NEWS | World Trade
Why negotiating
trade agreements
can be difficult
By Lesley Batchelor OBE
T
rade agreements are usually
referred to as ‘Free Trade
Agreements’ and are a reciprocal
relationship between countries in terms
of preferential tariffs on the goods or
services each exports to the other.
Each agreement must benefit both
parties and they will look to protect their
national business interests while trying to
facilitate bilateral trade. This, by its very
nature, can prove difficult to achieve.
Negotiation can be arduous, as we have
seen with the EU trade deals, but are great
once finalised for those on both sides of
the deal to promote and increase trade
between the two countries.
It is worth remembering, however,
that these tariff benefits would only
apply if goods can be shown to originate
in the UK or EU, based on complex rules
of origin. Traders would have to provide
proof of originating status, which
would have an administrative impact
on businesses. Critics also point to the
lengthy time which is typically taken to
negotiate similar free trade agreements
– in this case seven years.
However, there is a double-edged
sword here. Although any trade deal may
be less complicated because it would be
the UK only negotiating, therefore it must
be less complex than finding consensus
Access to the agreement and
the benefits which it brings will
cease once the UK leaves the EU
The long-awaited Comprehensive
Economic and Trade Agreement (CETA)
between the European Union and Canada
should take effect on a provisional basis
this April, now it has been approved by
the European Parliament.
The CETA agreement is expected to
benefit EU exporters by removing up to
90% of tariffs on EU goods sold to Canada
and vice versa. It is also expected to open
up access to many service sectors, as
well as enabling EU businesses to tender
for regional and national Canadian
government contracts.
This agreement, if negotiated along
similar lines between the UK and the EU,
would certainly have the effect of reducing
the impact of customs tariffs for trade
between the UK and the EU, without
requiring the UK to contribute to EU budgets,
or accept freedom of movement of people.
dofonline.co.uk
with 28 countries, the fact that it is only
the UK may possibly reduce the priority.
The good news is that it is hoped that UK
traders will begin to experience the benefits
of CETA, although they will only last for as
long as the UK remains a member of the
European Union. Access to the agreement
and the benefits which it brings will cease
once the UK leaves the EU.
Ironically, UK companies may then
find themselves disadvantaged by CETA,
if competing to sell goods in Canada up
against other EU companies who will still
have the preferential status. This is just
one of the many wrinkles that must be
ironed out as the UK learns to negotiate
trade agreements.
You could get a head start by studying
with the Institute of Export & International
Trade – www.export.org.uk/
qualifications Q
DIRECTOR OF FINANCE
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