Analysis Politics

New trade partnerships reveal the UK’s ambition to become tech hub of the world.

With Boris Johnson describing a no-deal Brexit as “very, very likely”, the UK’s recent free trade deals with Japan, Singapore and Vietnam signify that Britain’s admission into the Trans-Pacific trade group appears imminent.

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Image Credit: UK in Japan- FCO

Liz Truss, international trade secretary, yesterday added Vietnam to the list of 27 other trading nations that have agreed to “roll-over” or what are best known as continuity deals. The basis for the UK’s future trade with these nations is reliant upon negotiated agreements that have been instigated by the EU. In practice, the UK has been ‘copy and pasting’ the EU’s recently negotiated trade arrangements and has then refined certain aspects of these deals to specifically cater to Britain’s trading interests.

Truss has been undertaking a negotiations ‘marathon’ and has recently forged deals with Japan and Singapore and has cited her success in negotiating agreements with 57 countries. Back on 11 September, the UK-Japan Comprehensive Economic Partnership Agreement came to the fore and Truss presented this outcome as an achievement which “proved the naysayers wrong with this groundbreaking, British-shaped deal”.

Upon closer examination, it is clear that the deal is beneficial for the technology sector but less advantageous for those seeking to export agricultural products to Japanese markets. The EU currently receives reduced tariffs for ten out of 25 agricultural products and the UK’s future tariff arrangements as of 2026 give the UK limited use of these reductions, as access to the quota will be dependent upon the extent to which the quota is “utilised by the EU27”. If  EU member states make full use of the quota then any agricultural products exported from the UK that qualify for the tariff reduction will no longer have the reduction applied. This intricate and complex arrangement demonstrates that to characterise the deal in its entirety as a positive trade development for the UK is a gross over-simplification.

Despite this downside of the agreement, it does dismantle unnecessary red tape concerning the application of tariffs to British exports. EU businesses are still required to apply for lower tariffs before goods are shipped; whereas under the new arrangements UK products will automatically have their tariff rate lowered upon their arrival in Japan. In addition, six British products, one of which being cheese, will continue to receive protection and both sides’ willingness to see this protection expanded to 70 other products in the future emphasises that the arrangement merely marks the beginning of a more comprehensive trading relationship. The primary priority behind triumphant Truss’ latest trade deals has been to avoid a situation where the UK’s cessation of EU membership coincides with the UK losing preferential access to the markets of independent trading nations outside of the bloc.

The ‘jewel’ in the recent trade agreements struck by Truss with Southeast Asian nations has concerned digital trade. The EU has failed to establish trade cooperation with Japan in relation to e-commerce and as part of a determined drive to become the tech hub of the world the UK has included new provisions in its future trade arrangements which “enable the free flow of data” and UK businesses won’t be liable to “paying the extra cost of setting up servers in Japan”. Part of this trend of the UK bolstering its credentials as a nation that is at the forefront of promoting digital trade, the UK’s recent negotiations with Singapore concluded with both sides in agreement that negotiations concerning a “digital economy agreement” should commence next year.

The government’s strong emphasis on the importance of furthering the UK’s digital trade opportunities has been met with widespread appraisal from tech companies in the UK, with a Deliveroo Spokesman commenting in response to news of the UK-Singapore free trade agreement that “As a British tech firm that operates in Singapore (…) it is great news that (…) they now have a plan to go even further by agreeing a Digital Economy Agreement”.

The emphasis on strengthening the UK’s tech sector in negotiations has already resulted in a boost to the UK-wide tech industry, as Business Live recently reported that Lucideon, a firm which specialises in “materials technologies and processes” in Stoke-on-Trent, has publicised the fact that the UK’s future trading arrangements with Japan will lead to the company experiencing a £1 million surge in growth over the next twelve months and it consequentially plans to open a new office just outside Tokyo. Whether new trading arrangements with Southeast Asian nations will aid Johnson’s agenda of ‘levelling up’ remains to be seen but Brexit certainly provides the UK with a chance to diversify its supply chains, something which could be valuable in the long run.

With time running out to negotiate a free trade deal with the EU, the former prime minister of Australia Malcom Turnbull has warned that trading with the EU on “Australian terms” means the UK having to confront the prospect of facing “large barriers”. Maybe the very fact that Australia is in the midst of trade negotiations with the EU so that it can escape trading with the bloc on purely WTO terms indicates that the UK trading with the EU on these terms isn’t as desirable as perceived by prominent Brexiteers.

Come 31 December, regardless of whether there is a deal or no deal the UK’s future trade arrangements with Southeast Asian nations look extremely positive, specialised and a start towards the UK becoming a “digital hub”, rather than solely a “digital island”.

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