Business, Forwarding, Freight News

Corona virus could be spur for EU trade deal

[ March 9, 2020   //   ]

Adam Johnson, director of Leeds-based Tudor International Freight, says that the corona virus outbreak might provide an extra spur to signing a free trade treaty between the EU and UK.

The illness was already causing significant damage to economies worldwide and therefore made a no-deal outcome, with its consequent likely further reduction in trade, even less desirable for both parties.

However, the outcome is still far from clear and indeed the scope for a deal may have reduced sharply in recent days, he warned. Both sides have published their negotiating mandates and statements from the two sides suggested “several key areas of potentially terminal disagreement”.

A free trade treaty would eliminate import tariffs and quotas for goods passing between Britain and the EU, following the current standstill post-Brexit transition period.

Mr Johnson said: “These areas of potential talks breakdown include the EU’s wish for Britain to make binding so-called level playing field commitments – promises not to undercut it, in areas like labour rights and environmental protections – which were foreshadowed in documents such as the political declaration the parties agreed last November.

“Subjects of possible rupture also include the EU’s desire for its fishing fleets to retain access to British waters, agricultural standards, and the UK’s implementation of the agreed Irish front stop. Other potential areas of breakdown could be trade in financial services, data protection and security co-operation, plus questions around governance and dispute resolution.

“The apparent desire to re-visit the agreed political declaration – effectively the initial scoping document for the free trade deal – and the pre-negotiation rhetoric have not been encouraging. The UK government has, for example, threatened to walk away from the talks if it deems insufficient progress has been made by June.”

Johnson said it was possible to envisage the talks breaking down, an outcome which could have particularly adverse consequences for potentially vulnerable sectors, such as manufacturing. He said any imposition of tariffs and quotas was likely to be especially damaging for small businesses trading with the EU, which lacked the scope of larger organisations to absorb these blows.

He said: “Our advice to British businesses trading with the EU is therefore to hope for the best but prepare for the worst. Taking recent developments at face-value, we fear there’s every chance what now seems pessimistic may prove realistic in the next few months.”