• Following the United Kingdom’s withdrawal from the EU, the British government has made a number of agreements with other countries.
  • These new accords, ranging from the UK’s financial settlement with Switzerland to several free trade agreements, assure the future of British trade with the rest of the globe.

22-11-2022

The UK government has finalised a number of international accords that will assist establish Britain as a prominent financial centre now that it has exited the European Union.

One example is the agreement signed between the United Kingdom and Switzerland, which paves the way for an ambitious financial services agreement.

There have also been agreements with a number of other sovereign states, and other UK free trade agreements (FTAs) are now being negotiated.

This article outlines the major aspects of these agreements and what they aspire to achieve, as well as how long it takes to negotiate free trade accords.

Along with obtaining agreements with non-European countries, the UK has finally struck a post-Brexit trade agreement with the EU as a result of prolonged trade negotiations that continued up until the end of the Brexit transition period on March 31st, 2020.

WHY HAS THE UK NEGOTIATED BILATERAL SERVICES AGREEMENTS?

Brexit’s impact on UK citizens will be seen in a variety of ways, with economic factors being one of the most crucial. The UK has negotiated new foreign agreements to ensure the UK economy can thrive outside of the European Union.

The relevance of financial services agreements was highlighted by the UK Chancellor of the Exchequer, Rishi Sunak, who stated:

“The financial sector in the United Kingdom is critical to the development of the British economy, producing jobs, driving regional growth, and paying taxes that pay for critical public services.”

The Chancellor went on to say that, with Brexit, the country could now move forward in its own manner, based on UK values as a financial centre.

COUNTRIES THAT THE UK HAS MADE DEALS WITH

Following the withdrawal agreement between the EU and the United Kingdom of Great Britain and Northern Ireland, the United Kingdom of Great Britain and Northern Ireland needed to secure trade deals and financial agreements with other countries in order to secure future trading partners.

So far, the United Kingdom has signed fully ratified trade treaties with the following countries, which will take effect on January 1, 2021:

A number of other nations, including Singapore, Turkey, and Vietnam, have signed but not yet ratified trade treaties with the United Kingdom. Provisional application or bridging procedures, an alternate means of assuring trade continuity until a contract can be fully ratified, have been put in place in several circumstances to assure trade continuity.

Furthermore, the UK has signed trade treaties with several countries that have yet to take force, including Canada, Jordan, and Mexico. These are set to take effect in early 2021.

UK-EU TRADE DEAL AFTER BREXIT

After several months of negotiations and numerous missed deadlines, there was significant doubt in the run-up to December 31st, 2020, over whether the EU and UK could achieve an agreement on the parameters for their future commercial relationship.

However, UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed to continue negotiations, and a deal was reached just hours before the Brexit transition period expired.

The UK-EU trade agreement allows the country to continue doing business with its largest and closest trading partner without imposing additional tariffs and quotas, allowing the value of goods exchanged to remain relatively constant.

However, in order for commerce to continue, firms in the UK and the EU will need to adjust to new logistical, legal, and administrative hurdles, including as an increase in paperwork and customs checks.

Additionally, several products, including a variety of animal products, won’t be permitted to be exported to the European Union since the United Kingdom will stop adhering to EU product standard laws.

Finally, even while additional tariffs are not currently in effect under the UK-EU trade agreement, they might be in the future if the UK decides to depart too far from EU norms in areas like worker rights and environmental protection, or the other way around.

THE UK AND THE US HAVE SIGNED A CUSTOMS AGREEMENT

Jesse Norman, the UK Treasury’s finance secretary, and US Ambassador Robert Wood Johnson signed a Customs Assistance Agreement (CAA) between the two countries to ensure continued smooth trade after Brexit’s departure from the EU.

According to Norman, the bilateral customs agreement will also allow the two countries to continue their collaboration in combating customs fraud by exchanging data among UK and US customs officials, and “provides the legal framework for programmes to simplify trade flows for importers and exporters.”

Wood Johnson went on to say that the agreement allows the UK and the US to continue working together “to stop criminals trafficking illegal goods across the Atlantic – from guns to drugs, illegal wildlife products, and even counterfeit medicine” and “to keep countries in both our countries safe.”

The agreement also serves as the foundation for the Authorised Economic Operator Mutual Recognition Arrangement, a globally recognised quality mark that enables enterprises to benefit from customs benefits and attests to their compliance with global customs standards.

THE UK AND VIETNAM’S FREE-TRADE DEAL

The UK negotiated a free-trade agreement with Vietnam in the closing weeks before the Brexit deadline.

The two countries’ free-trade agreement will save Vietnam £114 million ($151 million) in tariffs on exports by the time the accord is completely implemented. The United Kingdom is expected to save over £36 million on exports.

Since August 2018, negotiations have been underway. The new agreement took effect on January 1, 2021, when Vietnam’s previous agreement with the EU no longer applied to the United Kingdom.

Because the UK and Vietnam are significant commercial partners, establishing a free-trade agreement after Brexit was advantageous to both parties. The third-largest trading partner in Europe for Vietnam in 2019 was the UK, with exports to that country totaling more than 4.5 billion pounds. On the other hand, the UK shipped to Vietnam items valued over 600 million pounds.

According to Liz Truss, the UK’s Secretary of State for International Trade, the agreement with Vietnam would also:

“Open the door for new digital alliances and joining the TPP… this will play to the U.K.’s strengths, as we become a hub for technology and digital trade with influence far beyond our shores, defining our role in the world for decades to come.

THE UK-SWITZERLAND BILATERAL FINANCIAL AGREEMENT

On June 30, 2020, British Chancellor of the Exchequer Rishi Sunak and his Swiss counterpart reached an agreement to negotiate an international accord on financial services. The agreement makes it easier to provide cross-border financial services.

