Boris Johnson doesn’t like to give up easily, so his latest promise is that the UK will complete a free trade agreement with the EU by 31 December next year. As he has stated, if he wins the election in December, the UK will be able to strike a free-trade agreement within just 12 months.

Is this possible?

According to the Financial Times, “few trade experts believe this is possible.” The reason being is the difficulty of having an agreement ready in such a short time, especially considering Brexit happening in January, and a transition period lasting until 31 December 2020. If this is the case, the article argues, the UK and EU would need to have agreed on “a comprehensive trade agreement by the end of next year. If they haven't, the UK in effect falls out of the EU with no deal. Most trade experts say a free trade agreement can’t be concluded that quickly.”

For many Brexiters, the UK wants to complete a similar kind of agreement as the Canada plus one, which took seven years for the EU to conclude and which will need the approval of all 27 remaining EU states.

Managing director of Eurasia Group Mujtaba Rahman has confirmed the impossibility of agreeing any trade agreement between the UK and EU. Talking to the FT, he said: “Remember this will be a trade agreement unlike any before. Normally trade agreements are designed to promote economic convergence. This one will be about managing divergence. That’s much more complicated.” 

As the government is not open to extending the transition period beyond the start of 2021, Johnson will have to win the election with a majority, something that will again open the possibility of a no-deal Brexit.

A Canada style free-trade deal

Boris is not looking for a close economic partnership, but rather for a trade agreement similar to the so-called Canada plus agreement, that will define the UK’s future relationship with the EU. Canada’s trade agreement with the EU is considered one of the most ambitious ones and is officially called the Comprehensive Economic and Trade Agreement (CETA). IT was signed in 2016 and was enforced in September. However, it hasn’t been ratified yet by all the countries, a step that could take several years.

The specific Canada trade deal has helped increase exports to Canada with Canada’s Minister of International Trade Diversification Jim Carr stating that: "At the Port of Montreal alone, we have seen 20% more traffic in goods headed across the Atlantic. This enormous step in growth for Canada and the EU has been the reason why new shipping lanes have been added to accommodate container traffic."

According to the deal, 98% of all tariffs on goods traded between Canada and the EU are duty free, something however, that, does not mean no border controls. Additionally, when it comes to the financial services, CETA does not offer anything that is not already covered by World Trade Organization rules. There is no"passporting" rights that will allow Canadian financial companies to sell their services in EU member states. Finally, there will still be tariffs on some products and quotas on certain agricultural products.

Not Ideal for UK and EU exporters

A Canada plus-type agreement might enable the UK to leave the EU customs union and decide on its own tariff rates, but it won’t necessarily solve all the issues faced by UK and EU exporters. There will be costs and additional bureaucratic documentation that will be too complicated or costly for companies.

EU: Any future trade agreement will be “difficult”

The European Union's Brexit negotiator Michel Barnier talking on Tuesday at the Web Summit, in Lisbon, said that negotiations on a future trading relationship with Britain would be "difficult and demanding," as the EU "will not tolerate unfair competitive advantage." "The UK should not think that zero tariffs, zero quotas will be enough," and that time would be "extremely short" for negotiations. He added that the UK still faced the threat of a no-deal Brexit: “Even when the [Brexit] deal is ratified it will not be the end of the story ... We have to build a new partnership with the UK after they withdraw."

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