Understanding Free Trade Agreements (FTAs)
A Free Trade Agreement aims to encourage trade in goods or services between two or more countries by making it easier and cheaper. Trade Agreements mainly aim to reduce or eliminate tariffs, taxes or fees imposed by governments for cross-border trade. They also meant to remove quotas, which are limits on the amount of goods that can be traded between both countries.
For businesses, lower tariffs mean cheaper imports and lower costs. Products sold in markets subject to free trade agreements will be less expensive and more attractive for overseas buyers, so understanding FTAs could determine your next export or import market and how competitive your business can be in those foreign markets.
Before the UK left the European Union on 1st January 2021, UK businesses were benefiting from over 40 trade agreements the EU had negotiated with more than 70 countries. Since then, the EU’s trade agreements are no longer applicable to the UK which now must negotiate its own deals. The UK has signed over 60 continuity agreements to ensure that trade with some countries was not disrupted.
The UK has also signed an agreement with Japan, this is the first agreement to differ from an existing European agreement. Talks are ongoing with another five countries or blocs, but the most important agreements have already been concluded.
We have been working with a wide range of businesses across sectors and know it can be quite difficult to understand how the trade agreements could affect your own business and if you can actually benefit from it. Each Trade Agreement will have a dedicated section to Rules of Origin which will determine if your specific goods can enter a specific foreign market under preferential or non-preferential basis.
Top Tips to help you understand Trade Agreements
· Check what Trade Agreements the UK Government has signed, fully or partially implemented or is under current negotiation:
· Check our blogs related to Rules of Origin in our Brexit hub
· Need help understand FTAs in more detail? Join our upcoming virtual seminar on Understanding Free Trade Agreements on 10th June aimed at giving businesses insight into the importance of these and how rules of origin could enable you to access world markets on a preferential or non-preferential basis.