Brexit: UK has rolled over just £16bn out of £117bn trade deals

Liam Fox has agreed deals with only seven of 69 countries covered by EU arrangements

The government’s push to roll over EU trade deals from which the UK currently benefits has yielded agreements covering only £16bn of the near-£117bn of British trade with the countries involved.

Despite frenetic efforts by ministers to ensure the continuity of international trade after the UK leaves the EU on 29 March, the international trade secretary, Liam Fox, has so far only managed to secure deals with seven of the 69 countries that the UK currently trades with under preferential EU free trade agreements, which will end after Brexit.

Fox’s department has yet to sign agreements with several major UK trading partners – including Canada, Japan, South Korea and Turkey – while sources have said that sufficient progress is unlikely to be made before the Brexitdeadline in less than 50 days’ time.

Canada, Japan, South Korea and Turkey alone accounted for goods exports worth £25bn in 2017 and imports of merchandise worth £28.6bn, with the UK currently able to access these markets on preferential terms as part of membership of the EU.

Fox sought to downplay the significance of the deals in parliament on Wednesday, saying all of the countries involved only accounted for about 11% of total UK trade in 2018, with the smallest 20 nations worth less than 0.8%.

Answering questions on his department’s progress, he told MPs the best way to avoid disruption was to ratify Theresa May’s withdrawal agreement, which would maintain Britain’s current trading relationships for the duration of the two-year transition deal, until alternative arrangements could be made.

“As with all international negotiations, and indeed any negotiations, they will go down to the wire. And I would expect nothing different from these agreements. That’s the way that countries do business,” he said.

Details have however emerged of the scale of the challenge. According to a document obtained by the Sun, progress has been ranked by officials using a traffic-light system, which shows most deals are far from completion.

Only a handful are shown as green and able to enter into force by March 2019. The majority are in amber and red, where deliverability is either off-track or significantly off-track, while some major trade deals, including with Japan and Turkey, are coded in black as “not possible to be completed by March 2019”.

The government announced a trade continuity agreement with Switzerlandthis week, covering goods worth more than £14bn. Fox also said that a deal with Israel and the Palestinian Authority had recently been reached, while more progress would be announced soon.

Adding Israel would take the total value of British trade covered by the agreements to about £18.6bn.

Most of the deals secured so far are worth relatively little to Britain. Countries among the seven deals agreed so far include the Faroe Isles, with exports of goods and services worth £6m and imports worth £230m; Chile, with exports worth £571m and imports worth £718m; and the Seychelles, worth a total of £123m.

The government’s struggles to roll over existing EU trade deals emerged as the European parliament voted in favour of a new one, with Singapore.

The long-delayed EU-Singapore free trade agreement will eliminate nearly all tariffs and open up markets in services, including retail banking, telecoms, business and IT. The EU trade commissioner, Cecilia Malmström, said she was “absolutely” confident the agreement would enter into force this year.

If the UK leaves the EU without a deal, it will lose the benefits of the Singapore agreement immediately. But if the Brexit withdrawal agreement is approved by parliament it would continue to trade with Singapore under the terms of the EU deal during the transition period.

Business leaders have become increasingly alarmed over the threat to British firms and the wider economy from the loss of access to the bigger markets covered by the EU free trade deals.

Allie Renison, the head of Europe and trade policy at the Institute of Directors, said the government needed to provide an urgent public update on its progress.

“While negotiations may be ongoing, the needs of firms trying to prepare for any disruption need to be given the utmost priority. If that progress under a no-deal scenario is looking unlikely with any countries, business has a right to know in order to plan accordingly,” she said.

It has been clear to UK companies that crashing out of the EU without a deal with Brussels by 29 March would lose them tariff-free access to the union’s internal market, but the risk from losing preferential access to countries the bloc has free trade deals with has been less-well publicised.

Failure to secure a deal would mean the UK reverting to World Trade Organization rules, which involve higher tariffs than the current arrangements.

The EU accounts for about half of UK trade in goods, meaning loss of access to the EU and the third countries would mean higher tariffs on the majority of British trade.

Barry Gardiner, the shadow trade secretary, said: “Many in the business community feel that [Fox] has diverted too much of his department’s resources on entirely new free trade agreements. And so keen has he been to grandstand with the new that he’s ignored the fundamental grinding work of securing what we already have.”

Source: The Guardian