EU promotes high quality trade deals, as UK founders on hasty new agreements

The UK government’s trade deal negotiations have recently been mired in controversy . In particular, the in-principle agreement with New Zealand has been heavily criticised as a one-sided arrangement. By contrast, since Brexit, the EU has been developing new legal instruments to strengthen its capacity to defend and promote its key interests.

Britain’s sheep-sheared trade deals

According to UK farming groups, the government’s recently announced trade deal with New Zealand, coupled with the government’s trade agreement with Australia, only four months earlier, threatens to undermine both the economic viability of the UK food industry and also the country’s food security. The government’s phased removal of financial and other support for UK food producers, at the same time as these trade deals are being struck, only adds to the sense of a government seemingly hell bent on declaring new trade deals at any cost.

From the perspective of the latest trade deal, while New Zealand’s large corporation-dominated producers receive tariff-free access to a large and valuable market, the UK’s small and medium-sized farming communities face lower costs and fierce competition from their NZ counterparts.  This is alongside no discernible benefit from increased exports – ranging across all sectors of the UK economy – to New Zealand.  Indeed, by the government’s own estimates, last year, the UK would only add £112 million in exports to NZ. The net effect would provide as little as 0.01% to GDP – 0.01% over a 15-year time span, and even a -0.01% drop in GDP over the longer term.

The British government’s accelerated, some say impetuous, trade negotiations with New Zealand and Australia are in any case far from concluded. Since the Australian trade accord was agreed in principle, no final signature has yet been secured, with the government’s chief negotiator returning empty-handed from Canberra only a fortnight ago.  Some speculate the trade deal with New Zealand may go the same way.

EU launches first annual report on securing effective trade agreements

By contrast, the European Commission’s first comprehensive annual report on the effective implementation and enforcement of EU trade agreements and arrangements, released last week, describes the Commission’s actions, in close partnership with EU business, Member States and stakeholders, to keep markets open and ensure that EU trading partners comply with their commitments. In this regard, the Report covers four priority areas:

(1) Making full use of the opportunities provided by EU trade agreements;

(2) Supporting the uptake of trade agreements by small and medium businesses (SMEs);

(3) Addressing trade barriers; and

(4) Enforcing trade commitments through dispute settlement.

This Report, which will be published annually, follows the appointment last year of the first Chief Trade Enforcement Officer in the Commission having an explicit mandate in reporting to various stakeholders in the EU’s trade policy environment.  This is in stark contrast to the UK government’s policy of trade negotiations involving minimal interaction with Parliament, while the details of negotiating texts, including in-principle agreed ones, remain largely shrouded in secrecy.

Coping with emerging global challenges

The EU’s shift towards a stronger implementation and enforcement of trade commitments arises from a global trade policy landscape which has changed substantially in the last few years, with new challenges emerging. This includes structural imbalances, level playing field and market access issues, and the political use by EU trading partners of unjustified restrictive unilateral measures or even economic coercion, all of which the EU views as needing to be addressed more assertively.

There are in particular concerns over Europe being squeezed in the middle of intensifying Sino-American competition. Both the US and China are raising pressure on companies to transfer sensitive data. In the US, there is ever less transparency on procedures on regulatory matters governing anti-dumping, anti-bribery, commercial litigation, foreign investment control, and anti-trust measures.  In China, there are virtually no transparent procedures in any of these areas whatsoever.

In beginning to deal with this confluence of economic and political pressure points and their impacts on the EU, the Report presents responses which can be undertaken in the context of the most economically significant EU trade agreements and actions by the Commission to eliminate trade and investment barriers in third country markets.

For instance, under the EU’s Trade Barrier Regulation (TBR), since the mid-1990s up to 24 TBR examination procedures have been initiated which have been used to serve the interests of a number of industries ranging from textiles, to music to drinks with different trading partners such as Brazil, Japan, Canada and Turkey.  A recent example of a TBR action can be seen in the Commission’s decision to open a formal examination procedure following a complaint against US measures lodged by America’s Remote Gambling Association.

The Report provides statistical data on trade and investment for the 37 main EU trade agreements for goods and services, including coverage of significant developments up to end-June 2021.  Since the EU-UK Trade and Cooperation Agreement only entered into force on 1 May 2021 (provisionally applied as of 1 January), it will be covered by the 2022 edition of the Report.

The Commission will also put forward a number of other important legislative instruments. These are anticipated to ensure the EU will be better equipped to respond to the challenges in international trade, notably with the means to enforce negotiated commitments under trade agreements.  It will also look to ensure a level playing field in traditional trade and investment areas such as through a foreign subsidies instrument and an international procurement instrument.

There will also be new legislation for ensuring the protection of EU interests in economic areas mostly connected to security, for example the coverage of FDI screening, export controls, anti-coercion trade issues, and tools to support the EU’s green and sustainable ambitions.

The EU’s collegiate approach to trade development

Alongside the continued, rules-based and proportionate recourse to traditional trade instruments covering anti-dumping and countervailing of subsidies, the envisaged new tools and the Commission’s renewed focus on enforcement should ensure a continuum of trade policy that provides an effective mix of transparency and appropriate balance of interests for all EU stakeholders, while progressively advancing new trade agreements with third countries.

As the Commission continues developing new and improved means to tackle the multiple challenges in implementation and enforcement, it recognizes the importance of intensively cooperating with Member States and the broad range of stakeholders in the form of businesses, trade promotion organisations, social partners, civil society groups, and non-governmental organisations.

All the while, the UK government pursues a seemingly one-track policy of securing trade agreements simply for the sake of securing trade agreements in line with its Global Britain mantra, no matter whatever the cost for Britain’s domestic producers, environmental standards or even whether tangible benefits exist for the economy as a whole.