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New Year, New Negotiations: Free Trade Agreements in Focus


Following the Trade Secretary’s New Year visit to Turkey to kickstart negotiations on an enhanced free trade agreement and the government’s commitment to a year of developing ‘service-focused’ trade deals, it’s an ideal time to review the some of the key free trade agreements that the UK has signed and some of the benefits these can offer both British exporters and importers.   


What are free trade agreements?  

Free trade agreements are a set of rules for buying and selling goods and services between two or more countries. Crucially, they are created to help reduce restrictions on imports and exports, encouraging trade between the countries named in the agreement. Reduced restrictions typically take the form of reduced or zero import duty and quotas but can also include more streamlined customs formalities and legislation surrounding intellectual property and technical standards.  


Free Trade Agreements currently in force 

The UK currently holds over 70 trade agreements with a wide range of world economies. UK traders can benefit from these agreements with immediate effect, receiving incentives such as zero duty on imports and promising export opportunities and overseas market access because of the reciprocity typically built into trade agreements.  


UK-EU Trade and Cooperation Agreement 

Agreed with the EU following Brexit, the UK-EU Trade and Cooperation Agreement offers businesses much-needed flexibility with the UK’s biggest trading partner. Crucially, the agreement ensures that UK exports to the EU continue to attract a zero rate of duty. Unlike before Brexit, however, this tariff-free trade is subject to ‘Rules of origin’, meaning British exporters to the EU must prove that their goods either ‘wholly originate’ from the UK or have undergone ‘substantial’ transformation in the UK.


UK-Japan Comprehensive Economic Partnership Agreement (CEPA) 

As the first trade agreement signed by the UK following its EU exit, the UK-Japan Comprehensive Economic Partnership Agreement (CEPA) is significant. It secured zero duty rates on key exports from important UK sectors including agriculture, food and drink, clothing and textiles and manufacturing. More relaxed Rules of Origin, meanwhile, should make it easier for UK exports in these sectors to qualify for reduced rates of import duty. Provided they have undergone processing in the UK and are composed of at least 50% UK- origin material, garments, for instance, will qualify for tariff preferences.  

For more information on Japanese export opportunities for UK businesses see our Culture Class article.


UK-Australia Free Trade Agreement 

Most recently, an agreement with Australia was ratified. This deal is particularly favourable since it offers zero import duty on most UK exports from day one, again with flexible Rules of Origin for UK manufacturers. Under this agreement, for instance, UK-based clothing manufacturers can use imported material in their garments. Indeed, zero rates of duty on certain Australian imports could see the same UK manufacturers make cost-effective use of Australian merino wool and leather in their products.  

The full range of free trade agreements signed by the UK can be found here.


Free Trade Agreements to be formalised 

Though they have been agreed and signed, a number of trade agreements between the UK and other territories are currently awaiting scrutiny and subsequent ratification by Parliament. Once this process is complete, British businesses will be able to take advantage of the tariff breaks and quotas these agreements offer.   


CPTPP 

The passing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) into UK law is eagerly anticipated. It will offer duty-free trade on a wide range of exports to eleven key economies including Japan, Canada, Mexico, Vietnam, Singapore and Australia. The Bill needed to bring the deal into force was introduced to Parliament during the King’s Speech in November and is hoped to be formalised by the end of 2024. 


UK-Ukraine Digital Trade Agreement 

Expanding on the existing UK-Ukraine free trade agreement, the UK-Ukraine Digital Trade Agreement should come into force this year. It is hoped this agreement will support the recovery of Ukraine’s economy. Crucially, it should offer cheaper and easier trade between both countries following the adoption of digital trade systems and documents.  


Eastern and Southern African – UK Economic Partnership Agreement  

At present, the UK is still waiting for key counter-signatories to the Eastern and Southern African - UK Economic Partnership Agreement (ESA -UK EPA). Comoros, Madagascar and Zambia have not yet signed and formalised the agreement. These countries are, however, currently eligible for the Developing Countries Trading Scheme (DCTS), meaning imports from these countries attract nil rates of import duty.  


Free Trade Agreements still being negotiated 

The UK is currently in the process of negotiating new and enhanced trade agreements with a number of countries, including India, Mexico and, most recently, Turkey. Though it’s not clear when these talks will be concluded and what their outcome will be, it is expected that we will see positive progress from these trade talks in the coming year. Make sure you’re subscribed to our weekly newsletter, ‘The Week’s Trade Talks’, for the latest updates on trade agreements.  


Learn more 

Besides knowing which free trade agreements can benefit your business, it’s important that traders are able to understand and comply with the Rules of Origin set out in individual trade agreements in order to claim preferential treatment compliantly. 

If you’d like to learn more about how free trade agreements can benefit your business or complying with rules of origin set out in specific trade agreements, get in touch with our International Trade Specialists.

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