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Most Favoured Nation: How To Negotiate A Trade Deal With India
Negotiation tips, trade dispute confusion, the steel deal and ISDS
So I were in charge of the UK negotiations with India, here is what I’d do: I would Give India everything it wants on services.
I know what you’re thinking … that sounds too obvious. But it’s actually a really good idea.
India wants the UK to make binding treaty commitments to continue allowing Indian services providers and intra-corporate transferees to easily work temporarily in the UK? Great idea. Do it.
India wants the UK to make binding treaty commitments to continue allowing Indian students to stay in the UK for two years after graduation? Great idea. Do it.
India wants the UK to agree a bilateral social security agreement to address issues such as the double payment of social security contributions and exportability of accumulated benefits? Great idea. Do it.
India wants the UK to make more of an effort to ensure the existing mutual recognition agreement between the Institute of Company Secretaries of India and the UK’s Institute of Chartered Secretaries and Administrators actually works? Perhaps look at some other areas where mutual recognition of professional qualifications would be beneficial? Great idea. Do it.
Not only would agreeing to all of the above be an excellent idea anyway, doing so might actually lead to a trade deal between the UK and India. It would also probably require the abolition of the biggest domestic obstacle to Global Britain: The Home Office.
Two birds. One stone.
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How to bring a trade dispute. No really, how?
The UK now has full control of its own trade policy. This means it is able to negotiate its own trade deals, set its own tariff levels, and formulate its own positions at the WTO. It also means that it will, on occasion, need to enter into trade disputes, or join existing disputes, against other countries so as to defend the interests of UK firms.
For example – let’s pretend that I am a massive exporter of luxury socks.
My luxury socks are sold all over the world and are much loved by all. HOWEVER, in this pretend universe the United States has introduced legislation that, in practice, prevents me from selling my socks to US consumers for arbitrary reasons based on my traditional production methods.
I’m pretty sure that this rule exists solely to give my US-based competitors an advantage and constitutes deliberate discrimination. I would therefore like the UK government to raise the issue with the US and ultimately, if a solution can’t be found, bring a WTO case against the US.
But there’s a problem. As far as I can see, other than the direct lobbying of ministers, there is no formal mechanism available for me to raise this issue with the UK government. Which is a bit weird.
What I really don’t understand is why the UK didn’t just copy the EU’s Trade Barrier Regulation (TBR). The TBR allows companies to present their evidence of mistreatment to the Commission, which then considers the evidence and whether it wants to do anything about it. It’s imperfect – and places a large burden on the company, which has to compile all of the evidence – but by all accounts it kinda works. (The UK has a tool that looks a bit similar, but without a formal process underpinning it.)
Anyway, feels like something that should be sorted out. Although perhaps the truth is that the reason there isn’t a formal process is that it isn’t something UK business cares that much about? I dunno.
ISDS vs The Climate?
Investor-State Dispute Settlement (ISDS) – the treaty provisions which allow investors to bring claims against states if they believe they have been treated unfairly, or the victim of direct or indirect expropriation – are not particularly popular with the environmental crowd who view the provisions as a potential obstacle to rapid decarbonisation. [I should mention they also concern officials actively thinking about net-zero too.]
Well, if this is something you personally have views on, recent recipient of an OBE (congratulations!) Prof Lauge Poulsen wants to hear from you. Contribute here:
UK-US Steel Deal?
Rejoice! After months of being low-key humiliated, the UK has finally convinced the US to open bilateral negotiations to remove the US tariffs legacy trade war tariffs on UK steel and aluminium.
The statement is also interesting for what it didn’t say. In contrast to the EU-US deal – which the cynic might view as cover to set up a transatlantic “green steel” cartel – there is no mention of working together to fight carbon leakage. The focus is instead solely on co-operation to combat Chinese overcapacity:
“During a virtual meeting today, Secretary of State Trevelyan and Secretary Raimondo discussed the impact on their industries stemming from global excess capacity driven largely by China. The distortions that result from this excess capacity pose a serious threat to market-oriented steel and aluminium industries in the United Kingdom and the United States, and to the workers in those industries. They agreed that, as the United Kingdom and the United States are close and long-standing partners, sharing similar national security interests as democratic market economies, they can partner to promote high standards, address shared concerns and hold countries that practise harmful market-distorting policies to account.”
My view is that this is probably a win for the UK, which really doesn’t want to get dragged into public discussions about carbon clubs and carbon-leakage. [But probably will end up there eventually b’cos of the EU CBAM].
Anyhow, let the negotiations begin! Finally.
Digital Trade Explainer
Excuse the self-promotion, but I wrote a short digital trade explainer for Flint. Read it here.
As ever, do let me know what you would like to see more/less of.