21
August 2020

Written by:

Thomas Woolhouse

Senior Account Manager

Blue cheese and trade talks

Coronavirus may be all encompassing, but since the gradual return of the UK economy from lockdown, we have begun to see renewed activity by Government in regards to its other policy commitments  such as housebuilding, infrastructure and levelling up. Some of these initiatives are in line with commitments made at the 2019 General Election and are closely linked to the post-Coronavirus economic recovery. However, the renewed focus on a global trade policy harks back to a time before Coronavirus, when Brexit was the most important policy challenge facing the UK Government.

As part of his pitch in 2019, Boris Johnson successfully positioned himself as the candidate who could ‘Get Brexit Done.’ This has been achieved, but he must now show the British people the benefits of Brexit, such as how it has enabled the UK to pursue an ambitious trade policy that can deliver far and beyond our former membership of the European Union.

It has been well reported that negotiations with the EU on the future relationship are locked in stalemate over key issues such as state aid and access to fisheries. Yet, despite the importance of these talks, the Department for International Trade has also opened negotiations with other key partners including Japan, Australia, New Zealand, and the United States, the latter of which is meant to represent the Holy Grail of trade agreements.

At the beginning of this week the Secretary of State for International Trade, Liz Truss, spoke out against ‘unacceptable and unfair’ tariffs placed by the United States on UK imports, namely single malt whiskey, salmon and cashmere. These tariffs have been applied by the United States as part of the ongoing Airbus/ Boeing dispute, and the Secretary of State has said that she will seek to remove these as part of her attempts to secure a new trading relationship once the Transition Period ends on 31 December 2020.

When compared to the scale of most free trade agreements, it may seem odd for ministers to quibble over individual products like scotch whiskey and salmon, yet these also have significant symbolic value.

For many people, the incomprehensive nitty gritty of global trade deals (particularly where they address complicated policy areas such as data and services) is the fiefdom of technocrats and economists, yet by citing breakthroughs on tariffs for English products, ministers can communicate the tangible benefits of their new and independent trade policy.

On a practical level, these small areas of focus are all that can be achieved in the brief window that is available. The UK Government has made clear its ambitions to secure new agreements with the United States and Japan prior the end of the Transition Period. In most cases, negotiating a new trade agreement is an lengthy and complicated process, often taking years. However, the UK Government is attempting to achieve multiple new agreements in an extraordinarily short length of time.

This means that whatever can be achieves will likely be modest in scale, although this does not necessarily translate as being easy to deliver.

As part of the negotiations with Japan, the Department for International Trade heavily publicized that the new agreements would remove tariffs on British luxury leather goods, whilst British consumers would receive access to more affordable Japanese electronics.

In practice, a new agreement with Japan will be little more than an amended version of the deal that already exists between Japan and the EU (which the Japanese refused to automatically roll over for the UK) – tweaked just enough to be heralded as a policy success, and a used as a stepping stone for British entry into the Trans-Pacific Partnership.

However, despite the UK supposedly being on the verge of signing this new agreement earlier in August, there has still been no breakthrough, as the Secretary of State is apparently holding out for a better deal over Stilton Cheese.  Again, for many people, this will seem like a strange hill to die on, particularly when one considers that there is little demand amongst Japanese consumers for imported cheese.

However, this is all part of the theatre. The UK Government must be seen to fight for symbolic concessions and preferential treatment for iconic British products – although this approach does not come without risk.

To successfully conclude a trade deal with Japan is politically important for the UK Government a number of ways. Not only is a deal required to ensure trade continuity following the end of the Transition Period, but it is also hoped that a trade agreement with the Japanese will set the tone for future negotiations with other partners. Both sides have said that they remain optimistic  a deal can be struck on schedule, and that 90 percent of the issues have already been settled. However, it has also been commented that the UK Government must also be more realistic in regards to what can be achieved.

The Prime Minister and many of his colleagues said during the 2016 Referendum Campaign that other countries would line up to strike new deals with the UK once it had left the EU. They have staked their credibility on it and a failure to agree terms with Japan would represent a serious blow to the PM and his Government, particularly if the ultimate reason was blue cheese.