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Brexit: What trade deals has the UK done so far? Brexit: What trade deals has the UK done so far?
(12 days later)
Following Brexit, the UK is free to strike new deals for selling goods and services around the world. Following Brexit, the UK is free to strike new trade deals for selling goods and services around the world.
The government will also have to negotiate a new trade agreement with the EU. This will be a top priority, although France has warned the UK to expect a bruising battle. The government is also beginning negotiations for a new trade agreement with the European Union (EU).
So, what is free trade and what deals has the UK already done?So, what is free trade and what deals has the UK already done?
What international trade does the UK do?
Selling goods and services to other countries is central to the UK's economy and supports millions of jobs.
In 2018, the total value of UK trade was £1.3 trillion and almost half was with the EU.
UK trade in goods - the products that can be bought and sold - was worth £840bn in 2018. Of this, cars were the biggest single export at £33.3bn, followed by medicine and mechanical power generators at £24.7bn each.
But trade isn't all about goods. Services - the skills which a country provides - were worth almost £460bn in 2018. Examples include finance, insurance, accounting and law.
Companies that sell goods abroad will often provide after-sales services as well. For example, a company that sells or leases power generators may also profit from offering maintenance and repair contracts.
Management consulting and technical services were the biggest UK service exports in 2018, worth £81.3bn.
What is a free trade deal?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. It does this by reducing or eliminating tariffs - charges for trading across borders. 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 - these are limits on the amount of goods that can be traded. Trade agreements also aim to remove quotas - limits on the amount of goods that can be traded.
Trade can also be made simpler and faster if countries have the same rules, such as the colour of wires in plugs. The closer the rules are, the less likely that goods need to be checked. Trade can also be made simpler if countries have the same rules, such as the colour of wires in plugs. The closer the rules are, the less likely that goods need to be checked.
So why have tariffs and quotas at all?So why have tariffs and quotas at all?
While free trade agreements aim to boost trade, too many cheap imports could threaten a country's manufacturers.While free trade agreements aim to boost trade, too many cheap imports could threaten a country's manufacturers.
In order to protect local car makers, for example, a country could impose tariffs on vehicles from other parts of the world.In order to protect local car makers, for example, a country could impose tariffs on vehicles from other parts of the world.
Why does the UK need an EU trade deal?Why does the UK need an EU trade deal?
The UK will need an agreement with the EU to stop new tariffs and other trade barriers coming into force after the transition period ends on 31 December 2020.The UK will need an agreement with the EU to stop new tariffs and other trade barriers coming into force after the transition period ends on 31 December 2020.
During the transition period the UK will remain part of the EU's trading arrangements - the single market and the customs union. That means no tariffs, quotas or checks will be introduced.During the transition period the UK will remain part of the EU's trading arrangements - the single market and the customs union. That means no tariffs, quotas or checks will be introduced.
The point of the transition is to give both sides some breathing space while a trade deal is negotiated, and to give businesses time to get ready.The point of the transition is to give both sides some breathing space while a trade deal is negotiated, and to give businesses time to get ready.
If any trade deals are reached, either with the EU or other countries, they will not start until the transition period ends.If any trade deals are reached, either with the EU or other countries, they will not start until the transition period ends.
What about a Canada-style deal?What about a Canada-style deal?
Prime Minister Boris Johnson has spoken in favour of an EU trade agreement that builds on the deal that Canada has.Prime Minister Boris Johnson has spoken in favour of an EU trade agreement that builds on the deal that Canada has.
Tariffs on most Canadian goods, such as machine parts, have been eliminated. However, there are some additional checks, such as customs and VAT.Tariffs on most Canadian goods, such as machine parts, have been eliminated. However, there are some additional checks, such as customs and VAT.
Services, like banking, are much more restricted.Services, like banking, are much more restricted.
The financial sector is important to the UK economy - so getting a deal in this area will be a high priority. The financial sector is important to the UK economy - so getting a deal in this area will be a priority.
How easy will it be to negotiate a UK-EU trade deal?How easy will it be to negotiate a UK-EU trade deal?
