Free trade agreements reduce barriers to trade between two or more countries by reducing or eliminating tariffs and import quotas. