What are the new trade agreements of the UK after the Brexit vote?
It is important to note that the impact of Brexit on trade is hugely dependent on the relationship between the UK and the EU post-Brexit. It is expected that the free trade agreement or WTO rules will significantly increase which will due to the imposed charges to access the market in terms of tariffs and quotas. The UK and the EU can negotiate a new free trade agreement that will outline the access to certain sectors and the regulations during this access. The selection of the best supply chains allows business to remain competitive and relevant in their respective industries.
The UK is a key player in the global supply chain with 41% of its exports being from the EU and 12% being from the United States. The UK’s participation in supply chains for industries in the mining and chemical products, telecommunications, and transport sectors is important. The EU supply chains must rebalance following the Brexit. Brexit also impacts trade between the UK and other countries in the world. In the last 25 years, the EU has been part of 36 free trade agreements negotiations with countries outside the EU. This leave will not benefit the UK from these trade agreements and it can choose to re-negotiate these agreements, but this will be time and capital consuming. Further, Brexit also reduces bilateral trade between the UK and the EU.
Research shows that the UK paid more to the EU than it got back. In 2016, the UK government paid £13.1 billion and the EU spent £4.5 billion on the country. As such, the UK contributed £8.6 billion. Based on this report, the UK invested more than it got from the EU.