Since leaving the EU, the UK has implemented its own independent trade policy, which has included transitioning EU-negotiated free trade agreements (FTAs) with 71 trading partners into UK law and striking entirely new FTAs with Australia and New Zealand. Agreement has been reached on the UK’s accession to CPTPP, which is being ratified across the trade area.  

Active negotiations are ongoing with India and the Gulf Cooperation Council (GCC) – the political and economic group comprising six states in the Middle East – and several existing FTAs are being upgraded with partners as diverse as Switzerland, Korea, Israel and Mexico.  

The Deloitte Attitudes to Trade Survey 2024 found that a majority of senior business leaders consider the UK’s FTA programme as being beneficial to their business - a notable improvement year on year. With so much going on, we take stock of the agreements reached so far, assess where ongoing negotiations are heading and what trade policy might look like in the years ahead. 

Done Deals 

The UK’s FTAs with Australia and New Zealand entered into force in May 2023. The economic impact of these agreements is likely to have been modest so far, given the time in force and trading distances involved, however, both agreements were found to be popular in our latest survey, with over half of respondents considering them potentially beneficial to their business. 

Ratification of the UK’s accession to CPTPP has been underway over the last year. The agreement requires at least six members to ratify for it to enter into force, which is expected by the end of 2024. The agreement will be subject to a phased implementation, applying only to those parties which have ratified the UK’s accession. So far, the UK’s accession has been ratified by Chile, Japan and Singapore – in addition to the UK itself.  CPTPP is the most significant of the new trade agreements completed so far, with exports to CPTPP countries worth £61.3 billion in 2022.  

One of CPTPP’s principal benefits is access to favourable rules of origin, permitting regional cumulation compared to trade under bilateral FTAs. Regional cumulation allows for inputs from all member countries to be considered as originating, so a product can more easily have undergone sufficient production within the trade area to be eligible for preferential tariff treatment. 

The UK does not currently import large volumes of inputs from across CPTPP to re-export to those countries, but these measures could prove beneficial for some firms in specific sectors - such as vehicle manufacturing and green tech - and over the course of time could result in diversified supply chains that may not be viable without CPTPP membership. Notably, CPTPP also opens up preferential trade between the UK and Malaysia for the first time. 

CPTPP was designed as a “living agreement,” and the UK’s membership gives it an opportunity to contribute to the development of new trading rules at the general review. Submissions for the review were taken by the UK government until February 2024 and the process is due to conclude when Australia chairs the CPTPP Commission in 2025.  

As a full member, the UK will also be able to veto the admission of new members, giving it further opportunity to shape the future direction of the bloc. Costa Rica, Ecuador, Ukraine, Taiwan, China and Uruguay have already applied to join CPTPP, while Thailand, the Philippines, Indonesia and South Korea have each expressed an interest. With the admission of new members over forthcoming years, the economic value of CPTPP could increase substantially.  

Ongoing Negotiations 

An FTA with India is the largest potential economic opportunity of the UK’s current negotiations, with the government estimating that a trade agreement could increase bilateral trade by up to £28 billion over the long run. The UK’s position has consistently been to seek a comprehensive agreement covering both goods and services, comprising market access along with wider provisions, for example, on digital trade.  

It is widely understood that India has prioritised trade in goods throughout the negotiations and we await formal guidance on what services liberalisation might be possible. Mobility could be particularly challenging, as a key offensive ask from the Indian side has been for greater access to the UK for the movement of professionals. 

Elections in India initially led to a pause in negotiations. The UK general election has effectively extended the time period during which negotiations are not progressing. It will be for both governments to assess progress made and take a position on concluding negotiations after the election. 

The latest update from the GCC talks confirmed that there has been “good progress” with draft treaty text advanced across most chapters. Total trade between the GCC and the UK was worth £62 billion in 2022 according to the latest government figures.  

The GCC operates somewhat differently from other trade agreements. It has a customs union, but it does not have an integrated services market, with each country operating its own independent regulatory environment and legal system. There is therefore a large degree of variability in what the final agreement may look like across each country. It may also create an opportunity for the UK government to forge a deeper relationship with individual countries, such as the United Arab Emirates, following the achievement of a baseline agreement with the GCC. 

