No-deal Brexit - Status of UK trade agreements

23 septembre 2019

The Government of the United Kingdom has issued Guidance on "UK trade agreements with non-EU countries in a no-deal Brexit" (updated on September 19, 2019).

The Guidance states that the UK will leave the EU on 31 October and lists trade agreements that have been signed that "will take effect as soon as the UK leaves the European Union". The date those trade agreements take effect will not necessarily be "as soon as the UK leaves the European Union" in that those treaties must be implemented into domestic law, which may not occur before October 31st.

The listed trade agreements include South Korea, Chile, Central America, Andean countries, CARIFORUM, Israel, Palestinian Authority, Eastern and Southern Africa and Switzerland. These agreements (also referred to as "roll over agreements") seek to preserve the preferential trading terms from which the UK currently benefits as an EU Member State. The EU negotiates trade agreements with non-EU countries on behalf of all of its Members collectively. The UK will not benefit from these agreements when it leaves the EU, unless it can agree to an independent bilateral trade agreement with the non-EU country.

Although the Guidance states that these roll over trade agreements will take effect as soon as the UK leaves the EU, it may be challenging for these agreements to be implemented into UK law by October 31, 2019, the current due date of the UK's exit from the EU.

The Trade Bill, which was due to implement these agreements into UK law, was close to adoption, but fell due to the prorogation of the UK Parliament on September 9, 2019. As such, the UK Government will need to consider an alternative mechanism for timely implementation of these agreements. With the UK Parliament not due to sit again until October 14, it may be challenging for an appropriate mechanism to be found, unless there is an extension of the October 31 Brexit deadline. The UK Parliament recently passed a law that requires the Prime Minister to accept an extension of the Brexit deadline up until 31 January 2020 (or later, subject to the UK Parliament agreeing an extension beyond 31 January 2020).

However, the Prime Minister has re-stated his commitment to leaving the EU on October 31, 2019, and is seeking to conclude a revised Withdrawal Agreement with the EU at the European Council meeting scheduled to be held on October 17-18. It is most doubtful that this is achievable.

The Guidance also lists 26 EU-third country trade agreements, association agreements, economic agreements, or customs unions still under discussion. These countries include Canada, Japan, Mexico, Algeria, Egypt, and Turkey. The United States of America, a major UK export market is not included as there is currently no free trade agreement between the EU and USA.

The Guidance says that if the UK leaves the EU without these agreements in place, trade with these countries will be governed by the World Trade Organization's rules.

In 2018, Canada represented 1.41% of total UK trade. All 26 of the countries or blocs combined represent less than 10% of total UK trade.

The UK Department for International Trade faces formidable trade negotiations in a post-Brexit world, most notably with the EU and the United States of America.

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