The EU Free Trade Agreement: Its Importance and Implications for Brexit

The European Union Free Trade Agreement (FTA) is a critical aspect of the relationship between the EU and non-member countries, including the UK. The EU FTAs have helped create a single market for goods and services, providing member states with significant economic benefits, such as access to a wider range of products at competitive prices. Since the UK`s decision to leave the EU, there has been a lot of debate about the potential implications of Brexit on the EU FTA and its impact on the UK`s economy.

Importance of the EU FTA

The EU FTA is designed to promote economic growth by reducing tariffs, removing non-tariff barriers to trade, and facilitating business-friendly regulatory cooperation. The FTA is a way for countries to benefit from the EU`s single market without being a member state, and the EU has signed FTAs with more than 70 countries around the world.

For countries like the UK, the EU FTA provides preferential access to the EU market, which is one of the world`s largest markets for goods and services. The EU is the UK`s largest trading partner, accounting for around 43% of the country`s exports and 51% of imports. Therefore, any changes to the EU FTA could have a significant impact on the UK`s economy.

Brexit and the EU FTA

With the UK no longer a member of the EU, the EU FTA will no longer apply to the country. Instead, the UK will need to sign a new trade agreement with the EU to continue trading with the single market. The UK and the EU have been negotiating a new trade agreement since the Brexit referendum in 2016, and the two sides have made some progress. However, there are still several sticking points, including access to fishing waters, level playing field provisions, and dispute resolution mechanisms.

If the UK and EU fail to reach a trade deal before the end of the transition period on 31 December 2020, the UK will trade with the EU on WTO terms, which would mean tariffs on many goods. This scenario would be detrimental to the UK`s economy, as it would face higher costs and reduced access to the EU market.

Implications for Businesses

The EU FTA is crucial for businesses that trade with the EU. Without an agreement in place, businesses will face increased costs and uncertainty, which could lead to job losses and a decline in investment. Many businesses have already started preparing for a no-deal scenario, including stockpiling goods and adjusting supply chains. However, these measures are only temporary solutions, and a long-term trade agreement is necessary for businesses to thrive.

Conclusion

The EU FTA is a fundamental aspect of the UK`s relationship with the EU and is crucial for the country`s economy. The failure to reach a new trade agreement with the EU would have severe consequences for businesses and the broader economy. Therefore, the UK and the EU must continue to negotiate in good faith to reach a mutually beneficial agreement that ensures the continuation of free and fair trade between the two parties.