Brexit News, Member News

Brexit Alert: Trade agreements with the Commonwealth post Brexit

By John ForrestPaul Hardy, Sophie Dembinski | DLA Piper

The UK Government is eager to promote the merits of increased trade with the Commonwealth after Brexit. The Commonwealth Heads of Government Meeting “CHOGM” held in London from 16 – 20 April 2018 was a much needed opportunity to showcase credible post-Brexit trade and investment opportunities with some of the world’s most diverse and fastest growing economies.

Following agreement reached in the March 2018 European Council summit, the UK is free to negotiate free trade agreements with third countries during the Brexit transition phase without seeking permission from Brussels provided that they enter into force after the transition period. However, concluding and ratifying any bilateral or regional deals with Commonwealth countries during the 21 month period will be a tall order. The UK Government faces a number of a challenges, including:

  • Commonwealth countries will want to have the clearest possible understanding of the UK-EU future trade relationship before they commit to any final deal with respect to their own relationship with the UK. They will also want to understand the extent to which the UK can be used as a ‘hub’ for its wider trade and investment relationships with the EU27.
  • Clarity as to the UK’s position in regards to existing EU trade deals with third countries. The UK may still be party to the EU’s agreements during the transition period, but it will no longer have a seat at the decision making table. The Department for International Trade will have to work hard to secure both the UK’s interests in the EU’s on-going trade policy agenda, whilst remaining alert to any rule changes that could negatively impact the UK whilst it remains a member of the EU.
  • Domestic interest groups. For example, to agree trade deals with Australia and New Zealand, the UK will need to make significant concessions in the agricultural sector, which will be unpopular with large parts of UK farming.
  • The Commonwealth might share a common language and legal system, but its geographically distant and disparate economies do not make up a single trading bloc and as such, the UK may be negotiating with each member on a bespoke basis. Irrespective of historical ties to the UK, Commonwealth countries are pragmatic and hard-headed about their trade relationships.
  • For many Commonwealth countries, such as India, a more relaxed immigration policy that guarantees business visas for service professionals could provide the opportunity for the talks towards a comprehensive bilateral agreement with the UK. The UK’s willingness to make concessions in the area of business- and student- related immigration will therefore be crucial to securing deep and comprehensive free trade agreements with India and other Commonwealth countries.

Despite the rhetoric of the past week therefore future UK trade agreements with Commonwealth countries remain a long way down the track, and contingent on the UK-EU future trade relationship. In the interim, businesses with an interest in Commonwealth trade and investment opportunities should make their priorities known to Government.

Working with our legal specialists in PPP, energy and infrastructure DLA Piper’s Global Trade and Government Affairs team is well placed to support clients to understand and respond to trade and investment opportunities arising from Brexit and the UK’s future trade negotiations with the EU and the rest of the world.

Compliments of DLA Piper, a member of the EACCNY