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- Negotiations and agreementsTrade policy
The United Kingdom left the European Union on 31 January 2020.
The EU and the UK reached an agreement on their future relationship on 24 December 2020. They formally signed the EU-UK Trade and Cooperation Agreement on 30 December 2020.
The agreement entered into force on 1 May 2021 after approval of the European Parliament and adoption by the Council.
- The EU is the UK’s biggest trading partner, accounting for 40% of UK foreign trade in goods in 2022.
- The UK is the EU’s third biggest trading partner (9.8%), after the United States and China. Switzerland is the fourth biggest.
- The EU's surplus trade in goods with the UK amounted to €113 billion.
- The EU's main exports of goods to the UK include: Machinery and transport equipment (36%), chemical products (16.8%), foodstuffs, beverages, and tobacco (8%), and base metals (5.8%).
- The UK's main exports of goods to the EU include: Mineral products (27.6%), machinery and transport equipment (23.4%), and chemical products (15.9%).
- 2021 data for trade in services reveal a balance in favour of the EU: €204.5 billion in EU exports compared to €175 billion in imports from the UK.
- Other business services, travel, telecommunications, financial services and transport are the most important flows in both directions.
- Investment flows from the UK to the EU have been stable in recent years, while EU flows to the UK have declined. The stock of mutual investments remains among the highest in the world.
The EU and the United Kingdom
The EU-UK Trade and Cooperation Agreement concluded between the EU and the UK sets out preferential arrangements in areas such as:
- trade in goods;
- trade in services and investment;
- digital trade;
- intellectual property;
- public procurement;
- aviation and road transport;
- social security coordination;
- law enforcement and judicial cooperation in criminal matters;
- thematic cooperation, and;
- participation in EU programmes.
Provisions ensuring a level playing field and respect for fundamental rights underpin it.
The Trade and Cooperation Agreement therefore goes beyond traditional free trade agreements and provides a solid basis for preserving the longstanding friendship and cooperation between the EU and the UK.
The EU-UK Trade and Cooperation Agreement consists of:
- a Free Trade Agreement, with ambitious cooperation on economic, social, environmental and fisheries issues;
- a close partnership on citizens’ security, and;
- an overarching governance framework.
Foreign policy, external security and defence cooperation are not covered by the Agreement as the UK did not want to include these. Since 1 January 2021, there has been no framework in place between the UK and the EU to develop and coordinate joint responses to foreign policy challenges, for instance the imposition of sanctions on third-country nationals or economies.
The Trade and Cooperation Agreement does not cover any decisions relating to:
- equivalences for financial services, or;
- the adequacy of the UK data protection regime
These are unilateral decisions of the EU and are not subject to negotiation.
The EU-UK Free Trade Agreement in detail
The Trade and Cooperation Agreement covers not just trade in goods, services, investment, public procurement and IPR, but also a broad range of other key areas in the EU's interest, such as competition, state aid, tax transparency, air and road transport, energy and sustainability, fisheries, and social security coordination.
- It provides for zero tariffs and zero quotas on all goods that comply with the appropriate rules of origin.
- It allows EU investors to establish their companies in the territory of the UK and operate them freely in most sectors.
- It provides market access beyond that agreed with Japan, for example, and includes regulatory provisions for many key service sectors.
- It ensures that EU companies already established in the UK will not be discriminated against in public procurement procedures.
- It secures resale rights for EU artists, which is not covered by international IPR conventions.
- It ensures undistorted trade and competition for EU companies in the energy and raw materials sectors and for industry in general.
- It contains a chapter on SMEs designed to promote the participation of SMEs in the agreement.
- Both parties have committed themselves to ensuring a robust level playing field by maintaining high levels of protection in areas such as:
- environmental protection;
- the fight against climate change and carbon pricing;
- social and labour rights;
- tax transparency and state aid: with effective domestic enforcement, a binding dispute settlement mechanism, and the possibility for both parties to take remedial measures.
- The EU and the UK agreed on a new framework for the joint management of fish stocks in EU and UK waters. The UK will be able to develop British fishing activities, while the activities and livelihoods of European fishing communities will be safeguarded, and natural resources preserved.
- On transport, the agreement provides for continued and sustainable air, road, rail and maritime connectivity. It includes provisions to ensure that competition between EU and UK firms takes place on a level playing field, so that passenger rights, workers' rights and transport safety are not undermined.
- On energy, the agreement provides a new model for trading and interconnectivity, with guarantees for open and fair competition, including on safety standards for offshore, and production of renewable energy.
- On social security coordination, the agreement aims at ensuring a number of rights of EU citizens and UK nationals. This concerns EU citizens working in, travelling or moving to the UK and to UK nationals working in, travelling or moving to the EU after 1 January 2021.
- The agreement enables the UK's continued participation in a number of flagship EU programmes for the period 2021-2027 (subject to a financial contribution by the UK to the EU budget), such as Horizon Europe.
More details on the trade part of the agreement.
Committees and Dialogues
The EU and the United Kingdom meet regularly to discuss issues and best practices and oversee the proper functioning of the Agreement.
Trading with United Kingdom
- Importing into the EU from the United Kingdom
- EU trade defence measures on imports from the United Kingdom
- Exporting from the EU to the United Kingdom
- Trade relations are part of the EU's overall political and economic relations with the United Kingdom
- The United Kingdom is a member of the World Trade Organization
The EU and the UK have agreed on a way forward to address the EU’s concerns about discrimination in the UK’s Contracts for Difference (CfD) scheme, which is the UK’s main mechanism for supporting low-carbon electricity generation.
Today the EU is requesting consultations with the United Kingdom (UK) at the World Trade Organization (WTO) on the UK’s discriminatory practices when granting support for green energy projects.