Recent EU Trade Policy

EU trade policy is likely to receive considerable attention over the next few months, as the EU negotiates its future trading relationship with the UK.

The UK formally left the EU on 31 January 2020. It is currently in a transition period, which is scheduled to expire on 31 December 2020. There is a possibility that the transition period could be extended by a single period of up to one or two years beyond 31 December 2020, provided that this extension is agreed before 1 July 2020. However, given the UK Government’s current resistance to an extension, an extension currently appears unlikely.

During the transition period, trade between the UK and the EU continues to take place on the same terms as prior to the UK’s exit. For example, UK goods have full tariff-free access to the EU market and vice-versa.

However, unless the UK and the EU reach an agreement on the future terms on which trade between them will take place before the end of the transition period, trade between the UK and the EU will take place on ‘WTO Rules’ following the end of the transition period.

A switch to ‘WTO rules’ could have significant effects. Some potential changes have been widely discussed. For example, tariffs could be introduced on UK goods exported to the EU, UK service suppliers might be unable to sell on a cross-border basis to the EU, and the reintroduction of customs checks could lead to delays which could hinder both manufacturers reliant on complex supply-chains and retailers reliant on ‘just-in-time’ deliveries.

Other changes are less obvious but also significant. For example, companies may be required to go through an additional conformity check in order to sell their products in both the UK and the EU, and UK exporters could find their product targeted by EU anti-dumping duties.