Provisional ‘copy-paste’ of EU trade deals could be UK’s Brexit life-raft
13 July 2016. By Poppy Bullock.
Countries that already have bilateral trade deals with the EU, such as South Korea, might be willing to extend trade preferences to the UK provisionally after a Brexit. The extension would apply until the trading partners are able to strike separate agreements with Britain.
Such stopgap measures would prevent a sudden spike in tariffs between economies accustomed to trading freely with one another.
The UK, which voted on June 23 to leave the EU, currently benefits from trade agreements struck by the EU. Over the past five years, the bloc has agreed to open its markets to South Korea, to Vietnam, to Central American countries and to others. Next year, a trade deal with Canada will come into force.
The vote to leave the EU has cast doubt on the UK’s commercial relationship with both Europe and its trading partners around the world, throwing a shadow over future trade deals. The UK must now scramble to ensure that the benefits of these preferential trade deals don’t crumble into the sea once Brexit has been finalized.
South Korea is just one example. In 2010, the country signed a trade deal with the EU. Of the EU’s current members, Britain is second only to Germany among South Korea’s trading partners.
The trade deal with the EU has reduced South Korea’s tariffs and opened up its services market, leading to a 55 percent boost in the country’s exports to the EU. For goods that have been fully liberalized, South Korea’s overall exports to the EU have increased by 35 percent.
Friends with benefits
Both South Korea and the UK have a lot at stake in maintaining the trade arrangements. For example, South Korea wants to be able to continue selling cars and ships on the British market, while still importing North Sea oil.
One of the smoothest ways to manage the UK’s transition out of the EU would be for South Korea to extend the terms of its EU trade deal to a post-Brexit Britain. The agreement would be replaced only after the two countries had agreed to new terms of trade — a deal that could take years to finalize.
A transitional deal would also save both sides the hassle of changing trading terms, only to then change them back once a new trade deal is in place. Traders and producers from both sides would be spared the additional costs and administrative burdens that would come with the loss of preferences.
Legally speaking, there’s nothing stopping the UK and South Korea from performing a copy-paste of the existing EU trade agreement and using it as a holding pattern until a tailor-made agreement can be negotiated and adopted.
An interim measure of this kind would grant Britain some much-needed breathing room, as it comes to terms with building a new trade-negotiating unit and redefining relationships with both the EU and the rest of the world. It would also curtail the damage Brexit could wreak on Britain’s trading partners.