UK plans incentives like freeports to boost trade with non-EU markets
London
BRITAIN is embarking on a two-pronged strategy to boost free trade with the US, Asia, Middle Eastern, African and other non-European Union (EU) nations.
Plans are now afoot for independent trade deals with nations outside the EU. As an incentive to get the best possible deals the strategy comprises "freeports" and moves to lower or cut tariffs.
The groundwork for this strategy is taking place during the 2020 transition period with the EU, following Brexit at the end of January.
During the transition the UK remains part of the European Union customs union and single market while the government negotiates a trade deal with the EU.
Trade deals with non-EU nations can take place from 2021. Foreign secretary Dominic Raab, who was in Japan, Singapore and Malaysia earlier this week, is one of the ministers paving the way with the brand, "Global Britain".
Rishi Sunak, who has been promoted from Chief Treasury Secretary to Chancellor of the Exchequer, is a strong backer of freeports. The government aims to have up to 10 freeports at harbours or airports from 2021 onwards, he said.
"Freeports will unleash the potential in our proud historic ports, boosting and regenerating communities across the UK," Mr Sunak said. "This is all part of our mission as an open, outward-looking country, championing global free trade."
At a freeport, imports can enter with simplified customs documentation and without the payment of tariffs.
Businesses operating inside designated areas in and around the port can manufacture goods using the imports. The finished product can then be exported tariff-free. Tariffs are only applied if the goods enter the domestic UK market.
Besides benefiting external trade, freeports will attract new businesses, foreign and local investment and create opportunities for towns and cities across the UK, Mr Sunak said.
The Department for International Trade has launched the second prong of the strategy, notably requesting large and small businesses to advise and suggest a new independent "global tariff" policy for the UK.
"It is time for us to look forward to our future as an independent, global champion of free trade," International Trade Secretary Liz Truss said. "It is vitally important that we now move away from complex tariff schedules imposed on us by the European Union."
A new UK Global Tariff "will ensure UK businesses compete on fair terms with the rest of the world while benefitting households with greater choice and lower prices", Ms Truss said.
The consultation with businesses will be open online until March 5. All views will be taken into account before the Global Tariff Policy is finalised and comes into effect in January 2021.
"This comes as the government sets out details of the UK's approach to negotiating free trade agreements with countries including the US, Australia, New Zealand and Japan," Ms Truss said.
As part of the consultation, the government is seeking views on simplifying and tailoring tariffs. Some ideas on the table include removing tariffs of less than 2.5 per cent, reducing higher tariffs or removing them on key production inputs.
"The new UK Global Tariff Policy will apply to goods from countries around the world unless the UK has different arrangements in place, for example a free trade agreement, or tariff suspension," the trade department said.
"Tariffs levied by other countries on UK exports will depend on that country's own 'most favoured nation' tariff schedule and whether the UK has a trade agreement in place."
A new Trade Remedies Authority will be established to protect UK businesses from unfair trading practices, such as dumping and subsidies.
According to national statistics, the UK's exports of goods and services totalled £689 billion (S$1.23 billion) in 2019, compared with imports of £718 billion. A deficit in trade in goods was partially offset by a surplus of in services in 2019. The UK had a trade deficit with the EU, but a trade surplus with non-EU countries.
