Explained: Why UK’s latest blueprint for Brexit threatens to derail plans for closer trade ties with India

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London | July 12, 2018 8:09 PM

UK government's latest blueprint for Brexit released today threatens to derail plans for closer trade ties with India.

UK’s latest blueprint for Brexit threatens to derail plans for closer trade ties with India

The UK government’s latest blueprint for Brexit released today threatens to derail plans for closer trade ties with India as it would prevent Britain from making the kind of concessions on trade in goods that India seeks.

The so-called Brexit White Paper has already shaken up Prime Minister Theresa May’s leadership following resignations of her Brexit minister, David Davis, and foreign secretary Boris Johnson, who disagreed with what is seen as a much closer alignment with the European Union (EU) than desired, as it would reportedly make trade deals with other countries more difficult.

Now, according to details of a confidential joint UK-India Trade Review released to ‘Greenpeace Unearthed’, it would appear that India would be among the countries unlikely to reap many post-Brexit benefits. The trade review highlights a range of non-tariff barriers to trade identified by Indian businesses that the Indian government would want the UK to reconsider as part of any new post-Brexit trade deal.

These include limits on fungicides in basmati rice, the enforcement of food hygiene standards for milk and dairy products, such as ‘paneer’, and the use of hormone-disrupting chemicals across a range of non-food products. These rules are imposed by the EU and under the new Brexit plan of a “common rule book” between the UK and EU on goods, any changes to food standards or chemical safety are unlikely. Dominic Raab, who became Brexit secretary on Monday after Davis quit in protest at the plan thrashed out at May’s country retreat of Chequers last week, stressed it struck the right balance between protecting existing arrangements with the EU and freeing up the UK to look further afield.

The UK’s Department for International Trade (DIT) also sought to downplay the impact of the strategy on trade ties with countries like India. A spokesperson said, “As we leave the EU, we will forge new and ambitious trade links around the world, while also maintaining our high standards on animal welfare and food safety. The joint trade review’s findings underline the continued strength of the bilateral relationship between the UK and India, and we are committed to driving forward this mutually beneficial trading arrangement.”

The UK-India Joint Trade Review, which also focused on life sciences and information technology, formed the crux of a new UK-India trade partnership announced during Prime Minister Narendra Modi’s visit to the UK in April for the Commonwealth Heads of Government Meeting (CHOGM). But experts have warned that closer trade relations still face considerable hurdles.

“The commitments to bind the UK to the EU’s regulatory approach on goods will constrain the ability of the UK to address Indian demands related to food and plant health,” said Sam Lowe, Senior Research Fellow at the Centre for European Reform. “As to whether the UK would be able to lower tariffs in future, it is dependent on whether the UK facilitated customs arrangement does indeed allow it to run a dual tariff regime at the border,” he said.

Meanwhile, further voices of dissent emerged around the government’s Brexit strategy, with the City of London Corporation describing it as a “real blow” to the UK’s financial and related professional services sector. “With looser trade ties to Europe, the financial and related professional services sector will be less able to create jobs, generate tax and support growth across the wider economy. It’s that simple,” said Catherine McGuinness, the corporation’s policy chair. The Brexit White Paper, which was greeted with some chaotic scenes in the House of Commons today, has been described as the most important document to emerge since the Brexit referendum in June 2016.

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