to revoke at the end of the year. The Bill will still allow Government to amend and revoke EU law in the future, by statutory instrument.

Horizon Europe – no agreement on UK's re-entry yet

The UK has been negotiating with the EU over its re-entry into the EU’s Horizon Europe research programme, since striking the Windsor Framework deal. A final approval on a deal to re-join was anticipated during the meeting between UK prime minister Rishi Sunak and European Commission president Ursula von der Leyen in Vilnius in July, but the talks did not yield any agreement. Negotiations will continue as Sunak stated the need to agree on 'a deal that works for UK taxpayers'.

While the UK is in the process of associating to the programme, researchers and innovators unable to receive their Horizon Europe funding can access funding form the UK Research and Innovation (UKRI) ’Horizon Europe guarantee’ scheme. You can find out more about the scheme here.

General trade updates

International Trade Week

International Trade Week is returning for its third year and will take place from 6-10 November. This week provides business representatives the opportunity to develop their exporting knowledge by learning more about the breadth of support available from DBT and its partners, the global export opportunities available from the UK, the UK’s trade agreements as well as speaking to experts to gain practical advice on selling overseas. Find out more on the International Trade Week website where you can sign up to receive updates. You can submit proposals for hosting an event through this form.

Developing Countries Trading Scheme

The Developing Countries Trading Scheme (DCTS) which cuts tariffs on products entering the UK from 65 developing countries entered into force on 19 June 2023. The scheme replaced the UK’s Generalised Scheme of Preferences (GSP) and is a simpler and more generous preferential trading scheme designed to boost trade with developing countries in order to support their development while saving UK businesses over £770 million per year by removing or cutting tariffs on over £9 billion of imports. Find out more about DCTS through this explainer video and access guidance on trading using the scheme here.

Useful Resources

UK-Australia Free Trade Agreement: benefits for the UK

Guide to Doing Business with Ukraine (Read in conjunction with Exporting guide to Ukraine)

Help and support for UK transition

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