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Interview

UK makes ASEAN 'high priority' for post-Brexit trade deals

London looks for new commercial partners as it touts 'Global Britain' banner

An online meeting between the foreign ministers of the U.K. and ASEAN countries in November. (Photo supplied by U.K. government)

JAKARTA -- The U.K. sees trade deals with Southeast Asian countries as a top priority now that it has officially left the European Union and looks for new commercial partners under a "Global Britain" slogan.

The U.K., which fully left the union at the end of 2020 after a transition period, has publicly stated that trade deals with countries like the U.S., Australia and New Zealand will be prioritized in coming months due to strong historical, cultural and economic and ties with Britain.

But "it is fair to say that ASEAN is an extremely high priority for us," Jon Lambe, U.K. ambassador to the Association of Southeast Asian Nations, said in a recent interview with Nikkei Asia, referring to the group's 10 countries.

The U.K. has already signed free trade agreements with Singapore and Vietnam, but those deals were made easier by the fact that both countries had an existing FTA with the EU, allowing that to be used as a reference point. But the U.K. will need to forge deals from scratch with other ASEAN members.

On Monday, Britain formally asked to join the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a pact that currently covers a 13% share of global gross domestic product.

Nevertheless, London is keen for deeper ties with countries in the region. "Trade is one of the many things that make ASEAN such a natural partner for the U.K.," Lambe said.

Britain is already conducting joint trade reviews with Thailand and Indonesia for potential deals and is also engaged with Malaysia through a joint committee on issues such as trade policy and market access.

ASEAN nations have been "real proponents of free trade," the ambassador said, having led the negotiations for the Regional Comprehensive Economic Partnership, an Asian mega-trade deal which concluded last year.

"Trade is a strong driving force in the U.K., and we are extremely proud of our history of free trade... we will be the standard-bearer for the best kind of free trade in the world," he added. "That is another area that we are keen to work with ASEAN on."

A trade deal with the U.K. should be beneficial for Southeast Asian countries as well. Trade in goods between ASEAN and the U.K. clocked in at $35 billion in 2019, or 12.7% of the total between ASEAN and the EU. Of the European countries, only Germany, the Netherlands and France have bigger portions of trade with the 10 Southeast Asian nations.

But for Western countries and organizations, striking trade deals in this part of the world has proved tricky, with the EU a case in point, The now-27-member grouping started an FTA discussion with ASEAN in 2007, but negotiations were suspended in 2009. Since then, the EU has shifted to sealing bilateral agreements with Southeast Asian states, but has only been able to conclude deals with Singapore and Vietnam.

With countries like Indonesia and Malaysia, palm oil has been a huge sticking point for the EU. Both Southeast Asian nations are big producers of the commodity and there has been a steady tension simmering between the three ever since the EU decided in 2018 to phase out the use of palm oil-based biofuel over deforestation concerns. Both Indonesia and Malaysia have filed a complaint with the World Trade Organization.

Britain, for its part, is looking to avoid confrontation. "From my perspective, this is an area where it is important we work together," Lambe said. "There is a strong consumer demand in the U.K. for palm oil and palm oil products. There is a strong industry in Malaysia and Indonesia and it is vital that we work together to ensure that both ends of that supply chain are content.

Jon Lambe, U.K. ambassador to the Association of Southeast Asian Nations. (Screenshot of interview)

The U.K. government last year proposed legislation designed to prohibit large companies from using agricultural commodities with illegal deforestation risks and require the companies to undertake due diligence on their supply chains.

During the consultation period, many suggested the government should "set environmental and human rights requirements that go beyond what is set out in law where the commodity is produced," but the government concluded in a November report that "working with and through national governments and supporting communities who live and work in highly forested areas, remains the best path to sustainability."

The ambassador said that while the U.K.'s mix of policies "is constantly under review," it is "extremely conscious of the fact that with any product like [palm oil], it is important" to work with the producers.

"I don't think there is any mileage to be gained in trying to come up with an approach that does not have producer buy-in," he said. "With the approach that we take, it is about talking to each other, working in partnership and ensuring we have [a] common set of things we want to do to overcome any challenges we face."

Lambe became Britain's first ever dedicated ambassador to ASEAN in November 2019 and an official mission to the 10-nation bloc was opened in early 2020 as the country prepared for post-Brexit foreign diplomacy. The U.K. also applied to become an ASEAN dialogue partner in June last year, having lost access to that channel through the EU, which has been one since 1979.

ASEAN has been developing close ties with its dialogue partners through regular high-level talks over regional and global issues since 1978, when Japan became the first country to acquire the status. But the bloc has long had a moratorium on new dialogue partnerships, with the last admission coming in 1996 when India, China and Russia joined the ranks.

"[The] U.K. was one of the driving forces in the EU becoming a dialogue partner... we are very focused on not losing the partnership that we have enjoyed [for] 40 years," Lambe said. "It will be ASEAN's decision and we will respect their decision. Obviously, [a rejection of the application] is something that we would not like [but] we think there is a lot there for the U.K. and ASEAN to work on."

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