Now we have left the EU, free trade negotiations need to be agreed by the end of the Transition Period 31st December 2020. More trade is essential if the UK is to overcome the unprecedented challenges posed by Covid-19. New Free Trade Agreements will be an important factor in facing that economic challenge, providing new opportunities for businesses and entrepreneurs who have faced significant challenges in this difficult period.
Our Department for International Trade appointed Champions Matt Smith and Barry Broughton are involved with the DIT programme. Later this year, the Department for International Trade will publish a new Export Strategy which will build on the 2018 Export Strategy, recognising that the economic environment and our trading relationships have changed.
Publication of UK Global Tariff
Earlier this month the UK Government announced its new tariff regime, the UK Global Tariff (UKGT). This will replace the EU’s Common External Tariff on 1 January 2021 at the end of the transition period. A Most Favoured Nation tariff schedule sets out the duty (tax) on imports coming into the UK from countries we do not have a trade agreement or other preferential arrangements with.
The new tariff has been tailored to the needs of the UK economy. It will support the country, by making it easier and cheaper for businesses to import goods from overseas from 1 January 2021.
Following Brexit, the UK is free to strike new trade deals for selling goods and services around the world.
So, what is free trade and what deals has the UK already done?
What is a free trade deal?
A free trade deal aims to encourage trade – usually in goods but sometimes in services too – by making it cheaper. This is often achieved by reducing or eliminating tariffs – charges for trading across borders.
Trade agreements also aim to remove quotas – limits on the amount of goods that can be traded.
What deals have already been done?
Worldwide trade negotiations have been taking place, 19 deals, covering 50 countries or territories, have been rolled over and are ready to begin on 1st January 2021* (full list below)
UK objectives with Japan have been confirmed and a trade deal is imminent; Deals for certain commodities have been agreed with Brazil. China remains a major UK export market accounting for £31.4 billion annually, so we are watching negotiations closely.
As the UK’s largest trade partner we focus here on the FTA with the US, it is anticipated this will help create opportunities for UK businesses, provide better jobs and boost the economy in every part of the country.
In May 2020 over 200 negotiators from the UK and US began their first round of negotiations, with the second virtual round of UK-US negotiations taking place in 2 weeks. Trade in goods between the US and UK was valued at $127.1 billion in 2018, with the two sides roughly in balance, while the services trade topped $134.8 billion. Britain is the seventh-largest U.S. goods trading partner.
These negotiations are proceeding at an accelerated pace. Negotiating teams will continue their work and meet virtually on a rolling basis, with meetings continuing throughout June and beyond.
Extensive discussions have taken place in nearly 30 different negotiating groups covering the following areas:
- Small and Medium Enterprises (SMEs)
- Legal Group – Disputes
- Trade Remedies
- Rules of Origin
- Legal Group – Core Text
- Technical Barriers to Trade
- Sectoral Annexes
- Cross cutting services
- Market Access for Goods, Overarching and Industrial Goods
- Good Regulatory Practice (GRP)
- Financial Services
- Sustainability, Environment and Labour
- General Coordination
- Market Access for Goods, Agriculture
- State Owned Enterprises
- Services Sectors
- Intellectual Property
- Sustainability, Anti-Corruption
- Market Access for Goods, Textiles
- Sanitary and Phytosanitary (SPS)
The meetings have been positive and constructive, both sides recognise the unprecedented circumstances in which these negotiations took place, with significant emphasis placed on supporting the post-Covid economic recovery.
A number of areas showed particular progress, including where both teams identified a mutually high ambition for services, investment and digital trade, among other areas.
We will keep an eye on progress and the implications for the global movement of goods in 2021.
Contact us if you would like to discuss any of your freight requirements on +44 (0)1622 237 979 email@example.com
*The following 19 deals are already rolled over and expected to take effect at the end of the transition period, these represent just over 8% of total UK trade:
- Kosovo (£8m of trade in 2018)
- Jordan (£448m in 2018)
- Morocco (£2.5bn in 2018)
- Georgia (£123m in 2018)
- Southern African nations (£10.2bn in 2018)
- Tunisia (£542m in 2018)
- Lebanon (£762m in 2018)
- South Korea (£14.8bn in 2018)
- Central America (£1.1bn in 2018)
- Andean countries (£3.4bn in 2018)
- Caribbean countries (£3.7bn in 2018)
- Pacific Islands (£163m in 2018)
- Liechtenstein (£146m in 2018)
- Israel (£4.2bn in 2018)
- Palestinian Authority (£41m in 2018)
- Switzerland (£32.4bn in 2018)
- The Faroe Islands (£252m in 2018)
- Eastern and Southern Africa (£2bn in 2018)
- Chile (£2bn in 2018)
The government is still in negotiation with a further 16 countries, including Canada and Mexico.