POLITICS
07/03/2018 00:00 GMT | Updated 07/03/2018 09:35 GMT

'Naive' Liam Fox Is Risking Trade 'Cliff-Edge' With 70 Countries After Brexit, MPs Warn

'Unless action is taken, these trade agreements will cease to apply to the UK'

DANIEL LEAL-OLIVAS via Getty Images
International Trade Secretary Liam Fox

UK trade with at least 70 countries could fall off a “cliff-edge” after Brexit, MPs have warned.

In a report published on Wednesday, the International Trade Select Committee called on the Government to do more to make sure the trade deals the UK enjoys through its EU membership continue after March 29 2019.

The committee - made up of Leave and Remain MPs - urged International Trade Secretary Dr Liam Fox to produce a legally robust mechanism for rolling over these deals – instead of the “naïve” behaviour of taking people’s word that it will be business as usual after Brexit.

The MPs also voiced serious concerns that the Government has not got a definitive list of which trade relationships will be affected after Brexit, as the EU operates a number of minor agreements alongside major deals.

The Government hit back at the criticisms, saying that, unlike the committee, it had spoken to representatives from more than 70 countries to make sure the deals would continue.

The SNP’s Angus Brendan MacNeil, chair of the International Trade Committee, said: “The Government is making much of the trade agreements it plans to make after Brexit, but first it needs to give us confidence that the existing agreements, on which businesses, consumers and trading partners alike rely, can be rolled over so the UK can benefit in its own right. 

“Unless an agreement is reached with our trading partners in the coming months, a significant economic price will have to be paid. 

“The Government is therefore correct to have identified maintaining our rights under these agreements as a priority. However, as the Committee has found over the course of our inquiry, a number of thorny issues and significant risks remain unaddressed.

“The Government must not be naïve enough to assume that a verbal agreement to maintain the status quo constitutes a watertight guarantee – contingency plans are required.”

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Angus Brendan MacNeil has branded the Government as 'naive'

The report warns that if the Government does not act fast, trade deals with countries such as South Korea and Israel could vanish after March 2019.

According to the document, ten of the UK’s top 50 export markets for goods in 2015 were covered by the EU-led agreements. Additionally, deals the EU has almost completed are with countries that make up 25% of UK trade.

As the UK only takes part in these deals thanks to its EU membership, once it leaves the organisation, they will no longer be legally enforceable.

The report reads: “Unless action is taken, these trade agreements will cease to apply to the UK, without exception, at the point of Brexit in March 2019.

“In consequence, barriers to trade will be imposed.”

During the committee’s evidence sessions, the UK’s chief trade negotiator Crawford Falconer admitted that while some countries had vowed to carry the deals over, until a legal agreement had been signed there was a risk they could change their minds.

Speaking in November, Falconer said: “All I would say is I’ve been around negotiations a lot and what people say today sometimes changes tomorrow.”

Another concern raised in the report is that the Government does not know just how many trade deals and agreements it is set to lose after Brexit.

The report reads: The EU is also a party to a wide range of other trade-related agreements, covering areas such as regulatory cooperation, aviation, customs procedures, the nuclear industry and agriculture.

“The number of these too is uncertain, but a suggested total figure for all EU trade-related agreements is 759 (with 168 countries).

“There is an urgent need for clarity over the number, type, scope, extent and importance of the EU’s trade-related agreements.

“The Government must reassure us that it has a firm grasp of precisely which agreements will cease to have effect in respect of the UK at the point of Brexit if no action is taken, and what the consequences of that would be.”

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International Trade Minister Greg Hands, who gave evidence to the committee, defended the Government’s actions, saying its priority has always been “ensuring continuity of our trade arrangements as we leave the EU, including in providing certainty to businesses, consumers and investors.”

He added: “We have always been clear that this work would take into account the terms and timing of any implementation period currently being negotiated with the EU.

“This is a technical exercise, not an opportunity to renegotiate terms.  We have already held discussions with more than 70 countries, unlike the Committee, and none have displayed any interest in disrupting trade flows, or in erecting barriers to trade that do not currently exist”. 

Tory MEP David Campbell Bannerman, a Brexiteer who is also a member of the European Parliament’s Committee on International Trade, said securing the roll-over deals should be an “absolute priority” for the Government.

He added: “However, if the EU agrees as part of the withdrawal agreement that these FTAs can be ‘rolled over’ - I would argue during the implementation period - and the UK can expressly negotiate and sign its own deals in the transition for implantation immediately after, then the process can be managed smoothly for all.

“It should be remembered that every single EU free trade deal includes the UK as a large economy and member state now, equivalent in size to 19 smaller EU countries put together.

“The EU is at risk of having to compensate all countries it has done free trade deals with for a significant loss of its market: 65 million out of 500 million people are leaving, as is the world’s sixth largest economy - ours.

“It is in the EU’s interests to keep other trading nations happy just as much as it is in Britain’s interests to keep the benefits of these deals until they are replaced by UK deals.”