Liz Truss’ Korean Trade Deal Torn Apart for Failures by Lords
A report by peers contests Government claims that separate British deals would be better than those secured with the EU.
The first big trade deal signed by International Trade Secretary Elizabeth Truss has been torn apart by peers for blocking parliamentary scrutiny, failing to protect new markets for farmers, and for only giving time limited opportunities for tariff-free exports and imports of cars.
The deal, covering £14 billion of trade with Korea, was hailed by Ms Truss as the “new gold standard of trade deals with our existing allies and like-minded countries”. She boasted it would safeguard the export of Bentleys and Denby pottery to Korea – but the House of Lords is unimpressed.
Baroness Donaghy, chair of the House of Lords EU Internal Market Sub-Committee, said: “It is not, as the Government has presented it, simply a straightforward continuation. The agreement can be amended, commits to starting its own renegotiation within two years and contains most favoured nation provisions – meaning that any additional market access in services offered by the UK to a third party must be offered to Korea also (and vice versa). These points raise pressing questions about the shape of the UK’s future trade policy.”
Peers were promised access to the draft trade deal before it was signed but then the Government withdrew access and said that, in future, all “roll over” trade agreements would not be shown to MPs or peers until they were signed – preventing parliamentary scrutiny.
Ministers agreed to drop a number of tariff free arrangements in the EU trade deal for agriculture, causing anger from the National Farmers Union. It safeguarded barley and animal feed but left out cheddar cheese – which has a 27% duty and was the bulk of orders worth £1 million. Under the EU agreement, this duty would be phased out to zero.
Inquiries by Byline Times revealed that this would put British cheddar at a competitive disadvantage to Irish, Australian and New Zealand cheddar and US hard cheese which will all qualify for zero rated tariffs. This is in a country where demand for cheese is rising. The Department for International Trade disputed this, saying that, by July 2021, British cheddar would be free of customs duties – but it didn’t explain how this would happen.
The report discloses that temporary arrangements have been made to ensure tariff free car exports and imports between the UK for cars made in both countries. For the first three years it will not matter if they contain parts that are manufactured in the EU. But for this to continue the UK will have to negotiate separately with the EU and according to the report the EU will be “quite demanding” about this because it would allow countries outside the EU to benefit from their negotiations.
The House of Lords EU Internal Market Sub-Committee report also contested Government claims that separate British deals would be better than those secured with the EU.
The EU-Korea agreement “may make Korea less inclined to give the UK any better treatment” than it has already granted the EU because it “would risk having to provide the same access to the whole of the EU ‘for free’”. Given this, and the fact that the UK is a much smaller market than the EU or US, UK Trade Policy Observatory considered that achieving better access to Korea was “unlikely to be easy”.
Byline Times put these points to the Department for International Trade, which referred them to Seoul and said it “will be presenting a formal response to the House of Lord’s European Union Committee’s report in due course”.