The Trade and Cooperation Agreement (TCA) between the UK and the EU agreed just before Christmas was hailed by the Prime Minister as a deal which offers significant new freedoms for the UK (as compared with EU membership), whilst at the same time providing certainty and substantial economic benefits for business. But how far do those claims match what the agreement actually says?
Removing trade barriers
The TCA is broadly similar to free trade agreements that the EU has entered into with countries such as Canada and Japan, the main difference being that it allows for zero tariffs on all qualifying trade in goods, including agricultural products. This is a significant economic benefit, especially given that no other EU agreement with a third country seeks to lower tariffs to the same extent. For example, although tariffs on most goods under the EEA Agreement with Norway, Iceland and Liechtenstein are zero, a small number of mostly agricultural products remain subject to tariffs.
That said, in order to benefit from tariff-free treatment, UK exporters and their customers in the EU will need to show that their goods meet the origin requirements under the TCA; for example, goods imported from China which have only undergone minimal additional processing in the UK are unlikely to qualify for tariff-free treatment on re-export to the EU (whereas previously, this was not an issue for UK exporters).
When it comes to non-tariff barriers, the TCA is substantially less beneficial from a business perspective. Compared with EU membership, UK businesses will face additional barriers to trade across a wide range of areas and in some cases, these will be significant (for example, the TCA does very little to ease the burden of additional red tape on goods trade – see this briefing for detail). As widely noted, the deal delivers relatively little in terms of removing barriers to trade or preserving current levels of access for services providers, even though this is an area where the UK has a trade surplus with the EU.