Perhaps a little battered from its dissolution from the EU bloc, the UK is stepping out onto the global stage in order to rekindle old deals and foster new ones in the wake of its newly found independence. New Zealand is its latest courtesan and negotiations have entered the sixth round and are designed to venture beyond the rollover agreement put in place when the UK parted from the EU. What then, does this mean for trade?
In a sense, the pandemic has had a silver lining for the UK. Other than acting to mask the ongoing grind of watching the UK and the EU disentangle themselves from one another, the world has – now that the pandemic itself has waned in many quarters – become keen to get back to some semblance of life as it was before coronavirus.
And that means getting back to making deals in order to propagate a post-pandemic recovery. With the UK being one of the largest economies on the planet, opportunities for Britain should be plentiful.
Before Brexit, the UK was automatically included in any trade deal the EU cared to make. At about the time the UK left the bloc, the EU had around 40 trade deals in play which accounted for more than 70 countries.
The UK has successfully negotiated rollover deals with 66 of these countries (according to Gov.uk). Indeed, according to UK in a Changing Europe, the UK has rolled over 36 EU agreements, and as of June 2021 was in talks with Algeria, Bosnia & Herzegovina, and Montenegro.
In essence, the rollover agreements are deals where the UK has been able to maintain favorable trade terms with those countries with the EU had established previous accords, rather than having to renegotiate every agreement again from the ground up.
Britain’s new independent position in world trade started in January 2021 and to have deals in place that parallel the ones it routinely enjoyed under the EU’s umbrella is common sense and beneficial to all.
The first trade deal made by the newly autonomous Britain from the ground up was with Australia, and it was finalized at around June of this year. According to Which, there are a number of benefits anticipated to materialize for the consumer.
These are potentially greater choice and lower prices on agricultural produce (such as beef), cheaper swimwear, confectionery, ceramics, and wine, broader online shopping between the UK and Australia, easier travel interactions between the countries, and more environmentally stable trade. It should be noted that the effects of the agreement are not expected to kick in for some time to come, however.
The Fifth Round
The fifth round of negotiations with New Zealand took place between the 8th and 16th of June. Damien O’Connor – Minister for Trade and Export Growth for New Zealand – spent time in the UK just after (16th-18th June) to conduct face-to-face talks. As described by the Department of International Trade, both countries are apparently fully committed to an agreement that ‘supports jobs, broadens consumer choice, and provides more opportunities in key industries such as services, digital trade, and the green economy.’ Four ‘chapters’ were provisionally closed during the session. These relate to:
Providing small and medium enterprises (SMEs) with access to procurement and maintaining the integrity of supply chains.
Creating mechanisms to ensure compliance with the terms of the agreement and providing consistent, just, efficient, transparent, and prompt handling of state-to-state disputes. Overarching confidence will thus be provided to businesses that all obligations as laid out by the agreement, are met.
A transparent rule of law allows for effective governance with agreed-upon expectations.
Gender in trade equality measures, recognizing that women are underrepresented in the international trade sector and that female owners of businesses, exporters, and entrepreneurs, have a seat at the table of world-wide trade.
Particularly good progress was made in chapters such as Goods, Cross Border Trades in Services, Customs, Digital, Telecoms, State-Owned Enterprises, Consumer Protection, Good Regulatory Practice, and Labour amongst others. The sixth round of discussions was set to take place in July.
In terms of economic advancement outside of the EU, Lizzy Burden writes for Bloomberg that little is to be expected, as has been modelled by the UK government. Where Boris Johnson tends to talk up the benefits of such trade dealing as one of the advantages of having achieved an exit from the EU, some quarters do not expect there to be any meaningful appreciation of the UK’s GDP, especially when comparing it to where Britain was before it departed the EU.
Even more so, some critics have stated that the agreement is more about the UK government attempting to validate its preeminence now that it is no longer able to stand on the shoulders of the EU. Whether or not this is the case, it is also the imperative for both countries to diversify their markets while still in the long shadow of a world living with COVID-19.
The dynamic between the two countries has shifted more recently. There was a time when being in bed with the UK financially was an imperative for the Kiwis: once upon a time, Britain was New Zealand’s top trading partner. These days, according to The Conversation, the UK ranks sixth. These days, China, Australia, and the EU (amongst others) are more fiscally important to New Zealand even though, as of 2019, UK trade was worth around NZ$6 billion.
Interestingly, a two-way street between the two countries is yet to be seen. While New Zealand espouses trade that is free from most import tariffs, Britain still chooses to impose them on things like motor vehicles, butter, cheese, honey, seafood, and wine. Not only will these levies have an impact on the final agreement between New Zealand and Britain, it will also no doubt have some influence over the final details to emerge regarding the UK’s deal with Australia. Some observers believe that the tariffs themselves will drop precipitously over the coming decade. Time will tell.
Nervousness abounds too in the new frontier of free trade for the agricultural sector in the UK. Farmers have been repeatedly voicing their concerns that cheap imports will subvert the sector, even though the UK government has stated their plans to deter this from happening.
As the new deal with New Zealand emerges, this must only add to the anxiety of farmers and stakeholders within the agricultural sector. Either way, where once New Zealand may have been considered the junior partner, the country has come of age, especially in light of the way in which they have successfully wrestled with the spread of coronavirus. Britain in contrast is being thrust into a new land, where a certain amount of self-rediscovery is at hand, as well as perhaps some international recognition now that it has slipped the bonds of Europe.