International Trade Secretary Liam Fox does not have the staff to secure new trade deals while also negotiating a Brexit deal with the EU, a Lords report warned today.
In a damning verdict on the UK’s preparedness for life outside Brussels, the Lords EU Committee warned that striking deals with 15 countries identified by leading ministers “seem to be far beyond the Government’s current staff resources.”
The head of the Civil Service hit back at the criticism, arguing his team had “the right skills, experience, and leadership” for the challenge of Brexit and negotiating new trade deals.
The report – “Brexit: trade in goods” – also warned UK businesses face an increase in costs and delays because of Theresa May’s plan to pull Britain out of the customs union, unless the Prime Minister can negotiate a deal which does not exist, nor has ever existed, in world trade.
Baroness Verma, who chaired the EU External Affairs Sub-Committee, urged the Government to agree a transitional deal with Brussels to give business time to prepare for any imposition of tariffs.
She said: “Goods dominate UK trade, and the EU is by far its largest trading partner.
“Trade in goods between the two is worth almost £357 billion each year. It is therefore imperative that a trade deal with the EU seeks to avoid the imposition of tariffs on trade in both directions.
She added: “Agreeing a free trade agreement within two years is inherently ambitious, so the Government must try to agree a transitional arrangement with the EU.
“The Government will also need to increase Whitehall’s preparedness for administering UK-EU tariffs and non-tariff barriers to UK-EU trade.”
According to the report, the Government has already identified 15 countries it is keen to secure a free trade deal with after Brexit, including Canada, China, India, Mexico, Singapore and South Korea.
The report says: “We note that such discussions with 15 countries in parallel, in addition to withdrawal negotiations with the EU, seem to be far beyond the Government’s current staff resources.”
The criticism echo concerns from trade organisations – reported by Huff Post UK earlier this year – that staff in the International Trade department “are running around like headless chickens trying to get the civil servants into place.”
Responding to the report, Cabinet Secretary and Head of the Civil Service Sir Jeremy Heywood said: “I have no doubt at all that the Civil Service is well equipped to deliver all of this Government’s priorities - including the UK’s exit from the EU.
“Civil servants have shown on countless occasions that we are resilient and adaptable to major challenges and critical work. We have the right skills, experience, and leadership to help achieve the best deal for the UK.”
An International Trade source added: “The number of officials working on trade policy has more than quadrupled since before the referendum.
“This includes policy and country specialists, as well as economic analysts and lawyers.”
If the UK is unable to strike a deal with the EU within the two-year period set out by the Article 50 withdrawal process, the two markets will fall back to World Trade Organisation rules.
The report shows cars being sold to the EU would be hit with a 10% tariff, alcohol with a almost 20% tariff, and dairy products with a more than 36% tariff.
As well as the extra cost of exporting, the report raises concerns over the increased financial burden which additional customs checks would have on businesses.
“Leaving the EU customs union would result in costly administrative requirements and customs procedures, whatever new framework for trade is established. This would result in a significant additional administrative burden for companies, and delays to consignments of goods, incurring additional costs,” it says.
A Government spokesperson said Theresa May was keen to pursue a transitional deal in order to help businesses after Brexit.
The spokesperson said: “The Prime Minister has been clear that we will pursue a bold and ambitious free trade deal and a new customs agreement with the EU.
“We want an agreement that gives British companies the maximum freedom to trade with and operate within European markets – and lets European businesses do the same in Britain.
“We have also been clear that we believe a phased process of implementation, in which both Britain and the EU institutions and member states prepare for the new arrangements that will exist between us, will be in our mutual self-interest.
“This will give businesses enough time to plan and prepare for those new arrangements.”