During the transition period, the UK has been covered by EU-third country trade agreements, giving trade access to around 40 non-EU countries. Once the transition period ends, these EU trade agreements will no longer apply. The UK is currently seeking to reproduce the effects of these agreements to ensure continuity of trading. But, from 1 January 2021, the UK will trade on WTO terms with any WTO member state it has not secured an agreement with. The guidance on this page represents the information currently available from government. The CBI will update this page as new information is released.
Key challenges for business
Where has the government been unable to ‘roll over’ the EU trade deals into new UK trade agreements?
The government has secured roll-over agreements with a number of key markets for CBI members including Switzerland, Norway and South Korea. However, the government has yet to conclude negotiations with a number of other key markets including Japan, Canada, Mexico, Singapore, Egypt and Turkey. Turkey is a special case because its trade relations are governed by its customs union with the EU. Sectors that are vulnerable to high tariffs include automotive and food and drink. For example, vehicles to Mexico would face a tariff of 20-25%, car components to Turkey 2-4% and Scotch whiskey to Morocco 49%. The UK would also lose preferential trade terms such as labour mobility with Canada. You can view a list of countries with roll-over agreements and countries where the UK is still negotiating, and tariff rates for individual countries. The WTO also provides an alternative source of information which also covers services are the country pages on the WTO website, such as Mexico.
Does rolling over these trade deals mean that everything will be the same from Day 1?
Businesses should not assume that a deal being ‘rolled over’ means that there will not be changes post-Brexit. For example, the agreement with the EEA countries of Norway, Lichtenstein and Iceland is a very basic goods-only agreement. So services firms would see new restrictions, such as having to obtain licenses to operate in those markets or obtaining visas to travel there. With Switzerland, only three of 20 mutual recognition agreements would be transitioned, meaning double testing requirements in many cases. And with South Korea, a three-year review clause on rules of origin as well as changes in tariff rate quotas will be applied.
How can businesses prepare for these changes?
It would be sensible to analyse exposure to new tariffs on exports and different trade terms around the world. Some CBI members have re-routed supply chains to avoid new tariffs. Services firms should also look at where new licenses may be required in EU third countries, although in some cases existing licenses are sufficient. Companies will need to check delivery timings for goods in case goods in transit arrive after a change in tariff regimes. Finally, keeping up to date with the Department for International Trade’s progress on negotiations would be helpful and the CBI will continue to update members through our UK post-Brexit transition guidance.