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Post-Brexit Trade Deals: Where Might the UK Find Solace or Miss Out?

The slow walk towards Brexit is inching ever closer, with the first draft of the withdrawal agreement published in mid-November. While there could still be many changes and it might even get rejected, it provides a good guide as to what the UK thinks its future relations will look like.

However, since Brexit was announced some businesses have already taken action in preparation. Research from RSM has found that 8% of businesses in the EU have already cut ties with British suppliers, while just 23% of EU businesses think a trade deal with the UK should be prioritised. In a post-Brexit world, the UK will need to create new trade deals, but this might be more likely in some regions rather than others.

With the EU

One of the key issues surrounding the terms of Brexit which is proving somewhat problematic is the Irish border. With no deal this could cause all sorts of problems, with customs checks and strict border controls probably having to be brought in. For this reason (and various others) the EU is keen to keep a permanent post-Brexit customs union with the UK.

Within the initial draft proposal for withdrawal there is a UK-wide customs arrangement with the EU, so assuming the draft is accepted by Parliament and the EU and it goes ahead, this could offer a workable post-Brexit trade deal. Yet that might be a big ask, as some believe the EU will want to tie the UK to permanent EU trade rules. Should a no deal happen then the UK really would be left out in the cold without any kind of trade deal and be forced to look elsewhere.

A Possible USA Trade Deal

Given the close relations between the USA and UK, it was assumed that this would be the first place the UK would turn should a good deal with the EU not materialise. President Trump has always seemed eager to strike up a deal as soon as possible, suggesting that a strong trade deal with positives for both sides could be worked out.

Yet a potential free trade agreement with the USA has been drawn up and the UK government is currently refusing to reveal its analysis. Negotiations are still to begin but with the USA the second-most important trading partner for the UK after the EU, it puts the UK in a similar negotiation position. By which it looks more reliant and desperate to strike a deal, giving the USA the upper hand.

Negotiations with China

Possibly one of the only positives to be gleamed from the potential impact of a no deal Brexit is that any businesses currently trading with countries outside of the EU won’t be affected. For this reason, a trade deal with China could be highly beneficial to the UK.

In 2016 the UK imported £42.3 billion worth of goods from China, yet only exported £16.8 billion. With the Belt and Road Initiative in place, China may be prepared to increase its imports from the UK, while if a deal is sorted out then trade between the two could become even more encouraged.

The Russian Blockade

As part of Brexit, there were UK and EU plans to split import quotas at the World Trade Organisation (WTO) in Geneva. However, Russia blocked this plan, which amongst other things, shows that it will be taking a hard line with the UK. This suggests that thrashing out a post-Brexit deal with Russia could prove incredibly difficult should it come to that, even though Russia is the largest country in Europe not to be in the EU.

Depending on the outcome of Brexit and the deal agreed with the EU, there could be various places the UK can turn to for drawing up post-Brexit deals.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes

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