TradeLane

Free Trade Agreements Post-Brexit

Posted by Emma Turner

5/13/19 2:55 PM

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March and April were stressful for EU-based Trade Compliance professionals. The threat of a looming no-deal Brexit caused many of us to spend countless hours watching the news, waiting for concrete feedback on the future state of the UK-EU trading relationship. 

Unfortunately, there is still no clarity on the UK-EU relationship post-Brexit, though we do have more time to prepare as the UK’s departure from the EU has been delayed until October 31st, 2019.

The delay to Brexit has alleviated some immediate concerns regarding UK business and their ability to leverage EU Free Trade Agreements (FTAs). As a member of the EU, the UK has contributed to the EU’s FTA negotiations since joining the European Community in 1973. Outside of the EU, the UK will now not only have to negotiate its own new FTA’s independently but will also have to reach agreements with existing trade partners to maintain benefits from existing EU FTAs.

Over the last two years, the UK’s Department for International Trade has been negotiating with non-EU countries that have an FTA with the EU on a number of continuity agreements to prepare for the UK leaving the EU with or without a withdrawal agreement. These continuity agreements seek to preserve the UK’s benefits in duty reductions on imported and exported qualifying goods to and from these countries. The agreements are designed to generally replicate the EU trade agreements they replace but may differ slightly.

Companies utilizing these continuity agreements will need to consider accumulation and its impact on whether or not goods qualify under the continuity agreement. For example, products manufactured in the UK and exported to Chile may no longer qualify for duty-free treatment as they do under the EU-Chile free trade agreement, as rules of origin are met using components sourced within the EU 27.

The UK has currently signed the following continuity agreements to ensure minimal disruption to trading when the UK leaves the EU.

  • UK – CARIFORUM trade bloc
  • UK – Chile
  • UK – Eastern and Southern Africa
  • UK – Faroe Islands
  • UK – Iceland and Norway
  • UK – Israel
  • UK – Palestinian Authority
  • UK – Switzerland

Other notable trade agreements such as Japan, Korea, Mexico, Canada, and Turkey will not be automatically extended, and a continuity agreement is not yet in place.

Unsure of how Brexit will impact your use of FTA’s and overall duty liability? Contact Tradewin. We’re here to help.

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Written by Emma Turner

Before joining Tradewin in 2018, Emma worked for HM Revenue & Customs (HMRC) in the UK for 27 years; with the last 19 years being in the Customs & International Trade department. Emma brings extensive knowledge and experience in AEO, EU Law, Customs Procedures and Valuation. During her time in HMRC, Emma assessed over 80 companies through their AEO-C and AEO-S authorisations, including companies within manufacturing, freight and retail sectors. In addition, Emma also brings an insight on how customs authorities process applications and apply the law for approvals and authorisations within the Customs & International Trade sector. Emma is based in London, UK.