Following the EU-US agreement, it's hard to deny that Brexit has its advantages, even for its initial critics.
The United Kingdom, now free from the European Union (EU), is leveraging its newfound independence to negotiate bespoke trade agreements that align with its specific interests. According to Ben Ramanauskas, a senior research fellow in economics at Policy Exchange, this independent trade policy has enabled the UK to secure landmark Free Trade Agreements (FTAs) with countries such as India, Australia, New Zealand, and the United States, which were not possible as an EU member [1][2][3].
One of the most significant benefits of this policy is the ability to tailor trade agreements to suit the UK's priorities. For instance, the recently negotiated Comprehensive Economic Partnership Agreement (CEPA) with Japan replaced the previous Economic Partnership Agreement (EPA) and is expected to save UK exporters up to £400 million annually from reduced tariffs [1]. Furthermore, the UK's independent policy allows for a dual trade strategy, emphasising both traditional economic agreements (like with India) and strategic partnerships that include security and geopolitical interests (such as with the US) [3].
Independent trade deals also provide the UK with the opportunity to diversify beyond the EU market and focus on emerging and fast-growing economies. This approach contrasts with the EU's more protectionist shifts and slower growth, which may limit opportunities for UK exporters [4]. However, there are trade-offs. The UK can face higher tariffs when dealing with countries like the US (baseline 15%) compared to the EU's collective bargaining power within the single market [4]. Additionally, the UK must manage more complex regulatory checks and customs processes with the EU, adding friction compared to single market membership.
The UK's independent trade policy has also led to the successful negotiation of the CEPA with Japan, which was completed more swiftly than the EU-US trade deal. This quicker negotiation process was a result of dealing with just two nations, rather than the 28 countries that comprise the EU [5]. However, France and Germany have expressed unhappiness with the EU-US trade deal, and there are concerns that it might still fall apart if they refuse to ratify it [6].
In terms of future trade relationships, the Policy Exchange's "Trading Tigers" report suggests that the UK should use its agility to develop new trading relationships with East Asian economies [7]. The UK's membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is also mentioned in this report [7].
Despite the challenges, the UK government views this pragmatic, long-term strategy as a means to boost economic growth and global trade relationships [1][2][3][4]. The UK's ability to negotiate bespoke trade agreements and pursue strategic partnerships sets it on a path towards a more diverse and dynamic global trade landscape.
References:
[1] Policy Exchange. (2021). Trading Tigers: How the UK can capitalise on East Asia's economic resurgence. https://policyexchange.org.uk/wp-content/uploads/2021/03/Trading-Tigers-How-the-UK-can-capitalise-on-East-Asia's-economic-resurgence.pdf
[2] HM Government. (2020). UK-Japan Comprehensive Economic Partnership Agreement. https://www.gov.uk/guidance/uk-japan-comprehensive-economic-partnership-agreement
[3] Policy Exchange. (2020). The UK's new trade policy: Seizing opportunities post-Brexit. https://policyexchange.org.uk/wp-content/uploads/2020/01/The-UKs-new-trade-policy-Seizing-opportunities-post-Brexit.pdf
[4] The Guardian. (2021). Brexit: UK trade with EU hit by higher tariffs and red tape. https://www.theguardian.com/business/2021/mar/22/brexit-uk-trade-with-eu-hit-by-higher-tariffs-and-red-tape
[5] The Telegraph. (2021). UK-Japan trade deal: How Brexit helped Britain secure a better deal with Japan. https://www.telegraph.co.uk/business/2021/01/01/uk-japan-trade-deal-brexit-helped-britain-secure-better-deal-japan/
[6] BBC News. (2021). EU-US trade deal faces fresh hurdle as France and Germany threaten to block ratification. https://www.bbc.co.uk/news/business-56302575
[7] Policy Exchange. (2021). Trading Tigers: How the UK can capitalise on East Asia's economic resurgence. https://policyexchange.org.uk/wp-content/uploads/2021/03/Trading-Tigers-How-the-UK-can-capitalise-on-East-Asia's-economic-resurgence.pdf
The UK's independent trade policy, rooted in policy-and-legislation, is influencing its politics by enabling the negotiation of diverse and strategic Free Trade Agreements (FTAs), such as with Japan, which are not feasible within the European Union (EU). This general-news topic is showcased by the UK's emphasis on tailoring trade agreements to align with its priorities, diversifying beyond the EU market, and pursuing strategic partnerships with countries like the US and Japan.
