Trade Deals

It is very unlikely that any substantive trade agreements will be reached with EU or other countries prior to March 2019. UK might reach trade deals with third parties (including EU) within 2-10 years after Brexit. First trade deals are likely to replicate existing EU trade deals (e.g. with Canada, S Korea and others). UK might be able to accede to trade blocs e.g. EFTA, CPTPP in similar timescales.

World Trade Organisation, General Agreement on Tariffs and Trade (GATT) and General Agreement on Trade in Services (GATS)

It is likely that the EU and other countries will continue to trade in goods (in the short term) with the UK on the basis of WTO schedules UK used as an EU member. 

The WTO operates by consensus and is currently facing structural challenges. US opposition to the WTO and increasing Chinese influence in it are restricting its functioning and development. The UK may wish to see WTO powers increase to provide easier access to more markets worldwide. Currently it appears unlikely that the UK will achieve a consensus for this. The UK will be able to negotiate for its own objectives but it's negotiating power will be less than that of the EU trade bloc.

Rights to provide services internationally are very restricted under WTO rules. The UK is likely to remain a member of GATS under which some additional access for services is permitted, however not all WTO members are signatories of GATS.

Trade in goods is permitted under WTO rules subject to fixed tariff rates which must be applied non-discriminatorily to all WTO members. WTO rules provide little consistency in regulation (other than where regulation is imposed to discriminate between suppliers) and do not reduce or dispense with border checks.

UK is likely to be permitted to participate in the General Procurement Agreement (GPA) which is an international agreement allowing UK companies access to many foreign government contracts. 

WTO limits unfair state aid and some unfair competition practices subject to difficulty in enforcing such provisions.

Composite Products and Supply Chains

EU imports may become more expensive due to tariffs, currency devaluation and administrative costs. This may affect the manufacture of composite products and impact upon UK supply chains for UK businesses who then export.

UK exporters will also need to ensure country of origin of goods is clear (for taxation reasons) where components of final products derive from EU.

Other Trade Impacts

UK businesses entering international contracts frequently seek English or Scottish law and UK courts or international arbitration in the UK. While there is no reason in principle for this to change, counterparties may be more reluctant to accept such provisions.

UK businesses may be able to benefit from a distinct ‘brand’ – separate from other European trading powers. This will require substantial efforts from UK exporters of goods and services and will take time to develop. Initially, Brexit may give rise to additional scepticism about UK suppliers which may take time to overcome.

How will Brexit affect your business?

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