Neither side wants tariffs and quotas - so that part of the trade deal could be straightforward.Neither side wants tariffs and quotas - so that part of the trade deal could be straightforward.
But getting agreement around rules and regulations could be much tougher.But getting agreement around rules and regulations could be much tougher.
The UK and the EU currently have the same rules - from the financial help companies are allowed, to the way wine is labelled. The UK and the EU currently share the same rules in areas like workers' rights, competition and environmental policy - they're known as level playing field rules.
Moving away from some of these rules might make it easier for the UK to secure trade deals with other countries. But in a recent document outlining the UK's aims, the government said: "we will not agree to any obligations for our laws to be aligned with the EU's".
But the EU wants the UK's rules to remain similar, to prevent its companies gaining an advantage. However, the EU insists that the UK must stick to the rules - so UK businesses don't gain an advantage.
Even if a trade deal is agreed, it will not eliminate all checks because the EU requires certain goods (such as food) from non-EU countries to be checked.Even if a trade deal is agreed, it will not eliminate all checks because the EU requires certain goods (such as food) from non-EU countries to be checked.
Time is also a problem. The transition is due to end on 31 December, and formal trade talks are not likely to start until early March.
There are several things you need to think about when you begin negotiating a trade agreement.
You need to be clear about what you want to achieve. Trade deals always involve trade-offs between different sectors of the economy.
So politicians need to ensure their negotiators know what the priorities are, and what a good deal would look like.
It's also important to know what the other side wants to achieve.
A deal has to be acceptable to both sides.
But the stronger party in a trade negotiation usually gets more of what it wants.
It is also a good idea to think about what will be acceptable to those who have to implement an agreement, and live with the consequences.
That means consulting with industry and business, but also with anyone else who has a stake in the system - consumers, or farmers, or trades unions.
And some of that debate should be had in public.
If everything gets cooked up behind the scenes, the chances of unpleasant surprises and subsequent public protests are bound to increase.
What happens if UK-EU trade talks fail?What happens if UK-EU trade talks fail?
If negotiators fail to reach a deal, the UK faces the prospect of trading with the EU under the basic rules set by the World Trade Organization (WTO).If negotiators fail to reach a deal, the UK faces the prospect of trading with the EU under the basic rules set by the World Trade Organization (WTO).
If the UK had to trade under WTO rules, tariffs would be applied to most goods which UK businesses send to the EU. This would make UK goods more expensive and harder to sell in Europe.If the UK had to trade under WTO rules, tariffs would be applied to most goods which UK businesses send to the EU. This would make UK goods more expensive and harder to sell in Europe.
Having WTO terms would also mean full border checks for goods, which could cause traffic bottlenecks at ports.Having WTO terms would also mean full border checks for goods, which could cause traffic bottlenecks at ports.
And the UK service industry would lose its guaranteed access. Qualifications would no longer be recognised and it would be much harder for workers to travel to the EU.And the UK service industry would lose its guaranteed access. Qualifications would no longer be recognised and it would be much harder for workers to travel to the EU.
This would affect everyone from bankers and lawyers, to musicians and chefs.This would affect everyone from bankers and lawyers, to musicians and chefs.
What trade deals has the UK done so far?What trade deals has the UK done so far?
While it was an EU member, the UK was automatically part of around 40 trade deals the EU had struck with more than 70 countries.While it was an EU member, the UK was automatically part of around 40 trade deals the EU had struck with more than 70 countries.
In the run-up to Brexit, the UK was given permission to copy these agreements. So far, the UK has managed to agree 20 such deals, covering 50 countries or territories. These represent just over 8% of total UK trade. The UK has been trying to copy these arrangements. So far, 19 such deals, covering 50 countries or territories, have been rolled over. These deals represent just over 8% of total UK trade.
The following deals are expected to take effect at the end of the transition period, according to the Department for International Trade:The following deals are expected to take effect at the end of the transition period, according to the Department for International Trade:
The government says it is still in negotiation with a further 16 countries, including Canada and Mexico.
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