International trade priorities for the life sciences post-Brexit

As the Brexit negotiations inch ever closer to a crunch point and debates heat up in Parliament over the UK’s preparedness to leave the EU, the government continues to ready itself to strike future trade deals. This work is being led by Liam Fox’s Department for International Trade (DIT), which was set-up after the EU referendum with the responsibility to lead the UK’s independent trade policy post-Brexit.

Over the last couple of months, DIT has asked the public and industry that the UK’s priorities should be in future Free Trade Agreements (FTAs) with the United States, Australia, New Zealand, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP includes eleven countries, including Canada, Australia and Mexico, and will enter into force at the end of this year. The BIA responded to the four consultations with a paper where we explained that the many uncertainties around the future UK-EU relationship make it difficult to provide detailed comments on potential FTAs.

Some context: the US and the WTO 

Even before the consultations were launched, it was no secret that the UK government was keen to negotiate an FTA with the US. A UK-US working group was set up last year to prepare the groundwork for a potential future agreement. The BIA and its members have also participated in several workshops led by DIT to highlight the sector’s priorities on issues such as IP, medicines regulation, and customs facilitation. And last month, the US announced that negotiations with the UK will start “as soon as it is ready" after it leaves the EU. Looking beyond a potential US FTA, it is important to note that the UK’s attempts to seal the terms of its post-Brexit World Trade Organization (WTO) membership by fast-track procedure have failed and will instead be subject to (lengthy) negotiations.

But DIT’s consultations come at a time where trade isn’t just on the agenda in the UK. The US and China continue to battle it out over tariffs, while the WTO is slowly losing its ability to resolve disputes in its highest court. At the same time, the US is looking to ramp up bilateral trade talks with not just the UK, but also with the EU and Japan. The US-EU negotiations for the Transatlantic Trade and Investment Partnership (TTIP) have been on ice since October 2016. The TTIP negotiations received public criticism over concerns about public health and the lowering of standards. In our sector, IP protections proved a sticking point. This time around, medicines pricing may become another hot topic in all three negotiations after the US’ proposal to establish an “international pricing index" in an attempt to lower the cost of medicines domestically.
 

Brexit uncertainty trumps independent trade policy 

The BIA has been working closely with the UK government, including DIT, since the EU referendum to emphasise the life science sector’s trade related priorities both with the EU and other international partners. We’ve made clear from the start that due to our sector’s integrated links with the EU, a close UK-EU relationship is more important than future trade deals. The top priority continues to be the secure supply of medicines to UK patients as we leave the EU. For companies supplying medicines to the NHS, this is proving to be an enormous challenge. We continue to communicate this concern to the government and our response to DIT’s consultations was no exception. 

We highlighted to DIT that the lack of clarity on the future UK-EU relationship makes it difficult to comment on what the UK’s priorities in potential future FTAs should be. As this relationship becomes clearer, the sector will be able to provide more detailed information on both the UK’s overall post-Brexit trade policy and specific FTAs. But with the current uncertainty the sector faces, we explained that this is not the right time to give detailed information for the proposed FTA negotiations. 

We also reiterated the sector’s long-term ask to have continued access post-Brexit to current EU FTAs and Mutual Recognition Agreements (MRAs) on medicines regulation with third countries. Together with a comprehensive deal with the EU, the continuation of these agreements provides important foundations for the UK’s post-Brexit trade policy. Once these foundations are in place, the BIA and our members will be able to provide more details on specific trade asks. That being said, we highlighted the following areas as key to the life sciences in future FTAs and set out some high-level principles which would benefit the sector:

• Mobility and people – future trade agreements should ensure that companies have frictionless access to talent and the ability to circulate employees internationally 
• Science and collaboration – the government should seek how it could facilitate and enable science collaboration as part of FTAs, and particularly enabling SMEs to build cross-border relationships 
• Intellectual property - future FTAs should seek to capitalise on the UK’s strengths and encourage trading partners to adopt high standards of intellectual property protection and enforcement, and the UK should work with partners to encourage the harmonisation of IP systems globally
• Customs and trade facilitation – the UK should develop a customs and excise regime that reduces the burden on companies importing to and exporting from the UK
• Rules of origin – the UK should adopt simplified, easy-to-handle, and rational rules of origin based on common and defined chemical and pharmaceutical processing activities 

We will continue to work with the government and our members to help shape the UK’s trading relationship with the EU and its independent trade policy with new trading partners in the near future. If you’re interested in becoming involved with the BIA’s trade work, please let me know via email.