Daily Archives: July 14, 2021

Fishing creels are seen near Oban in Scotland, Britain, January 8, 2021. REUTERS/Russell Cheyne/File Photo

LONDON, July 14 (Reuters) - Britain's fisheries have been sold out by the post-Brexit trade deal agreed with the European Union, the head of an industry body said on Wednesday, urging the government to do more for the sector when a so-called adjustment period ends in 2026.

Winning back "control" of Britain's fishing waters was one of the main drivers for Brexit, with the industry becoming the poster child for many supporters of the country's departure from the EU during the 2016 referendum and beyond.

But Barrie Deas, chief executive of The National Federation of Fishermen's Organisations, said the government's assurances and promises made before striking a trade deal with the bloc late last year had been broken.

"It's really quite hard to convey how sudden was the fishing industry's fall from grace," Deas told journalists.

"The flags flying over our vessels for the last couple of years had a slogan which was 'fishing no sell out' and that really spelt out our fears. Those flags now seem both politically astute and prescient because that's what's happened."

He said there had been changes to quotas for fish "but at the margins", that the deal with the EU had emboldened other states such as Norway, and producers of some live shellfish had experienced real difficulties in exporting to the bloc.

"In that sense it's a tale of woe, very far away from the sea of opportunity that some spoke about," he said, adding that the COVID-19 pandemic had also hurt the sector making it more difficult to quantify the impact.

The government lauded what it called its great deal with the EU on fisheries, saying over time Britain will be able to take advantage of becoming an "independent coastal state".

Under the deal, Britain agreed to an adjustment period, when fishing rights for the bloc's fleet in British waters will gradually be reduced over five years. From 2026, there will be annual talks to set the terms of access.

Deas said the government must show it can do more for the industry in 2026.

"One of the big questions is what happens after 2026 and it's clear that the EU is quietly confident that it has sufficient what it calls dissuasive powers to prevent the UK from fully asserting its rights," he said.

Reporting by Elizabeth Piper; Editing by Emelia Sithole-Matarise

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UK fisheries sold out in Brexit deal, industry body says - Reuters

The post-Brexit Trade and Cooperation Agreement (TCA) between the UK and the EU is nominally a free trade agreement for goods. Bob Hanck, Laurenz Mathei and Artus Galiay examine in more detail what the agreement does and does not mean for trade. They argue the agreement falls some way short of establishing free trade and that the combination of Brexit, wider secular societal and industrial trends, and the pandemic are creating a perfect storm for British exporting companies.

Five years ago, the UK voted to leave the EU. After four years of complicated negotiations, and three Prime Ministers later, the UK and the EU concluded the Trade and Cooperation Agreement (or TCA, also known as the post-Brexit Treaty) in December 2020. The TCA was heralded as a free trade agreement with the best possible positive effects for British industry in general and exporting companies in particular.

Since June 2016, however, the wider economic background to Brexit and the economic losses that followed in its wake have changed significantly. The transition towards a green economy (with significant structural changes in innovation, industry, and markets) and the Covid-19 crisis (a large, but hopefully temporary supply and demand shock) have shifted the goal posts for all developed economies.

While economies everywhere face adjustment problems, Brexit has made life for UK businesses structurally harder and disproportionately more so than for companies in the EU. The reason is that the TCA did not, in fact, produce a flat free trade area, but a very bumpy one at best. A simple list, as in the table below, of the key areas where Brexit has changed things helps understand the nature and extent of the problem.

Table: Impact of the Trade and Cooperation Agreement on exporters

Any market needs basic rules to trade, such as who owns what; what can be traded; and how, where and with whom you can trade. Naturally, the provisions in the TCA are symmetric in the sense that they apply equally to all signatories. However, one key point, often ignored in the official British reading of the TCA, is that the same rules may have very different effects on different parties.

The reason is painstakingly simple: the UK is proportionately a much smaller market for the EU than the other way around. Almost 50% of all UK exported goods in 2019 went to the EU, while the UK made up only 6% of all EU manufacturing exports that year. Even though some sectors and regions in the EU are more exposed than others, because of these relative weights the same rules have quantitatively different aggregate effects. Put differently, the asymmetry in effects was, as it were, built into the TCA itself.

In part this also reflects the uneven distribution of power in the negotiations. The TCA between the UK and the EU, concluded in late-2020, was never meant to be fair in the conventional sense of the word. Instead, it pitted one significantly smaller player against the largest single market (with free trade within it) in the world.

Dual shock I: Rules of origin and the green economy

But requirements associated with rules of origin (RoO) a major part of the TCA make the effect even more lopsided. A UK company exporting to Germany is subject to RoO thresholds; a French company doing the same is not. The French company could, therefore, import cheap parts, ingredients and textiles from across the globe, assemble or mix the final product and sell it on as an EU product (subject to some basic safety standards). The British company needs to make their product with a higher share of locally-sourced, and thus, all things being equal, more expensive components.

