In addition to these continuity agreements, the UK Government is also seeking new trade agreements with Australia, New Zealand and the US. It has also committed to updating and improving arrangements with several countries, opening public consultations on upgrading FTAs with Canada and Mexico, and a new trade agreement with India.
The UK’s new trading relationship with Norway, Iceland and Liechtenstein
On 4 June, the UK concluded negotiations with Norway, Iceland and Liechtenstein to upgrade the continuity agreement which had been solely focused on trade in goods. The comprehensive new EEA EFTA States - UK Free Trade Agreement covers trade in goods, services and investment, digital trade, capital movements, government procurement, intellectual property, competition, subsidies, small and medium sized enterprises, good regulatory practices and regulatory cooperation, recognition of professional qualifications, trade and sustainable development. It also encompasses legal and horizontal issues including dispute settlement. While a significant improvement on the continuity agreement which was previously in place from 1 January 2021, differences in market access remain when compared with the free movement available prior to Brexit.
The UK’s new trading relationship with Turkey
As Turkey is in a Customs Union with the EU, the UK’s ability to sign a continuity agreement with Turkey was dependent on the UK-EU Trade and Cooperation Agreement, the UK’s trade deal with the EU. The new UK-Turkey Free Trade Agreement incorporates a number of different agreements under a single agreement which includes industrial goods, coal and steel, agricultural products (tariff-rate quota based) and processed agricultural products.
Appreciating that the EU Customs Union and a Free Trade Agreement are two different concepts for assessing origin requirements is key for traders. With the Customs Union, goods could benefit from free circulation between member countries. However, with the Free Trade Agreement products are only traded free of import duty if they originate in one of the countries. In short, the UK and Turkey will only continue to benefit from tariff preferences if goods traded originate in either country.
Currently, origin requirements (the Rules of Origin Protocol) in the UK-Turkey agreement include a number of temporary provisions that will be shortly updated in line with the UK and the EU Trade Cooperation Agreement. At present, this means importers and exporters can still benefit from the preferential tariff rates for the UK/Turkey origin materials. Furthermore, applying cumulation rules and using EU materials and processing for exports to Turkey (and vice versa) will be possible once the Rules of Origin Protocol is updated accordingly.