UK Bilateral Trade Agreements: What You Need to Know

The United Kingdom`s exit from the European Union has led to many changes in the country`s trade policies. One notable change is the shift from multilateral trade agreements, which were previously negotiated through the EU, to bilateral trade agreements.

So, what exactly are bilateral trade agreements and how do they differ from multilateral agreements?

Bilateral trade agreements refer to trade deals between two countries. These agreements are negotiated specifically between two nations, outlining the terms and conditions that govern trade between them. Some examples of such agreements include the United States-Mexico-Canada Agreement (USMCA), the Australia-United States Free Trade Agreement (AUSFTA), and the Japan-Australia Economic Partnership Agreement (JAEPA).

Multilateral trade agreements, on the other hand, involve multiple parties, often facilitated through international organizations such as the World Trade Organization (WTO). The most well-known multilateral agreement is the General Agreement on Tariffs and Trade (GATT), which is the predecessor to the WTO.

In the post-Brexit UK, the government has been actively seeking to negotiate new bilateral trade agreements with various countries around the world. These trade agreements are important for the UK`s economy, as they help to secure markets for UK exports and also facilitate access to cheaper imports.

As of June 2021, the UK has negotiated 67 new trade agreements, with some of its biggest trading partners such as Japan, Canada, and Switzerland. These agreements cover a wide range of industries including agriculture, fisheries, manufacturing, and services.

One notable agreement is the UK-Australia Free Trade Agreement, which was announced in June 2021. This agreement is significant as Australia is the UK`s 14th largest export market, with trade between the two countries valued at £13.9 billion in 2020. The agreement is expected to eliminate tariffs on all UK exports to Australia, which will provide a boost to UK industries such as automotive, financial services, and pharmaceuticals.

Another important agreement is the UK-Japan Comprehensive Economic Partnership Agreement (CEPA), which was signed in October 2020. The agreement is expected to increase bilateral trade between the two countries by £15.2 billion, and also includes provisions for digital trade, data protection, and intellectual property.

However, bilateral trade agreements have also faced criticism for potentially undermining the multilateral trading system. Some argue that these agreements could lead to a « spaghetti bowl » of conflicting trade rules, making it difficult for businesses to navigate global trade.

In conclusion, bilateral trade agreements are becoming increasingly important for the UK`s economy in the aftermath of Brexit. While these agreements provide new opportunities for UK businesses, it is important for policymakers to consider the potential consequences of moving away from multilateral trade agreements. As trade continues to evolve, it will be interesting to see how these bilateral agreements affect the global trading system as a whole.