The automotive industrys green transition is an interesting example of how Brexit has made adjustment to an already hefty challenge even more complex. In line with other very ambitious governments, Boris Johnson has recently announced that the UK will ban the sale of new petrol and diesel cars from 2030 onwards. While necessary from a macro political-economic view, it does imply that products, production and services have to be rethought often from the ground up.

Electric vehicle (EV) production is a case in point. The planned widespread introduction of EVs over the next decade will require massive investments in the existing UK plants to reorient production from internal combustion engines to vehicles propelled by electricity. Very few parts are the same or at least very similar, while new parts such as batteries require local state of the art production facilities. The latter is particularly important: without a functioning battery supply chain, EV production wont take off in the UK, potentially leading to a demise of the industry and a loss of more than 100,000 jobs.

To make matters worse, the TCAs RoO requirements put a due date on the establishment of this new supply chain. From 2027, 55% of the final value of a car must be originating components (i.e., produced in the UK or EU) for exports of domestically produced cars (i.e., those made in the EU or the UK). If either do not meet that requirement, exported cars face a 10% tariff. More than 80% of all UK-made vehicles are exported, and since more than half of exported UK cars go to the EU, the cost of RoO will disproportionately be felt in the UK.

Batteries, which can make up more than 50% of the value of a car, are currently mainly produced in Asia. Cars built in the UK with batteries produced in China or South Korea thus fall foul of the RoO requirements in the TCA. So, how likely is it that the UK will succeed in establishing a large enough domestic battery supply chain before the TCA due date?

The Japanese carmaker Nissan has recently announced its plan to increase its battery production in Sunderland to potentially 6-9 GWh and the UK government is in talks with large manufacturers (including Ford, Samsung and LG Chem) about building battery gigafactories in the UK. However, it is unclear if talks are progressing quickly enough to meet the 2027 deadline (such factories take years to build and reach operating capacity, even after a speedy approval process). In addition, a recent report warns that the planned annual battery production capacity of 45 GWh from 2030 is almost 100 GWh short of the forecasted demand in 2040 (140 GWh).

Dual shock II: Services exports and Covid-19

For a long time, the UK has been Europes poster child in the services sectors. In 2019, services accounted for 80% of the total UK economic output (in Gross Value Added) and around 30 million jobs. This includes a wide array of sectors including finance, legal and business services, transport, information and communication technology (ICT), medical and social care, creative, hospitality, environmental, and other non-tradeable services. But services are also crucial for the UKs trade balance. In 2018, services accounted for 46% of all UK exports, (40% of which went to EU member states) but only for 34% in France and a mere 17% in Germany. Additionally, while the UK had a trade deficit in goods, it ran a substantial surplus of 28bn (32) in services.

While the financial services sector is likely to lose business to other global financial centres because of the limited financial equivalence granted by the EU, Brexit will hit many other service suppliers once the Covid travel restrictions are lifted (on top of other non-tariff trade barriers such as mutual recognition of qualifications that will come into play). While business travel and, therefore, physical service provision in the EU was impossible during the pandemic, the lack of services commitments in the TCA will ground many previously successful British services exporters also in the future.

The main reason for this is the arduous new visa and work permit requirements for UK business visitors when providing a paid service in the EU. A band of five musicians on a tour through six EU countries, for instance, will likely need to fill in up to 60 individual forms (5 people X 6 countries X 2 forms, for visas and work permits) and often deal with multiple national authorities with varying abilities of swift application processing.

TCA governance and the way ahead

The complicated and last-minute negotiations of the TCA means that both parties have ample flexibility to amend the new rulebook gradually. The TCA foresees 19 specialised committees sitting under a ministerial level joint partnership council which cover almost every aspect of the agreement and can suggest (marginal) changes to the deal. Conceivable upgrades in the future could include a formalised arrangement of the mutual recognition of professional qualifications or (parts of) the border check requirements.

However, such progress will require significant changes in the political attitude on both sides, and, as the Centre for European Reform warns, the flexibility of the TCA could also leave it falling apart slowly. Not only can both parties terminate the agreement unilaterally following a 12-month notice period, but breaches of TCA commitments could negatively influence trade and investment flows between the UK and the EU. A unilateral reintroduction of EU tariffs on British exports as punishment for UK divergence in labour or environmental standards is just the most prominent example among many.

Given the current state of mistrust between the UK and EU, not to mention the evident lack of political will on either side of the Channel, British exporters cannot take anything for granted, even if they reshuffle their processes to fully adhere to the new rules. Which brings us full circle or in the words made famous by the lead Brexit negotiators: Nothing is agreed until everything is agreed.

