According to a press release, Fox will use his visit to promote a “festival of innovation” in Hong Kong later this year, and is set to make an announcement regarding the growth of UK tech start-ups.
China-UK ties
Britain looked to elevate its trade and investment relationship with China before the surprise 2016 vote to leave the European Union, ushering in a “golden age” in ties with Beijing.
According to Britain’s Department of Investment and Trade (DIT), 2016 saw trade between the UK and China reach 59.1 billion pounds (80.3 billion US dollars), with China the UK’s fifth largest trading partner.
The UK exported 16.8 billion pounds’ worth (22.8 billion US dollars) of goods and services to the world’s second biggest economy, making it Britain’s eighth largest export destination.
Last month, former prime minister David Cameron was put in charge of a Belt and Road Initiative investment fund, another sign of the importance Downing Street is attaching to ties with China and its commitment to ensuring the UK remains an outward looking country after Brexit. 25 billion pounds in financial support will be offered to British companies along the Belt and Road, according to the DIT.
Fox’s arrival in China coincides with a report in the Financial Times that suggests informal talks between the UK and representatives of the Trans-Pacific Partnership (TPP) have been held regarding a post-Brexit relationship.
UK trade minister Greg Hands is quoted as saying “there doesn’t have to be any geographical restriction” on a potential deal, which could see the UK join the 11-nation group despite not having a border on the Pacific or South China Sea. The TPP is itself looking to regroup after Donald Trump pulled the US out of the agreement upon entering office.
When could a UK-China trade deal be struck?
Britain isn’t able to legally negotiate trade agreements while in the European Union, but is expected to begin formal talks as soon as it leaves in March 2019. However, informal preliminary discussions such as the above TPP talks suggest groundwork for post-Brexit trade deals is already underway.
Brexit does of course complicate matters. The terms of a post-Brexit transition deal with Brussels, which EU negotiator Michel Barnier has said would end by December 2020, have not been laid out.
Discussions on a UK-EU trade deal have not begun, and it remains unclear how any such agreement would affect Britain’s own negotiations with China and other countries.
Last month’s agreement between the UK and EU to go forward with trade talks was based on progress made on three factors, including the Irish border. However, the consensus reached on Northern Ireland had a lot of parties to please, and how it will really be implemented remains ambiguous and at the whim of how UK-EU trade talks unravel.
How long do trade deals ordinarily take?
Trade deals are notoriously complex and usually take many years to complete. A free trade agreement between Canada and the European Union needed more than nine years of talks before provisionally entering force last October.
Deals between individual states and blocs like the EU are particularly lengthy because each member state needs to ratify any agreement. Bilateral deals can be achieved more quickly, but still typically require several years.
China and New Zealand signed an FTA in 2008 after around three years of talks, but its full terms have been implemented very slowly, and won’t be complete until 2019.
How have post-Brexit negotiations gone so far?
Fox has come in for criticism for claiming a post-Brexit trade deal would be the “easiest in human history.” The latest reports of UK-TPP talks have been derided as “pie in sky thinking” by Liberal Democrat leader Tim Farron, who questioned why “people want us to leave a market on our doorstep and join a different, smaller one on the other side of the world.”
US President Donald Trump was initially supportive of a “very big and exciting” trade deal with the UK after Brexit, but cracks have already appeared in the form of disagreements over agricultural standards.
Beyond trade deals, the UK has made progress with China on financial cooperation. Chancellor of the Exchequer Philip Hammond visited Beijing in December, and announced that both sides would look to speed up the introduction of the London-Shanghai Stock Connect program.
Beijing and London agreed banks from both sides would boost cooperation, and that a feasibility study on a Mutual Recognition of Funds deal would be carried out, opening up China to the UK’s asset management sector.
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