CPTPP, EU agreement implementation, Week in London column

Week in London: Chile deal upgrade, medical duty suspensions, fish war script in TCA

Hello, this is Iana Dreyer, stepping in for Chris Horseman this week.

This was another familiar week in the politics of EU-UK post-Brexit trade relations, with Northern Ireland and access to fishing waters along the Channel Islands dominating the news. We shall come back to Northern Ireland. In the meantime, here are some other notable British trade policy news this week.

Duties suspended for inputs critical for vaccine production

London announced on Thursday a suspension of import duties on a range of products it deems critical to the production of vaccines such as sorbitol, acetic acid and even clothing items such as gloves.  The suspension applies until the end of December 2022.

The government also announced it will be consulting stakeholders on the revision of import restrictions on 5 fisheries products and raw cane sugar.

UK and Chile to launch FTA modernisation negotiations

Trade minister Penny Mordaunt and Chilean Minister for Trade Rodrigo Yañez announced plans to launch negotiations to modernise their rather basic – i.e. goods focused – free trade pact that currently frames the bilateral economic relationship between the two countries.

Chile was among the first countries with which the United Kingdom ‘rolled over’ a bilateral free trade agreement with the EU post-Brexit. Chile got one perk out of it: better quota terms for its agricultural exports.

Chile was ready to discuss immediately an upgrade to the agreement. This would have included items such as services and investment, which would have benefited the UK more. But London was absorbed with ensuring it can keep alive as many valuable trade deals inherited from the EU as possible.

Now, as Chile is close to concluding its FTA modernisation negotiations with the EU, it seems that London woke up to the fact that it might end up being in competition with some key European players in the Chilean market.

“Ministers asked that the ad hoc modernisation working group, agreed at the Association Council, meet in early 2022 to develop a timeline for the planned bilateral work on investment, and explore future opportunities in services trade,” says a joint statement released on Monday.

Note too that Chile is a signatory to the CPTPP – the prized Asia-Pacific trade pact that the UK is keen to join. Chile has however not yet ratified the deal itself.

The two sides agreed to focus on keeping trade paperwork as simple as possible and boost digitally enabled trade immediately.

“They agreed to extend the use of digital certificates for exporters from UK to Chile and Chile to UK,” according to the ministerial joint statement. “They tasked officials to explore further ways of using technology to reduce business burdens, including fresh initiatives in digitisation and certification.”

Anglo-French fishing vessel wars – the script is in the TCA…

Borderlex as a trade policy news outfit is not a specialist in fishing vessel rights and fishing quota management…. But those who wonder about the fishing vessel turf wars occurring in the Channel might want to simply have a look at the relevant chapter in the EU UK Trade and Cooperation Agreement.

The deal on fisheries is quite unique within the galaxy of terms agreed in the 2500-page TCA.

Most interestingly, it does NOT foresee a ‘structured’, i.e. rules-based and panel-based – dispute settlement process. And it also foresees the possibility for any side to suspend its provisions for the islands of Jersey and Guernesey and the Isle of Man.

Quoting verbatim from the relevant TCA chapter:

ARTICLE 497 Authorisations, compliance and enforcement

  1. Where vessels have access to fish in the waters of the other Party pursuant to Article 500 and Article 502:

(a) each Party shall communicate in sufficient time to the other Party a list of vessels for which it seeks to obtain authorisations or licences to fish; and

(b) the other Party shall issue authorisations or licences to fish.

  1. Each Party shall take all necessary measures to ensure compliance by its vessels with the rules applicable to those vessels in the other Party’s waters, including authorisation or licence conditions.

ARTICLE 501 Compensatory measures in case of withdrawal or reduction of access

  1. Following a notification by a Party (“host Party”) under Article 500(5), the other Party (“fishing Party”) may take compensatory measures commensurate to the economic and societal impact of the change in the level and conditions of access to waters. Such impact shall be measured on the basis of reliable evidence and not merely on conjecture and remote possibility. Giving priority to those compensatory measures which will least disturb the functioning of this Agreement, the fishing Party may suspend, in whole or in part, access to its waters and the preferential tariff treatment granted to fishery products under Article 21.

ARTICLE 506 Remedial measures and dispute resolution

This article basically allows for unilateral judgement on both sides of what is failure to comply with the terms of the agreement. Also:

  1. “A Party shall not invoke the WTO Agreement or any other international agreement to preclude the other Party from suspending obligations under this Article.”

As the French would say in relation to the unfolding story: c’était écrit.

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