Note:The research for this article was partly funded by Nord France Invest and Rgion Hauts de France. The article gives the views of theauthors, not the position of EUROPP European Politics and Policy or the London School of Economics. Featured image credit:Arron Hoare / Number 10 (CC BY-NC-ND 2.0)

Originally posted here:

Dancing in the dark: What Brexit means for UK-EU trade and UK industry - EUROPP - European Politics and Policy

Here then is a chance for the UK to adopt a fairer approach, boosting livelihoods and helping to ensure fewer Africans make the perilous trip to Europe. Finished African products could benefit UK consumers thanks to lower prices. Last year, the UK set out plans to boost Africa-UK trade. At the time, the Government said: Africa has 8 of the worlds 15 fastest growing economies and there is huge demand on the continent for clean, sustainable and innovative investment. As home to some of the worlds most enterprising technologies and the financial centre of the world in the City of London, the UK is perfectly placed to meet that demand and be the continents investment partner of choice.

Among the Department for International Developments 370m worth of programmes was 200m to help build trade infrastructure in southern Africa. At that time, African and UK firms announced 6.5bn worth of deals, while the Government announced that the UK had signed trade agreements with 11 African countries, covering 43 per cent of the UKs total trade with the continent. Unfortunately, Covid has disrupted much of this, while the global south has been hit particularly hard by the pandemic and global lockdowns, lacking the financial firepower of the developed world.

This then makes the need for the UK to help African countries develop their industrial capacity all the more vital, connecting the dynamism of a youthful continent with the financial specialism of the City, as well as the technological expertise of the likes of Oxford and Cambridge. The EU has been a poor friend to Africa, all the while talking up its progressive ideals. By contrast, post-Brexit Britain has a unique opportunity to build a new type of partnership to develop African industry, starting with English-speaking Commonwealth countries, utilising diaspora networks, and demonstrating that sound ethics and economics need not be incompatible in the world of international trade.

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Post-Brexit Britain can be the friend to Africa that the EU never was - Telegraph.co.uk

DOVER, England, July 9 (Reuters) - Trade disruption could return if British holidaymakers head for European summer breaks, the head of the country's biggest port said, calling on the government to urgently reconsider funding to redevelop Dover to prevent long-term damage.

Britain's passage out of the European Union was eased by a lack of tourist traffic to France during the COVID-19 pandemic, enabling port staff to process the extra paperwork now required for trucks to access Europe and keep goods moving.

But the government dropped a travel quarantine requirement for fully vaccinated Britons on Thursday, potentially increasing the number of vehicles that could descend on the south-west port over the summer holiday months. read more

A pre-Brexit trade rush led to 20-mile queues, but Doug Bannister, CEO of the Port of Dover, told Reuters the site had so far managed the switch to customs checks well, after Britain left the EU trade bloc at the end of 2020.

"That's because we haven't seen the demand for tourists coming from our facilities, as we would normally expect to see," he said on a bright sunny day as a ferry departed for Calais.

"There will be longer transaction times and more processing," Bannister said, if there was a rapid return of passenger cars to Dover, which was used by some 2.4 million trucks, 2 million tourist cars and 74,000 coaches in 2019.

Britain's transport minister Grant Shapps has said that new vaccination status checks could also cause queues at airports and ports, including the busy cross-Channel route.

BREAKING POINT

British industry had warned in the run-up to Brexit - which took Britain out of the EU's single market and customs union - that the supply chains could be strained to breaking point.

Even the government said that some 7,000 trucks could back up from Dover if they failed to fill out paperwork correctly.

Instead, a December rush to stockpile goods in the country meant trade dropped off in January and enabled manufacturers and logistics groups to adapt to the new demands.

Dover, just 21 miles across the Channel from the French coast, had applied to the government for 33 million pounds in funding to adapt the port for the additional checks it needs to make, an application that was rejected.

It is challenging that in court.

Now it is asking again, and for more, to build increased passport checking capacity, to reroute some traffic and make it easier for trucks with the wrong paperwork to leave a site that is sandwiched between Dover's towering white cliffs and the sea.

Dover is also unclear on what changes it would need to make, if any, before the introduction of a new EU security plan, the Entry/Exit System, that collects data on the movement of people.

"We handle 122 billion pounds ($168 billion) worth of trade every year, and that is significant," Bannister said. "Now if that starts to curtail, then that's going to be felt throughout all regions of the United Kingdom."

"If the money is not forthcoming then we've got some tricky decisions to make."

Bannister said it was only logical that the government should fund the redevelopment because increased customs checks formed part of the Brexit deal it had negotiated. He said an "alternative funding mechanism from government" was now needed.

A spokesman for the government, which has given money to the local area and built nearby customs processing centres, said it could not comment because of the legal proceedings, which it said it would "robustly" contest.

($1 = 0.7256 pounds)

Reporting by Kate Holton; Editing by Guy Faulconbridge, Alexander Smith and Raissa Kasolowsky

Our Standards: The Thomson Reuters Trust Principles.

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EXCLUSIVE Dover warns of Brexit trade disruption as tourists hit Europe - Reuters UK