- Tuesday, November 26, 2024
By: Shubham Ghosh
THE British government’s hurried negotiation strategy for getting a Brexit free-trade agreement (FTA) with India could end up as a bad deal, a parliamentary committee of the UK has warned.
According to a report by The Independent, the House of Lords International Agreements Committee said an “arbitrary” deadline to reach an agreement by Diwali, a Hindu festival, made the approach seem “overly ambitious or unrealistic”.
The government’s department of international trade (DIT), meanwhile, said it was making “good progress” on its bid to complete talks by the deadline.
British ministers are desperate to ink fresh trade agreements with nations around the world to make up for the damage done to the UK’s trade by Brexit, the Independent report added.
According to the Office for Budget Responsibility’s latest assessment, goods imports to the UK from the European Union (EU) were down 18 per cent (on the 2019 levels) in the fourth quarter of 2021 while those from the UK to the EU were down nine per cent.
Also, the UK’s service exports to the UK were down by more than 30 per cent while exports to the rest of the world were down five and 10 per cent below that seen in 2019.
Yet, trade policy experts are not too hopeful that the UK could make up for the damage caused by Brexit by signing agreements abroad. The Independent cited an analysis by the University of Sussex Trade Policy Observatory based on government figures that the reduction in economic benefit was likely to be 178 times more than the gains of the likely trade deals. The analysis was published in 2021.
Meanwhile, the House of Commons International Trade Committee cautioned that questions still linger over whether the FTAs would lead to significant economic benefits while the DIT has been warned not to oversee its agreements, such as a recent one made with Australia.
The Lords international committee warned about the FTA with India saying “India’s historically protectionist policies, different regulatory approaches and business practices, mean that overcoming barriers would require, in many areas, changes to India’s domestic legislation”.
This would “likely be difficult to secure and be a lengthy process to implement” which means the committee “therefore questions the arbitrary Diwali deadline set for the conclusion of the negotiations, cautioning that the government could risk giving up a good deal for a fast one by setting a time ambition over and above content”.
Baroness Hayter, chair of the international agreements committee said, “A growing economy, as well as a growing middle class and consumer market, make India an attractive trading partner for the UK. The UK government, however, must not accept a poor agreement simply to meet a deadline.
“We have noted that the aspirations in the Negotiating Objectives are particularly challenging because some would require changes to India’s own cultural and legal approach, which are unlikely to be achieved, or would take a long time.”
A DIT spokesperson said, “We are making good progress toward our shared commitment to conclude the majority of talks on a comprehensive deal by Diwali, having already closed 12 chapters. We remain clear that we won’t sacrifice quality for speed and will only sign a deal which delivers for the UK.
“India is projected to become the world’s third-largest economy by 2050 and a free trade deal could open huge opportunities for UK businesses to trade with India’s £2.2 trillion economy.”
