Comprehensive Economic Partnership (EUC Report)

Lord Loomba Excerpts

Thursday 26th November 2020 Grand Committee

[Lord Loomba (CB) [V]]

My Lords, I share the Government’s pleasure at signing the trade agreement between Japan and the UK, their first trade deal outside the EU. However, the agreement raises some issues, especially as there appears to have been some overselling by the Government on their achievement in signing it.

The first issue relates to an agreement with the EU on diagonal cumulation, so that goods bought from Japan and then incorporated into British goods can be sold on in the EU with the UK as the country of origin. At this point, we do not have such an agreement in place. This is no small matter, as without it—and time is tight on reaching agreement—businesses may find themselves unable to sell their product in an EU country either at all or, to be able to do so, with increased costs.

Secondly, tariff-rate quotas are problematic for UK companies. For instance, there is a mixed bag for agriculture, with products such as cheese and wheat capable of zero-rate tariffs, while products such as butter, whey and sugar have lost all access to lower tariffs.

There also appears to be some confusion over how access to zero tariff-rate quotas will operate in practice. One report suggests that zero rates will be available only once EU companies have used up their share of the quota, while a second believes that the zero rate will be available on point of delivery. One suggests that UK companies will only benefit from anything left after the EU has taken up its share, while the other says that UK companies that get in first will access it. Can the Minister explain the correct position?