What are the prospects for more trade deals post-Brexit?

Trade deals are vital to the UK’s hopes of maintaining and increasing its prosperity post-Brexit. So what are the prospects for 2021?

After the success in reaching a trade deal with the EU, the UK has begun the process of securing deals around the world. The biggest goal, of course, is a deal with the United States, as the UK’s largest single trading partner at 15% of total trade in 2018, according to government figures.

How a deal is reached

Trade agreements aim to eliminate tariffs and reduce other trade barriers coming into force. Many also aim to cover both goods and services.

They focus on improving on WTO rules by removing quotas and applying common rules around certain goods and services.

Trade deals in place

While it was an EU member, the UK was automatically part of around 40 trade deals, which the EU had with more than 70 countries. In 2018, these deals represented about 11% of total UK trade.

There are more than 30 trade deals that the Government has already struck, covering more than 50 countries, effective from 1 January 2021. These deals account for around 8% of the UK’s total trade, based on 2018 figures.

In October, the UK confirmed an agreement with Japan, meaning 99% of UK exports there will be tariff-free. The total value of UK-Japanese trade was £29.1bn in 2018, according to government figures. Similar deals have also been struck with Singapore and Vietnam.

Another significant deal is that struck with Switzerland on services. Under the UK-Swiss deal, UK professionals and other service workers will continue travelling freely to Switzerland and work visa-free for up to 90 days per year.

Possible trading partners

While several deals have been struck globally already, it is evident that many more are still outstanding and are likely to be concluded during 2021 and beyond. More talks still will be initiated as the UK builds its network of deals.

Further countries the government currently  has ongoing trade discussions with include:

  • Albania
  • Algeria
  • Bosnia & Herzegovina
  • Ghana
  • Montenegro
  • Serbia

WTO rules and what they mean

Trade with non-EU countries will take place under World Trade Organisation (WTO) rules, unless bilateral trade deals are made. Under WTO rules, tariffs are applied to most goods that UK businesses export. This would make UK goods more expensive and harder to sell. The UK could also do this to imported goods, if it chose to.

Having WTO rules also means full border checks for goods, which could cause delays at ports. 

US Trade deal

A trade deal with America is the most important, both politically and economically.

President Joe Biden’s new administration has said that trade deals will take second place to investing in the US economy. Liz Truss, UK trade secretary, remains confident a good deal is possible, but perhaps not in 2021. “We’ve agreed the majority of text in the majority of chapters,” Truss said in an interview with Bloomberg. “The important thing for me is it’s a good deal, rather than it gets done quickly.”

“It’s in both the interests of the U.S. and the U.K., as the global economy seeks to recover from coronavirus, that we’re putting our money where our mouth is and delivering more trade,” Truss said. “The United Kingdom is never going to be forced by some deadline into a deal that doesn’t suit all parts of our country.”

AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.

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