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gov.uk/ukspaceagency
Trade Negotiations Priorities
SGP Export Forum
16 November 2017
What will we cover?
1. UK Space Exports – value and region
2. Key features of FTAs
3. Trade policy priorities
4. Priority ...
1. UK Space Exports: value and region
£5bn revenue through exports in 2014/15
UKSA/DIT export survey top markets
Location ...
2. Key features of FTAs
FTAs are bilateral or regional trade agreements
covering ‘substantially all trade’
In theory, pret...
3. Trade Policy Priorities
For manufacturers, the key barriers are:
Restricted government procurement (effectively closed ...
What does the export survey tell us?
Market Access Barrier % Respondents
UK export controls 55.56%
Preference to domestic ...
4. Priority non-EU markets and barriers
Focused on markets without EU FTAs already in place…
Tier 1 countries (large devel...
FTA Priorities: USA
Opportunity
The US is the largest producer and consumer of space-based products and services.
US gover...
FTA Priorities: India
Opportunity
6th largest space market (institutional). Largely self-sufficient, but does buy technolo...
FTA Priorities: China
Opportunity
China is the 3rd largest market (institutional). Increasingly sophisticated and self-suf...
Other markets
Japan: 4th largest institutional market. Export survey:
2nd non-EU export market. Regulatory barriers and
pr...
5. Example provisions in current FTAs
Specific space-sector provisions in EU FTAs include:
EU-South Korea FTA allows EU sa...
6. Questions…
Have we identified the right countries – e.g.
focusing on new FTA countries, not lower tier
markets etc?
Hav...
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Space Trade Negotiations Priorities

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Space Trade Negotiations Priorities

