Free trade agreements – Six month progress report
Six months on from the EU-UK trade deal coming into force, what progress has been made with agreeing trade deals with the UK’s non-EU trading partners?
Before leaving the EU, the UK was party to approximately 40 trade deals that the EU had negotiated with more than 70 countries. Although the UK is now free to negotiate its own trading terms with these countries, to ensure continuity for UK businesses in the meantime, the UK has so far made agreements with 63 of these countries that replicate the terms of the EU trade agreements.
New trade deals
The biggest prize coveted by the UK following Brexit is the prospect of negotiating new free trade deals with established and growing economic powers such as Japan, China, India and the United States. Although a deal with Japan, estimated by the UK Government to boost trade between the two countries by as much as £15bn over the next 15 years, was signed in October 2020, the reality is that Covid-19 has pushed trade negotiations down the priority lists of major nations as they grapple with the pandemic.
A free trade agreement with Australia, heralded as being the UK’s first fully new trade deal since leaving the EU is scheduled to be completed in June 2021. This deal holds significance as it will be eagerly anticipated by other countries as a template for future deals of their own, including concessions the UK might be prepared to give in those negotiations. However, with a projected increase in GDP of only 0.02% for the UK on the Government’s own figures, in economic terms this deal is unlikely to get pulses racing at the UK Treasury.
India appears to be next in line for the start of negotiations later this year over a trading relationship with the world’s fifth-largest economy worth £23bn to the UK economy in 2019, with aspirations of doubling this figure by 2030. Of course, the jewel in the crown for the UK remains a free trade agreement with the United States. Although the opening five rounds of negotiations took place last year, these talks have been stymied more recently, not least because of the election of Joe Biden – a President who doesn’t share his predecessor’s appetite for prioritising a trade deal with the UK.
Despite its best efforts (which have been significantly disrupted by Covid-19), there is a long way to go before the UK has all of its new economic alliances in place. It will be longer still before we can assess how many of them will bear fruit and whether they justify the UK’s decision to leave the world’s largest trading bloc.