Cornwall Council – Supplementary Written Evidence (JTN0033)

Introduction to Cornwall Council

1. Cornwall and the Isles of Scilly (CIoS) see opportunities and concerns in expanding UK trade with Japan. CIoS as a region has below average exports and improving our trade performance has been identified as a key element of increasing our productivity, which stands at £17,634 GVA per capita in 2017, equal to 64.6% of the UK average. CIoS is a rural region with agricultural producing 6% of its GVA, double than the UK average[1]. With 20% of Cornish people employed in the agricultural industry, any trade initiatives which strengthen agricultural trade will be welcomed. CIoS produce high-quality products including meats and dairy products, some of which are geographically protected such as Fal Oysters and Cornish Clotted Cream. CIoS are concerned with the potential influx of highly subsidised Japanese agricultural goods competing with domestic suppliers, but also recognise that the agriculture does differ significantly between CIoS and Japan.

2. CIoS has made an ambitious commitment to become carbon neutral by 2030, and as such, any trade initiative which affect carbon emissions are important to us[2]. CIoS is committed to reducing our impact on Climate Change and therefore is interested in this inquiry due to the potential impact on global carbon emissions through increased shipping.

3. CIoS, as a region with low exports, it has significant potential to grow. CIoS is interested in trade initiatives as an opportunity to increase its economic output, productivity and establish and strengthen trading relationships outside of the EU. However, as the EU is CIoS main trading partners, we would not want a future trade initiative towards Japan to be at the expense of continued access to the EU market.

How is the UK – Japan agreement likely to impact your organisation?

4. Cornwall Council is a local authority whose jurisdiction includes the county of Cornwall. Therefore, any initiative that will impact Cornwall, will be of interest to Cornwall Council.

5. As a highly rural region which prides itself on high standards of agricultural produce, we are supportive of paragraph 87 in the UK - Japan agreement report[3] published by the government that promises no compromises on our high agricultural welfare standards (i.e. animal health and welfare standards and phytosanitary standards). Given the differences in agricultural produce between the UK and Japan, we see
6. little concern regarding domestic and unfair competition.

7. Cornwall Council are also supportive of the agreements section on engaging SMEs. 99.7% of businesses in Cornwall are considered micro and SMEs. Cornwall also has low productivity and increasing exports is identified in our local industry strategy as a way to improving our performance in this area. If seminars and further support will be part of this deal and help to encourage smaller enterprises to export, this will help aid our economy and would contribute to the Governments “levelling Up” agenda.

How might the differences between the EU – Japan and the UK – Japan deal impact your organisation

8. Cornwall Council for the most part, support the additions which have been made with the differences from the EU – Japan trade agreement. These changes include better protection of agricultural standards, an increase in SME engagement in export markets and an reduction on tariffs on certain products. However, Cornwall Council are concerned over the extra support which is put into the section over financial services. By increasing financial services under this deal, there is a real concern that areas like Cornwall will not benefit as much as other areas of the UK as we do not contribute a lot of financial services. This would disadvantage areas like Cornwall, by encouraging investment in regions such as the South East, where financial services are larger and therefore increased financial services would go against the UK’s levelling up agenda unless other benefits can be delivered to support areas where financial services are less important or if those involved in financial services are not encouraged to move out of the South East.

How might this deal impact the UK’s economy for specific sectors and/or specific regions

9. Cornwall Council are supportive of this deal, it encourages export growth and puts into place initiatives to protect our food standards. However, we have concerns on what this deal will do for the UK economy in terms of levelling up. Financial services play a large role in this agreement. Financial services only account for 1.4% of CIoS GVA. This is compared to the 6.9% average for the UK, meaning that other areas of the UK will benefit more than CIoS under this part of the agreement. CIoS has low productivity and there is a concern that areas like CIoS will not benefit as highly as places in the South East who have a large financial sector. This may cause the UK economy to become even more uneven which is bad for national growth.

10.         We believe there are more initiatives that can be added to ensure this does not happen such as a section on increasing renewable and carbon friendly service trade with japan. This can help other areas of the economy which may reside outside of the South East, and thus helping the levelling up campaign created by the current conservative government.

4 November 2020