  1. 1. gov.uk/ukspaceagency Trade Negotiations Priorities SGP Export Forum 16 November 2017
  2. 2. What will we cover? 1. UK Space Exports – value and region 2. Key features of FTAs 3. Trade policy priorities 4. Priority non-EU markets and barriers 5. Example provisions in current FTAs 6. Questions
  3. 3. 1. UK Space Exports: value and region £5bn revenue through exports in 2014/15 UKSA/DIT export survey top markets Location Income (£m) Percentage of income (%) Rest of Europe 2,452 49 North America 957 19 Asia Pacific 793 16 Africa and Middle East 398 8 South America 369 8 Undefined 34 0 TOTAL 5,008 Top 10 Non-EU Export Markets Top 10 Import Markets 1. USA 6. India 1. USA 6. South Korea 2. Japan = 7. GCC 2. Russia N/A 3. China = 7. South Africa 3. Israel N/A = 4. South Korea = 7. Israel 4. Japan N/A = 4. Russia 10. Brazil 5. China N/A
  4. 4. 2. Key features of FTAs FTAs are bilateral or regional trade agreements covering ‘substantially all trade’ In theory, pretty much every aspect of trade is on the table, including: tariffs, services (including establishment), procurement, product standards, IP, regulatory barriers. In reality, certain areas, including defence procurement aren’t. Typically take years to negotiate. But, FTA negotiations create wider dynamics on economic cooperation. Also UK will seek to pursue commercial interests in advance of finalising FTAs.
  5. 5. 3. Trade Policy Priorities For manufacturers, the key barriers are: Restricted government procurement (effectively closed to foreign firms in most major space nations) Commercial presence restrictions – e.g. equity ownership Weak intellectual property enforcement UK export controls For operators, the key barriers are: Regulatory/security requirements - countries often require operators to build gateway infrastructure to land signals which is costly, restricting or preventing market access Licensing and testing requirements on satellite equipment Spectrum allocation Restrictions on selling direct to customer, requirement to use national incumbants Local establishment restrictions For applications, the key barriers are:  Commercial presence restrictions  Restrictions on services, including cross-border trade in services including digital/data  Regulatory barriers affecting DTH, including domestic firms buying from foreign operators
  6. 6. What does the export survey tell us? Market Access Barrier % Respondents UK export controls 55.56% Preference to domestic suppliers 50.00% Regulatory barriers 41.67% Restricted government procurement 41.67% Requirement to use national incumbents as intermediaries 36.11% Customs procedures 33.33% Security concerns 33.33% Weak intellectual property protection 30.56% Licensing requirements 19.44% High tariffs 16.67% Export survey supports this assessment and has informed it. All but UK export controls can be tackled through trade negotiations.
  7. 7. 4. Priority non-EU markets and barriers Focused on markets without EU FTAs already in place… Tier 1 countries (large developed space nations) USA India China Tier 2 countries (mixture developed and developing space nations) Japan GCC Brazil Indonesia Others (developing space nations and LICs)
  8. 8. FTA Priorities: USA Opportunity The US is the largest producer and consumer of space-based products and services. US government procurement (through DoD and NASA) accounts for around 13% of global space revenue. US commercial space sector of similar size. The North American market (USA & Canada combined) accounts for 19% of total UK export revenues (c. £1bn p/a). Barriers No tariffs. Open commercial market, but extremely competitive Highly restrictive procurement – ‘Buy American’ – but reasons for optimism: Buy American waivers, special status as part of US National Technology and Industrial Base (implications?) Procurement is key: Achieving access for UK companies through an FTA is likely to require concerted bilateral diplomacy as part of trade and defence cooperation, along with R&D collaborations. Time for a campaign? Defensive interests: US highly competitive and subsidised by huge institutional procurement, effective cross-subsidisation. Any further UK opening must be contingent on the US opening its procurement to UK suppliers. We need Technology Safeguard Agreement (TSA) for launch programmes – opportunities/risks?
  9. 9. FTA Priorities: India Opportunity 6th largest space market (institutional). Largely self-sufficient, but does buy technologies and tier 1 and 2 products. Nascent commercial sector and significant potential for downstream applications – e.g. climate, agriculture, education, health. No accurate export data, but identified as priority country by industry through the Space Growth Partnership (SGP) and 6th largest export market in space survey. Barriers 10% tariffs. Restricted procurement– role of Indian Space Research Organisation (ISRO) and its commercial arm Antrix. Very high regulatory barriers affecting operators – ISRO again … incl. preference Indian satellites, need to provide capacity through ISRO (middle-man), licenses (media), import licenses for handsets, gateway infrastructure, in-flight connectivity But some positive signs, recently permitted 100% FDI in space sector, ISRO committed to increase commercial procurement, ‘downstream’ opportunities
  10. 10. FTA Priorities: China Opportunity China is the 3rd largest market (institutional). Increasingly sophisticated and self-sufficient, but keen to buy technology. Dominated by government. No accurate import/export data. From export survey, 3rd most important non-EU export market and 5th most important source of imports. Barriers Tariffs low (0% parts, 2-2.5% satellites). Weak IP protection and technology transfer requirements. Export controls are the major barrier for manufacturers Restrictive FDI rules: foreign equity restrictions, for telecoms need JV with State owned enterprise and high capital requirement (c.US150m) Restrictive type approval of terminals. Regulatory restrictions on operators – e.g. lease through ‘qualified domestic entity’, but some pragmatism.
  11. 11. Other markets Japan: 4th largest institutional market. Export survey: 2nd non-EU export market. Regulatory barriers and preference for domestic suppliers. Value of UK-Japan Satellite Procurement Agreement (like US one). GCC: 5% tariff on parts. Export controls. Security requirements. Brazil: opaque and burdensome regulations. Satcom operators face triple-tax (to domestic customer, to 2nd domestic customer, to consumer) Indonesia: opaque and unclear regulations. Security requirements (for govt. censorship) favours domestic suppliers. Possible equity restrictions …
  12. 12. 5. Example provisions in current FTAs Specific space-sector provisions in EU FTAs include: EU-South Korea FTA allows EU satellite broadcasters to operate directly cross-border into South Korea, thus avoiding the obligation to liaise with a Korean operator. EU-Canada CETA proffers access to procurement by the Canadian Space Agency, covering goods and services limited to those related to satellite communications, earth observation and global navigation satellite systems.
  13. 13. 6. Questions… Have we identified the right countries – e.g. focusing on new FTA countries, not lower tier markets etc? Have we identified the right barriers, what’s missing, what relative importance? What is the best way of engaging space industry on specific barriers as negotiations progress? Contact: philip.brown@ukspaceagency.bis.gsi.gov.uk

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