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Brexit No Trade Agreement

April 8th, 2021

The UK and EU negotiating teams are likely to be in the process of reaching a trade deal after Brexit, with several officials saying a deal could be reached by the end of the week. If the UK leaves the EU without these agreements being in force, trade with these countries will take place in accordance with WTO rules. To date, more than 20 of these existing agreements, covering 50 countries or territories, have been shaken up with the exception of the I.V. and will begin on 1 January 2021. Based on 2018 figures, this represents about 8% of total trade in the UK. But it is clear that new agreements with some countries will not be ready in time. The WTO is the place where countries negotiate international trade rules – there are 164 members and if they do not have free trade agreements between them, they operate under “WTO rules.” In the absence of a trade agreement, negotiations are likely to end in a dilemma and neither side would be inclined to continue negotiating administrative pacts for financial services. The United Kingdom has joined the General Agreement on Public Procurement (GPA), an international agreement that allows companies based in GPA signatories to access other MPA contracts. Access is not at the same level as access to contracts currently granted under EU rules. Non-tariff barriers include product standards, safety rules and food and animal hygiene controls. Some of them will be candidates with or without an agreement, but companies that trade with Europe fear that no agreement, in particular, will cause long delays.

Britain is in talks to continue its participation in these agreements and has so far concluded continuity agreements with a dozen countries. Talks between the EU and the UK are under way to reach a post-Brexit free trade agreement before the end of the year. The UK is expected to conclude trade deals with other third parties (including the EU) within two to ten years of Brexit. This may also include countries with which the EU does not have current trade agreements (including the United States, Australia and New Zealand). If the UK wishes, it may be able to join trading blocs such as EFTA, CPTPP for similar periods. In the area of asylum, the UK could seek bilateral agreements with some EU countries to deport asylum seekers. France, Ireland and Greece would probably be at the top of the list, but an end to the non-agreement could limit the appetite for these agreements. Update to show that the UK has in principle reached a trade agreement with the Customs Union for Southern Africa and the trade bloc of Mozambique. A free trade agreement will indirectly have a positive impact on financial services, as it would increase the sense of finding a constructive solution to other problems, such as data flows, trading in equities and derivatives, and the results of the equivalence of the investment bank.

Both sides have tried to reach a new free trade agreement that would get rid of tariffs and quotas, but not a new border bureaucracy. But time is running out. The UK, for example, could not reduce tariffs on the EU alone in order to keep trade going. It should treat the rest of the world in the same way, which could result in cheap imports flooding the UK economy and harming domestic businesses. No new trade agreement can begin until the transition is over. On 23 October, the UK government signed a new trade agreement with Japan, which means that 99% of UK exports will be tariff-free. Updated, South Africa having signed the UK-SACU-M trade agreement. A free trade agreement aims to promote trade – usually with goods, but also sometimes with services – by making it cheaper.

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