Trade deal bonanza! Truss told Britain can fill its boots as key figures are published

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Economists Professor David Blake and Professor David Collins were speaking in advance of the publication of UK overseas trade in goods statistics for November 2021 on Friday. The data will offer vital clues about how trade with the rest of the world is shaping up, with Britain no longer restricted by the bloc’s complex web of rules and regulations.

It comes as the UK economy has surpassed pre-Covid levels for the first time in November after the country recorded stronger-than-expected growth.

According to the Office for National Statistics (ONS), the gross domestic product (GDP) expanded by 0.9 percent between October and November. This was higher than expectations and meant the economy was 0.7 percent larger than in February 2020.

Prior to her appointment as Foreign Secretary in September, Ms Truss was tasked with striking trade agreements with third countries the world over.

Deals are already in place with major economies including Australia, led by Scott Morrison, Canada, led by Justin Trudeau, Japan, led by Fumio Kishida, and New Zealand, led by Jacinda Ardern.

Prof Blake, Professor of Economics at City, University of London, told “So long as the UK government liberates itself from the protectionist mindset of the EU and reduces trade barriers after Brexit, and UK businesses respond positively to the challenge of increased international competition (through increased productivity), the prospects for UK trade and prosperity post-Brexit are very bright indeed.

“The EU itself acknowledges that 90 percent of future growth in global GDP will be outside the EU.”

It was important to remember the main purpose of trade deals was to make consumers better in both countries, by giving them a wider choice of goods at competitive prices, Prof Blake pointed out.

He explained: “They are not intended to protect domestic producers from international competition, which is the way the EU views trade deals.”

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As such, in terms of goods trade issues of regulatory standards and tariffs needed to be addressed, he said.

He added: “For goods to be freely traded between the UK and the other country in the trade deal, there needs to be either equivalence or mutual recognition of regulatory standards.

“In addition, there needs to be an agreement on the tariffs set on both intermediate and finished goods imported into both economies.”

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Imported intermediate goods are used in the production of finished goods, meaning rules of origin (and hence tariffs) needed to be applied if finished goods were subsequently exported to the other country and vice versa, Prof Blake pointed out.

He said: “The tariffs on finished goods imported from a third country into the UK and the other country need to be the same, otherwise there will be arbitrage possibilities.”

In terms of the import of agricultural products, there was a requirement for similar health and safety standards for the same reason, he stressed.

In terms of trade in services, an effective trade deal needed to liberalise services by ending market access restrictions which prohibit quantitative restrictions and discriminatory treatment of services, service suppliers and investors from the other country, Prof Blake said.

He emphasised: “The best trade deals use a ‘negative list’ which mean that all services sectors are liberalised, unless they are on the negative list.”

Meanwhile Prof Collins, Professor of International Economic Law at City University and a specialist in the World Trade Organisation (WTO), emphasised much work remained to be done.

Referencing the New Zealand deal signed in December, he told “That agreement specifies streamlined customs procedures – so the UK will need to get its customs processes up to speed to fulfil that obligation.

“Then there is the accession to the CPTPP – here the UK will need to sort out its schedule of commitments for services, hopefully liberalising them to the fullest extent possible.”

Prof Collins added: “The UK should also consider scrapping its commitment to the GDPR in favour of a more agile data protection regime as this will find favour with CPTPP countries and also the US.

“A new agreement with Canada is also likely forthcoming (improving upon the CETA rollover). Here the UK should seek deeper commitments for services and the mobility of professionals.”

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