Free trade agreements on the horizon in 2024

Wed 3 Jan 2024
Posted by: Danielle Keen
Trade News

Uk trade

When Department for Business and Trade (DBT) secretary Kemi Badenoch ended the year celebrating her department’s successes on X, formerly Twitter, she cited free trade agreements (FTAs) such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which the UK has joined, and fresh deals with Australia and New Zealand .

Reflecting on the value of FTAs to the UK economy, IOE&IT’s trade policy and engagement lead Henriette Gjaerde said:

“Free trade agreements can offer significant benefits for the signatory parties such as reduced tariffs, increased market access, and facilitated trade and customs procedures. They can also reduce barriers to trade, streamline regulations and procedures, as well as lower the cost of goods for consumers in target markets.”

“By reducing the time and resources needed for UK businesses to export, FTAs represent a great potential source of economic growth, and can lead to increased investment and efficiency of trade between the countries involved.”

The following agreements are being discussed this year, with deals or further rounds of talks anticipated soon.

India

Expectations that the UK and India will sign an agreement by April have been reported in Indian publications.

An Easter deadline would be favourable for both countries as they prepare for elections this year.

Last year, during the thirteenth round of negotiations, Politico warned that if India’s election was to be called in February, it would make completing a deal in Spring unlikely.

Concluding in December, this round of talks saw little progress, with Indian skilled worker visas remaining a stumbling block.

The round also introduced a new potential blocker in the form of the UK’s proposed carbon border adjustment mechanism (CBAM), Reuters reports. The measure, designed to impose tariffs on high-polluting goods, was first introduced by the EU in October, and has led India to consider filing a complaint with the WTO.

Negotiations, launched almost two years ago, are set to enter their fourteenth round this month with final terms on services, intellectual property and visas to be agreed.

Canada

UK-Canada FTA talks, first launched in 2022, have faced successive hurdles owing to food exports last year.

British food standards that prohibit Canadian beef exports aggrieved Canadian farmers, who felt they faced unfair competition from UK producers.

UK cheese exporters now face a new trade barrier as their access to the Canadian market has been reduced as of Monday.

Canada operates a WTO-approved cheese quota, in which they allow tariff-free cheese exports in two reserves, EU and non-EU.

Cheese exports up to the amount of 14,272 tonnes will be accepted in the EU reserve – this can be fulfilled by all EU member states.

The amount allocated in the non-EU reserve is only 6,140 tonnes. Under the terms of the UK/Canada Trade Continuity Agreement, the UK was moved from the EU to the non-EU reserve as of 1 January 2024.

Any UK cheese exported that is over the non-EU reserve amount will now face a 245% duty, effectively pricing them out of the market, as per the Guardian.

Gulf Cooperation Council Agreement

The beginning of the year will also see negotiations with the Gulf Cooperation Council (GCC) as a sixth round of talks are slated for Q1 2024.

The council, comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, represents a combined market of 54m people, worth approximately US$16trn. 

Hosted in Riyadh, fifth-round talks ended in November with gov.uk announcing that 21 policy areas had been covered across 40 sessions, with hopes high that “an ambitious, comprehensive and modern agreement, fit for the 21st century” can be secured.

Speaking at a panel at the Arab-British Economic Summit the same month, DBT’s chief negotiator Tom Wintle lauded the agreement as a clear opportunity for UK firms with lots of potential for services. He added that good progress had been made by way of tariff reductions.

While an obvious boon to the economy, this potential partnership has generated some controversy, causing alarm among some human rights groups, including Human Rights Watch.

Switzerland 

A Swiss FTA is also in the pipeline with the third round of negotiations concluding in December.

The government reported progress had been made across areas including sanitary and phytosanitary (SPS) measures, animal welfare and provisions for small-to-medium enterprises (SMEs).

The deal is also touted for its potential to enhance the UK’s services sectors, with talks heavily focused on securing UK firms greater access to the Swiss market. Bilateral trade in this area is already estimated to be worth £23.7bn.

This was bolstered by the signing of the Berne Financial Services Agreement which was signed on 21 December 2023.

The agreement removes barriers to trade in financial services between the UK and Switzerland. It will give UK insurance brokers access to the Swiss market, and make firms exempt from new Swiss rules requiring companies to establish a physical presence in the country before working with clients there. 

South Korea 

Negotiations with South Korea are likely to launch this year, after an accord with the UK was, extending low-tariff provisions in the existing agreement. 

The UK welcomed South Korean president Yoon Suk Yeol for tech-heavy discussions, setting the tone for an agreement that could benefit the UK’s electric vehicle industry.

A trade agreement with South Korea is expected to also include substantial provisions for digital trade, with additional support for smaller businesses. This reflects trends within the two countries’ trading relationship – in 2021, 79% of the UK’s services export to South Korea were delivered digitally.

After the accord signing, Badenoch said any future deal would “play to the UK’s strengths as an advanced, high-tech economy”.

A prospective deal is cause for excitement among the UK’s tech business community. During a public consultation period, in which individuals and businesses from industry were invited to share their views on what a deal should look like, Tech Nation CEO Gerard Grech welcomed the prospect as a great opportunity for “export-ready” tech scale-ups.