Brexit: Future Free Trade Agreements and Global Trade Arrangements

At the end of the transition period the UK will no longer be covered by EU-third country trade agreements.

In addition to agreeing a future trade deal with the EU, the UK also needs to secure continued trade arrangements and preferential access to key markets around the world.

The priorities for members across our sectors in future trade agreements are regulatory alignment, tariff free access and customs agreements to facilitate as frictionless trade as possible.

The UK Government has worked with key international partners to ensure Bilateral Aviation Safety Agreements (BASAs) and/or working arrangements are in place at the end of the transition period. Information on BASAs with USA, Brazil & Canada, and Working Arrangements agreed with Japan can be found on the CAA website.

UK Global Tariff (UKGT)

At the end of the transition period the UK will no longer apply the EU’s Common External Tariff. This is to be replaced by the UK Global Tariff will apply to all goods imported into the UK from 1 January 2021 unless an exception applies.

Exceptions can include:

  • an arrangement under the Generalised Scheme of Preference
  • a trade arrangement between the UK and another country
  • a tariff suspension of relief in place

For interest to ADS members there has been significant liberalisation of tariffs related to parts of aerospace engines, aircraft, and other associated parts. Members with specific interest in tariff lines should use the Check UK trade tariffs from 1 January 2021 tool.

The International Trade Secretary has also revamped the Board of Trade which will aim to produce a series of reports looking at the vital issues facing international trade and Britain at the moment. The board will also generate advice and providing expertise to influence government trade policy. The reports will be published quarterly from 2021 on key trade issues and interests for the UK and ADS will keep members update on relevant issues.

UK Continuity trade agreements with non-EU countries

After 31 December 2020, EU third country trade agreements will not apply to the UK.

The UK is seeking to reproduce the effects of existing EU agreements to ensure the continuity of trading arrangements for UK businesses.

Trade agreements that have been signed and will come into effect at the end of transition in January 2021

Ongoing discussions for UK future trade agreements

The Government is negotiating with a number of other key markets including Canada, Mexico, Egypt and Turkey. Further details on the agreements that are still in discussion can be found on gov.uk. If there are EU agreements in place that the UK cannot replicate, then trade will take place under World Trade Organization (WTO) terms at the end of transition.

On Friday 23rd October 2020 the UK signed a Comprehensive Economic Partnership Agreement with Japan. This agreement is based on, but goes beyond, the existing EU agreement. Details can be found on gov.uk with the full legal text now available.

The UK has also launched negotiations for new free trade agreements with some key trade partners which are currently in various stages of discussion:

The UK-US trade negotiations concluded the fourth round in September 2020 with some tariff offers made which is considered progress, but may not be relevant for our sectors.

Negotiations for the UK-Australia FTA were launched on 17 June 2020 in a joint statement and the UK Government has also published its negotiating mandate for a future trade agreement with Australia, following response to a public consultation held back in Autumn 2018. Talks are ongoing

Round two of trade negotiations between the UK-New Zealand are underway of 19 October, following Jacinda Ardern’s landslide victory in the General Election.

More information on the UKS Free Trade objectives can be found as they develop on gov.uk.

How can businesses prepare for these changes?

Businesses need to be aware of any potential exposures arising from the new UKGT and the new trading arrangements that the UK has agreed.

As discussions continue with other countries that are vital to the trade of ADS members. We continue to follow the progress of the Department for International Trade’s negotiations and will continue to update members through the ADS Brexit-hub.