UK’s Trade Status Post Brexit
Existing EU free trade agreements cover 53 markets and one-third of the world’s economy. A specific issue is the possible loss of preferential access to those markets through trade agreements. The UK may be required to negotiate new bilateral agreements with those countries in some cases.
This is necessary to establish the UK status in terms of most favoured nation obligations for where there is no trade agreement.
States will most likely wish to understand the terms of the UK’s ongoing relationship with the EU before proceeding with free trade agreements. It would be important to establish the extent to which the UK still has access to EU goods and services markets.
Existing EU Free Trade Agreements
The EU itself is already party to almost 75 preferential trade agreements with third countries, of varying vintages. The newer agreements are more comprehensive and cover services and investment including in particular that deep and comprehensive trade agreements with certain eastern European countries. They also cover intellectual property, competition law, procurement, environmental-related and other basic EU principles.
A key issue that will arise for the UK in Brexit is its continued participation in existing EU preferential trade agreement. The may require an amendment or a protocol to cover the UK’s continued participation.
In principle, a protocol could allow for continued participation or adherence to the agreement by which the UK would become a third-party with the EU (and where applicable the EU states and the third-country). Such agreements are amended in a particular manner when new member states accede to the European Union.
The agreement of each of the international parties may be required in many cases. In principle, such countries would welcome continuity, although political considerations may arise. However, the possibility of bargaining may arise.
The position may be more complex with mixed free trade agreements to which the EU states are also party so that individual consent of EU states may also be required to an amendment.
Institutional issues may arise in disentangling the existing enforcement mechanism. Issues will arise in dividing quantitative preferences, quotas et cetera as between the UK and the remaining EU members.
In principle, the UK could negotiate very similar agreements with the third-party countries to that in place with between them and the EU. In some cases, the third country may not be willing to grant the same concessions to the UK that it has granted to the EU due to its lesser bargaining power relative to the EU as a whole.
The UK may be in a position to negotiate a new free trade agreement with the third-party by way of a bilateral agreement. However, third countries are likely to want to see the terms of the EU UK agreement prior to entering a new bilateral agreement with the UK.