The UK is also working on an enhanced FTA with Switzerland. Given that the current arrangement mostly concerns trade in goods, with both parties being significant services exporters, the UK and Switzerland are working to update and broaden the FTA significantly.  The fourth round of UK-Swiss negotiations took place in March, including a discussion of services and investment, mobility, digital, SMEs and the environment, all of which are not addressed substantively under current arrangements. Following the talks, the government highlighted that it was particularly important for the UK to secure mobility provisions in any new agreement.  

These provisions are a high priority for businesses on both sides, with UK-Swiss services trade worth £27.9 billion in the 12 months to September 2023. The UK and Switzerland have also been negotiating mutual recognition of professional qualifications (MRPQs) for lawyers and mutual recognition in financial services. The next round of FTA talks is expected to take place in the UK in early summer. 

In addition to these negotiations, the UK is seeking to re-negotiate further agreements, including with Korea, Israel, Turkey and Mexico. Currently, all of these agreements are goods-focused, with the UK seeking to broaden their coverage to include trade in services. The UK is also hoping to recommence negotiations on an enhanced FTA with Canada, which has been paused following an impasse primarily over trade in agricultural goods. 

The Future? 

Once the UK has concluded its current FTA negotiations, the scope for more economically significant trade agreements begins to narrow. The UK is unlikely to pursue an FTA with the United States under the Biden administration, with negotiations currently suspended.  

While a federal FTA has not been possible to progress, the UK has pursued several Memoranda of Understanding (MoU) with individual US states. The MoUs are designed to help make it quicker, easier and cheaper for firms in the UK and the US to do business. For a comprehensive analysis of the MoU programme, please see our insight article from July 2023 here.   

Whichever party wins the next general election in the UK, the government is likely to give more focus to increasing the utilisation of our current crop of FTAs. Governments can negotiate trade agreements, but they are of limited benefit if businesses are not taking advantage of the preferential terms on offer. For example, it is thought that some businesses are struggling to comply with complex rules of origin, which must be fulfilled in order to capitalise on the preferential tariff rates on offer in trade agreements.  

The government’s communication of the benefits of FTAs will be crucial in driving higher trade agreement utilisation with businesses on the ground. Clear communication of the practical changes that FTAs create will help businesses to take advantage of the new terms of trade. This, combined with further trade missions, export initiatives and financial support, could help British exports to continue to grow towards the government’s target of £1 trillion by 2030. 

It is likely that, whoever is in government, over the long run the UK-EU trade relationship will become stronger as gaps in existing arrangements are addressed.  We have seen this already, following the negotiation of the Windsor Framework and the UK opting to rejoin the Copernicus and Horizon programmes.  

By comparison, the Labour Party could pursue ties with the European Union in a different direction, including by seeking bespoke arrangements to align with EU rules in some sectors and by concluding a sanitary and phytosanitary (SPS) agreement, which could support trade in food and plant products (the area which is struggling most to adapt to new border checks).

Labour has also suggested that it may pursue bespoke arrangements for traveling musicians and further recognition of professional qualifications. However, the party has stated its commitment to staying outside of the EU’s single market and the EU customs union, which will limit future scope for significant further market access with the continent. 

Business expectations on the development of this trade corridor are high, with over 50% of firms we surveyed expecting the review of the UK-EU Trade & Cooperation Agreement (TCA) in 2025 to result in greater market access in the form of goods and services. 

What should I be doing now? 

The UK is set to continue to pursue a wide range of complex trade negotiations over the coming years. While some developments may appear far away, the combined impact of the UK’s independent trade policy is reshaping the landscape for businesses trading internationally from or with the UK.  

Now is the time to quantify the impact on your business. Whether you’re in goods or services, large or small, you should be evaluating your operations, supply chain, and investment decisions to position your business to take advantage of these developing relationships. For support in assessing your priorities, Deloitte’s specialists are on hand to help.