LONDON – British industry bodies were celebrating Christmas – and then some – on Dec. 24 after the U.K. and the European Union inked an historic post-Brexit trade deal that will wipe out duties on goods passing between the two regions.
The agreement, reached on Christmas Eve by the U.K. and the EU, came after months of negotiations that were so tense and fractious that businesses had begun preparing for a no-deal scenario, and a default to World Trade Organization rules.
WTO rules would have meant a range of single and double-digit tariffs on U.K. exports ranging from food to fashion. The EU is the U.K.’s largest trading partner, and it was crucial for both sides to get a deal over the line. Although the details of the eleventh-hour deal have not yet been released, it is understood to be good enough for both sides.
British parliamentarians will be called back to work on Dec. 20 to ratify the deal, and new terms will kick in as of Jan. 1. There will inevitably be more red tape, with fashion companies among the many businesses that will have to fill out detailed paperwork when sending goods and samples abroad.
Now that a deal has been struck, all businesses will be able to avoid the WTO duties, which would have meant a 12 percent levy on U.K. clothing exports to the EU, and a 8 percent one on footwear exported to Europe.
“The EU is the U.K. fashion and textiles industry’s biggest market, and we are relieved that a deal has been secured. The deal should help secure the 7.4 billion pounds of fashion and textiles that the U.K. sells to the EU every year, as well as helping to secure the future of thousands of jobs and hundreds of companies,” the group said.
The organization added that while the deal is “extremely welcome and provides some clarity,” there is still much that companies need to do, as the trading environment with the EU “will be very different even with this deal.”
Nigel Lugg, chairman of UKFT, said: “I am delighted that a deal has been agreed. While we need to see the detail of the deal to fully understand the implications, UKFT will be working with its members to help the industry maintain and grow its exports to the EU and the rest of the world.”
Helen Brocklebank, chief executive officer of Walpole, the association of British luxury brands, said that while the deal wasn’t perfect, it was good enough. Like UKFT, Walpole had earlier this year told its member brands to prepare for a no-deal.
“It was always going to be a slightly strange trade agreement, in that it is one which inevitably increases barriers rather than removes them, but British luxury brands will breathe a huge sigh of relief that the U.K. and the EU signed a deal today, and between this, and the promise of the [coronavirus] vaccine, everyone will be much more optimistic about what can be achieved in 2021.”
She added that British luxury brands “are determined to make a success of the country’s decision to leave the EU, and we understand that we are one of the country’s most valuable and alluring assets. Some of this success depends on the government striking strong free trade agreements with the U.S. and other countries.
“What we need to see from government now is, a sound post-Brexit, post-COVID recovery plan with particular action points on assistance for the retail and hospitality sector, and a marketing drive to get tourists back to the U.K. with speed. Part of this includes a demonstrably successful track and trace scheme to signal to the world that Britain is safe to visit. Walpole would also like to see the appointment of a minister of hospitality to support this sector’s very specific needs resulting from the harm imposed by the pandemic.”
Not every free trade deal has been as fraught as this latest one with the EU. The U.K. has rolled over more than 20 deals with countries including Canada, Switzerland, Israel, Singapore and South Korea.
In October, it inked a free trade agreement with Japan and it is currently negotiating with the U.S. Talks are understood to be progressing positively, despite the upcoming change in U.S. presidential administrations to that of President-elect Joe Biden.