Trade negotiation between the UK and the EU
Trade negotiations between the UK and the EU took place after Brexit between the United Kingdom and the European Union for a trade agreement to make trade easier than it might have been without such a deal. The deal would cover both tariff and non-tariff barriers to trade. The negotiations formally ended on 24 December 2020 with an agreement approved in principle by the UK Prime Minister (on behalf of the UK) and (on behalf the EU) the President of the European Commission.[1] The result was the EU–UK Trade and Cooperation Agreement (TCA).
This article is about trade negotiations between the United Kingdom and the European Union. For the resulting agreement, see EU–UK Trade and Cooperation Agreement.
Having left the European Union on 31 January 2020 with an eleven-month transition period, the United Kingdom left the European Single Market and European Union Customs Union with effect from 1 January 2021.[2]
During the Brexit negotiations in 2017 (of the withdrawal agreement), the two sides agreed that trade negotiation could only start after the UK's withdrawal, because such negotiations could not happen when the UK still has a veto right within the EU.[3] For this and other reasons, a transition period after Brexit day was defined to allow those negotiations. The transition period started on 1 February 2020, in accordance with the withdrawal agreement. The transition period was scheduled to end on 31 December 2020, a deadline which could have been extended for two years, if requested by 30 June 2020.[4] The British government declared that it would not apply for any such extension,[5] and did not do so. In addition, it declared that the only kind of trade deal the UK is interested in, if any, is a Canadian-style trade deal.[6][7] A trade deal facilitates EU–UK trade, which accounts for 49% of international UK trade.[2] A Canadian-style trade deal offers the UK a reduction on most custom tariffs between the EU and the UK, but without eliminating VAT, customs and phytosanitary checks.[2] The arrangements for its dominant financial services sector are of particular importance to the UK.[6]
UK trade with the rest of the EU before Brexit[edit]
The rest of the EU (EU27) was the UK's largest trading partner before Brexit: In 2018, the bloc made up 45% of UK exports and 53% of UK imports.[10] Outside EU, the biggest trading partner of the UK is USA, which in 2018 made up 19% of UK exports and 11% of UK imports.[10]
For the EU27, the UK is its second largest export market (after USA), and third largest import market (after China and USA).[11]
Expected consequences[edit]
According to the UN Conference on Trade and Development, a trade agreement between the UK and the EU would help limit the drop of exports from UK to EU to 9%, while the expected decrease would be 14% in case of no deal.[15]