Many Trade Deal Negotiations for the UK. What's the Status?
On December 31st 2020 the United Kingdom will leave the European Union and will no longer be part of the Customs Union. This means the United Kingdom will also no longer be part of any trade deal that the European Union has. There are around 70 trade deals that the United Kingdom was a part of as an EU member state. These 70 deals now have to be renegotiated.
In the past updates around Brexit we have mainly focused on the negotiations with the European Union. This time we will focus on the main deals the United Kingdom is negotiating next to the negotiation with the EU. Quotes come from a recent article on Bloomberg.
The United States
The United States is the United Kingdom’s biggest trading partner. In 2019 the trade between the two countries was worth around $270 billion. There are several penalty tariffs in place in the United States for British goods like aluminium, steel, and Scotch whiskey. These were implemented by the United States as a response to the subsidies that Airbus got from the European Union. Now that the United Kingdom has left the European Union, they are hoping to get these tariffs lifted.
A key obstacle to overcome will be disagreement over agriculture: The U.S. sees greater market access for its food exports as a big prize, whereas the British government is under pressure not to allow products like chlorine-washed chicken and hormone-treated beef into the country. It may also be difficult to finalize a comprehensive agreement before the U.S. presidential election in November.
The EU has a provisional free trade deal in place with Canada, which the United Kingdom would like to continue after Brexit is final.
Tariffs have proved a major sticking point. As part of its preparations for a no-deal Brexit, the U.K. last year slashed its global tariff schedule, leaving little incentive for Canada to maintain an FTA with Britain. The U.K. has recently revised those no-deal tariffs, however, which could give it more bargaining power in the negotiations.
For Canada, the main priorities are increasing trade in services and building on existing arrangements for allowing professionals to move more freely between the two countries.
The United Kingdom and Japan are negotiating a deal based on the deal that Japan has in place with the European Union. While this gives both sides a solid starting point, there is much to be done and not much time. Japan needs to have reached an agreement before the end of this month, to get it ratified by its parliament before the end of the year.
Japan seemed keen to make changes from the existing EU agreement in areas like agriculture. The EU-Japan agreement also phases out tariffs on cars over time, and Japan will likely seek to eliminate those levies immediately in any agreement with the U.K. Renegotiating trade in services will also be important to Britain. With the accelerated time frame for talks, though, the agreement will likely be heavily based on the existing EU-Japan deal, with a few areas having moderate tweaks.
There is not much to gain for the United Kingdom from a trade agreement with Australia. Australia is the United Kingdom’s 20th largest trading partner. Next to that Australia has very low tariffs already on most products.
The U.K. sees the main potential benefit in services, which comprise 60% of its exports to Australia, and has said it wants to secure easier access for professionals such as accountants, auditors, engineers and architects.
Negotiations started in June, and Australia has indicated it would like to complete a deal by the end of 2020. Britain also sees the talks as a step toward membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a pact covering 11 nations including Canada, Peru, Singapore and Vietnam.
A deal with New Zealand, Britain’s 53rd largest trading partner globally, is expected to have a negligible effect on the U.K.’s GDP, according to a U.K. government analysis. Northern Ireland may even be negatively affected by a deal, the government’s modelling suggests, because of greater competition from New Zealand-based farmers. The talks started in mid-June.
Read more on the United Kingdom’s negotiations in this article on Bloomberg.
Trade Agreements Worldwide
Customs Support closely follows the news on trade agreements across the globe. We publish a monthly round-up of news on negotiations, finalizations, and ratifications of trade agreements around the world. You can find the latest edition here.