Labour’s Shadow Trade Secretary Emily Thornberry said clauses included in rollover trade deals with 23 countries including Canada, Switzerland, Norway and Singapore exclude manufacturers benefiting from freeport tax breaks. She claimed firms taking advantage of new freeport zones at East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth & South Devon, Solent, Thames and Teesside will now be forced to pay possible high tariffs on exports to these countries.
Ms Truss has signed nearly two dozen rollover trade deals with the aim of reducing the financial hit experienced from Brexit and enabling firms to take advantage of tariff-free trade that was available to them before the UK left the European Union.
But trade ministers are accused of failing to remove “duty exemption prohibitions” contained in these agreements that state companies which have not paid duty on its imports cannot take advantage of the beneficial tariffs on their exports.
Ms Thornberry said: “When I asked Liz Truss recently what she was doing to promote the nation’s new freeports, I was told in response that it was a ‘domestic policy’ and not something her department was focused on, and now I fear that we are seeing the cost of that inattention.
“Last November, when the Treasury invited applications for its new freeports scheme, the small print warned potential bidders of the prohibition clauses contained in several continuity trade agreements the Department of Trade had signed in the previous two years.
“But despite that warning, Liz Truss went on to sign trade agreements with 10 more countries containing the same clauses, including key markets like Canada, Singapore and Mexico.
“It would have taken an hour of discussion and the stroke of a pen to explain the UK’s freeports policy to negotiators from these countries and remove the prohibition clauses from those agreements, and I cannot understand why Liz Truss failed to do that.
“On the surface of it, this looks like a catastrophic blunder by a minister stuck in her silo, and as a result, I fear that manufacturers in towns, cities and regions across our country who have succeeded in bidding for freeport status risk missing out on access to key markets.
“I’ve written to Liz Truss asking her to clarify the situation, and if it needs fixing, I’ve urged her to go back to the negotiating table immediately with these 23 countries and get these clauses removed before Britain’s freeports come into operation later this year.”
But a UK Government spokesperson hit back at these claims, and said: “There is no error and it is not uncommon for free trade agreements to have these provisions.
“Businesses will not be shut out of markets we have negotiated free trade deals with. They will benefit from both our free trade programme, and also from freeports, which provide tax breaks, simpler planning restrictions and cheaper imports.
“Where these provisions apply, businesses can choose to either benefit from the duty drawback, or the preferential rates under the free trade agreement – provided they meet the rules of origin test under that agreement – depending on what suits them best.”
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