The goal of the UK’s bilateral financial services agreement with Switzerland is to increase collaboration and trust by making cross-border access to the Swiss market simpler for the UK finance industry, and vice versa.

This outcome-based mutual recognition agreement strengthens collaboration between the United Kingdom and Switzerland by lowering the costs and barriers to cross-border access for UK financing.

There will be a special emphasis on the following financial services:

  • Insurance
  • Banking
  • Asset management
  • Capital markets

The recent COVID-19 pandemic has also contributed to the creation of the bilateral financial services agreement. Given the impending economic difficulties and the easing of the coronavirus travel restrictions in Europe, such promises are deemed to be especially crucial.

A Services Mobility Agreement was also struck between the UK and Switzerland on December 4th, 2020, and it will expand upon the trade agreement that was previously reached.

This will maintain the freedom of movement for professionals and service providers from the UK to work in Switzerland for up to 90 days without having to obtain a work permit or pass an economic interest test, supporting trade worth over £37 billion in sectors like legal services, the creative industries, and the tech sector.

UK-KENYA ECONOMIC PARTNERSHIP AGREEMENT FINALISED

The United Kingdom and the Republic of Kenya have signed an Economic Partnership Agreement (EPA) to foster increased trade and investment between the two countries.

The agreement means that the UK has agreed to giving immediate duty-free, quota-free access to Kenyan imports, while Kenya has committed to gradual tariff liberalisation.

The EPA further requires that some locally sensitive Kenyan items be excluded from tariff liberalisation for the UK.

THE UK AND TURKEY AGREE ON FREE TRADE DEAL

The UK’s trading relationship with Turkey was previously governed by the EU-Turkey Customs Union, as well as agreements on agriculture, coal, and steel trade, but this has changed following the signing of a traditional free trade agreement between the UK and Turkey.

The UK-Turkey agreement covers trade in manufactured goods, agriculture, and services, as well as customs and trade facilitation, intellectual property, and technical trade obstacles.

Trade agreements between the United Kingdom and Turkey are significant because the United Kingdom is Turkey’s second largest trading partner. According to Turkish Foreign Minister Mevlut Cavusoglu, a $20 billion post-Brexit bilateral trade target has already been set.

THE UK AND CANADA AGREE ON PROVISIONAL TRADE DEAL

The United Kingdom and Canada have negotiated a trade agreement known as a “rollover.” This will preserve trade between the two countries now that the UK has withdrawn totally from the EU.

The Canadian and British governments have announced the “Canada-UK Trade Continuity Agreement,” which will be a temporary arrangement to limit the negative impact of Brexit on both countries’ economies until a full trade agreement can be reached.

According to the UK government, the rollover agreement “secures confidence for UK businesses trading goods and services with Canada valued around $35 billion (£20 billion).” Both Canada’s Prime Minister Justin Trudeau and the United Kingdom’s Prime Minister Boris Johnson praised the move as beneficial to both countries.

The two governments have agreed a Memorandum of Understanding (MoU) to maintain continuity of trading arrangements in crucial areas until the TCA takes effect in early 2021.

THE JAPAN-UK COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT (CEPA)

A deal that removed trade barriers between the two major economies of the UK and Japan was reached.

Even though some have argued that the Japan-UK Comprehensive Economic Partnership Agreement (EPA) benefits Tokyo more than London, it still represented an important development for the UK’s post-Brexit relations.

The deal will offer some assurances to Japanese business interests in the UK after the uncertainties of Brexit left many contemplating a move to the EU.

ECONOMIC AND COMMERCIAL ATTACHÉ AT THE LUXEMBOURG EMBASSY IN LONDON

The Luxembourg Chamber of Commerce and the Ministry of Foreign and European Affairs reached an agreement to establish a position for an economic and commercial attaché at the Luxembourg Embassy in London.

Christophe Brighi has taken up the attaché position and is now in charge of fostering trade ties between the two countries.

Given that the UK is one of Luxembourg’s most significant trading partners for both goods and services, the attaché position was established to help bolster trade relations after Brexit. The attachél’s duties include assisting Luxembourg firms that want to start up or expand their business operations in the United Kingdom.

There are also proposals to establish a Business Club in the United Kingdom to provide a venue for business communities to interact and foster contacts between the United Kingdom and Luxembourg.

UK TRADE DEALS SIGNED WITH MEXICO

Although trade agreements between the UK and Mexico have been reached, they did not take effect on January 1, 2021, much like the case with Canada.

The TCA is anticipated to take effect in early 2021, though the length of the free trade negotiations with Mexico has not yet been determined.

Until the Trade Continuity Agreement goes into effect, the UK has agreed to permit preferential tariff rates to be applied to goods imported into the UK from Mexico.

Mexico has also stated that it will put in place a tariff rebate programme that will enable any businesses to request a refund on any excess tariffs they may have to pay prior to the TCA taking effect.

FINANCIAL SERVICES AGREEMENT SIGNED BETWEEN BRAZIL AND THE UK

Following the fourth Economic and Financial Dialogue (EFD) between the two nations on December 10, 2020, which was attended by the UK Chancellor, Rishi Sunak, and the Brazilian Economy Minister, Paulo Guedes, as well as a number of central bank governors and the heads of financial sector regulators, a financial services agreement between the UK and Brazil was signed.

The robust economic ties between the UK and Brazil can continue in the future thanks to agreements that have already been reached on financial services, taxation, sustainable growth, and investment opportunities for UK businesses.

The representatives of the two nations agreed to keep working together to expand market access, support initiatives for clean growth and green finance, and combat environmental problems and climate change.