Sunak’s latest Brexit climbdown over EU quality mark

#Brexit special section Downing Street Policy & Politics

Rishi Sunak’s government has notched up another Brexit climbdown after caving in to industry fears and U-turning on plans to replace the EU’s “CE” product quality mark with a British rival.

The proposed “UKCA” copycat mark has been indefinitely postponed with a government minister conceding the decision was made to reduce “red tape” for businesses and “prevent a cliff-edge moment” when the mark was set to be introduced in 2025.

British businesses welcomed the move to keep the EU’s “conformity” symbol as a pragmatic step after business minister Kevin Hollinrake said the government has “listened” to their concerns.

“The government is tackling red tape, cutting burdens for business, and creating certainty for firms – we have listened to industry, and we are taking action to deliver,” said Hollinrake.

“By extending CE marking use across the UK, firms can focus their time and money on creating jobs and growing the economy.”

Trade body Make UK – which champions UK manufacturing – said it welcomed the climbdown but criticised the government’s post-Brexit history of “last-minute policy changes” which have created unnecessary costs for businesses.

Sunak’s accepting limitations of post-Brexit divergence

A survey by the British Chambers of Commerce (BCC) in 2012 found only 8% of businesses wanted to scrap the EU mark while 59% of firms impacted by the decision wanted to keep it.

“Businesses will breathe a sigh of relief that the government has decided to take a pragmatic approach to the safety marking of products sold in Great Britain,” said the head of BCC’s trade policy William Bain.

However, the Financial Times reports the decision does not extend to construction products or medical devices which will still be required to use the UKCA mark.

The climbdown “is also the latest signal that Rishi Sunak’s government is accepting the limitations of post-Brexit divergence,” states the FT.

Earlier this year business secretary Kemi Badenoch announced the government u-turn over plans to scrap all EU laws by the end of 2023

Question raised over UK-San Marino double tax treaty

Meanwhile, questions are being raised over Jeremy Hunt’s role in the UK’s low-tax treaty with San Marino. The Guardian reports the deal was “championed by a leading Tory donor, who with his companies has given more than £700,000 to the party and £30,000 to the chancellor.”

After a “double taxation” deal was signed in May, Hunt posed for photographs with the donor, Maurizio Bragagni – described as a prominent businessman and diplomat for San Marino –  outside No 11 Downing Street. Double taxation treaties “eliminate the double taxation of income and gains arising in one country and paid to residents of the other country”, the Treasury states.

The chancellor and four members of his family enjoyed the hospitality of San Marino over three days in 2021to the value of £7,869 – as declared by Hunt, who is a former member of the APPG (all parliamentary group of MPs and peers) on San Marino.

Bragagni met with Hunt over the three days during which the chancellor – who was not in government at the time – was made “Grand Officer” of the order of the Knights of St Agatha by San Marino.

According to the Treasury, the UK has “has signed over 130 double tax treaties, including with the United States, China, Japan, India, Germany and smaller countries. They are designed to prevent tax evasion in the UK and excessive foreign taxation and other forms of discrimination against UK business interests abroad.”

Tax and accountancy expert Richard Murphy has questioned the benefits of the UK-San Marino deal, commenting: “There will be no financial flows from San Marino to the UK of any consequence. Why are we allowing for the potential of flows from us to them? I think there could be the opportunity for someone to exploit this by ‘treaty shopping’, to set up the opportunity to create a financial services hub in San Marino that could be used for funds to flow out of the UK.

“For me, any such possible opportunity is naive at best and totally unnecessary, why do it? You have to question the political judgment of any politician who would want to do that, let alone claim publicity for it.”

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