Most Favoured Nation: Quiet Convergence
Happy New Year! Brexit, Quiz Results, CPTPP, RCEP, Labour and trade jobs
It has been about one year since the UK exited the EU’s single market and customs union, which has led to a bit of soul searching as to whether Brexit is on track and delivering on its promises. As you would expect, for very different reasons, lots of people are unhappy – either because they never wanted the UK to leave the EU in the first place or because the Brexit-in-reality doesn’t quite match up with the Brexit-in-their-heads.
On the “real Brexit has not been tried yet” side of things there is grumbling about the fact that the UK isn’t making full use of the new powers it has to regulate differently, scrap red-tape, etc. Which is true – it isn’t. And there are certainly areas – for example on medical device regulation – where doing differently from the EU **could** unlock some benefits for UK consumers.
But regulating is complicated, and lots of rules exist as they do for a reason … not just because the EU made the UK do it. And in lots of areas – particularly manufactured goods – the business case for divergence from EU rules and approaches just isn’t there, what with the costs of regulatory duplication for those firms selling on both the European and UK markets being perceived to be higher than any potential benefits.
The truth is, beneath the talk of pints of champagne and other exciting gimmicks, the extent to which the UK is remaining convergent, or at least reliant, on EU rules is probably greater than the True Brexit Grumblers know.
Some examples (all of which I think are sensible):
The UK will continue to recognise EU product safety markings (CE mark) until 1 January 2023 (and indefinitely in Northern Ireland). With the deadline for adopting the alternative UKCA marking having already been extended twice, there is a suspicion that this will happen again, at least in respect of some products.
The UK will continue to recognise EU product safety markings (CE mark) and certificates issued by EU-based notified bodies for medical devices until 30 June 2023 (and indefinitely in Northern Ireland).
The deadline for UK companies transitioning their EU REACH authorisations to supplement their basic chemical registrations with supporting safety data has been extended from 27 October 2023 to 27 October 2025.
The UK will continue to recognise EU batch testing and release for medicines until at least December 2022, with a two year notice period given in the event of changes.
Anyway, happy new year!
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Most Favoured Quizzer
Thank you to those of you who submitted answers to the inaugural Most Favoured Nation Christmas trade quiz. I am happy to announce that the winner/biggest loser is … the UK Department for International Trade’s Ben Fraser! Congratulations. Ben wins a lifetime full subscription to this newsletter (I didn’t promise the prize would be a good one.)
A recap of the questions along with his answers:
1. What is the HS code of the greatest of all Christmas foods, a mince pie?
Ben: Somewhere in HS 19 alongside bread and cakes. Surely nobody can stretch to 4 (or 6!) digits without googling...
2. Rudolph the Reindeer and his fellow reindeer will be subject to new animal health controls when entering the UK this Christmas Eve. Must they …
a. pre-notify their intention to arrive in the UK, be accompanied by a health certificate, and declare themselves at a border control post, where they will be subject to document checks, identity checks and physical inspection
b. pre-notify their intention to arrive in the UK and be accompanied by a health certificate;
c. be accompanied by a qualified vet; or
d. Enter via Ireland into Northern Ireland, and then on into the rest of the UK hassle-free?
Ben: b) if coming from Lapland. Although a) from this summer..?
3. In the hit children’s film Frozen, the kingdom of Arendelle dominated regional trade in which essential commodity?
Ben: Easiest one -- ice! (part of HS 22 as the beverage water..?)
4. At the beginning of 2021 the UK introduced new VAT rules for e-commerce. Foreign sellers, such as Father Christmas, sending some goods to the UK now need to register to for UK VAT, and charge it at the point of sale. These rules apply to a foreign seller exporting goods to the UK valued at
a. Over £1000
b. Under £135
c. Over £135
d. Under £1000
Ben: b). But I reckon Santa sells(?) his goods from the UK anyway so was liable for VAT before
5. The full text of EU-UK Trade and Co-operation Agreement was published on Christmas Day, 2020. How many times does the word ‘present’ appear in the agreement?
a. 29
b. 283
c. 65
d. 112
Ben: d). Including in the most important provision on trade and forests: "The Parties recognise the importance of conservation and sustainable forest management for providing environmental functions and economic and social opportunities for present and future generations, and the role of trade in pursuing that objective."
What a champion. Everyone, be more like Ben.
Literally everyone loves the CPTPP
Adding to the long list of prospective joiners, Ecuador has joined the UK, China, Thailand, Taiwan and South Korea in the CPTPP queue. Cecilia Malmström, the former EU trade commissioner, even wants the EU to join. If only someone could convince the US administration to reconsider membership we might have to think about relabelling it … perhaps WTO 2.0?
RCEP
The world’s largest trade deal, the Regional Comprehensive Economic Partnership, came into force at the beginning of this year. RCEP covers 15 countries including China, Japan, South Korea, Australia and Indonesia.
Now … people have a been a bit snooty about RCEP, given it doesn’t deliver the same level of liberalisation as say CPTPP. But I think ECIPE’s Hosuk Lee-Makiyama makes a good point when he notes that:
"The RCEP delivers the first-ever market liberalization for Japan with either China and ROK, showing that even the most politically or historically controversial liberalization can be ratified when they are well-packaged as a subset of a regional deal,"
He also makes the point that the US and EU have consistently underestimated the importance of ASEAN (who make up ten of the fifteen signatories; six have ratified) in the region, and should wind their neck in a little when it comes to criticising the depth of the trade deals of others given their current inability to get their own FTAs done.
Anyhow, I expect the UK to be submitting an application to join any moment now …[1]
Emergency!
According to politico, the EU is going to introduce new legislation that will grant it new powers to act in the event of a fresh supply chain emergency.
This will apparently consist of:
“toolbox of measures that can be activated to ensure security of supply during a crisis,” Breton wrote, which could mean export controls and powers for the EU to request information from companies on production, stockpiles and their supply chains.
and
“mid-to long-term measures … to address structural strategic dependencies, diversify sources of supply and increase EU industrial capacities.”
Juicy …
A US trade deal is actually good
Also in politico (what would we do without you), we have news that Labour would actually negotiate a trade with the US if in power, on their terms.
This led to a lot of eyebrow raising, but … it makes sense.
A trade deal with the US is not inherently a bad thing (in fact it is a good thing!) and ruling one out would be silly. Saying it wants one allows Labour to fend off gloomster attacks from the government, and instead focus on the substance. Which I’m sure would inevitably lead to Labour not actually doing a trade deal with the US, but still.
Trade jobs
DIT are currently recruiting 16 international trade trainees. It sounds like a pretty sweet gig for people trying to get into the trade world. It runs for two years (with opportunity to be made permanent), has a decent salary, and involves a 6 months overseas placement.
Check it out here. Deadline for applications is 11:55pm on 31 Jan.
As ever, do let me know what you would like to see more/less of.
Best,
Sam
[1] This is a joke. Or is it … ?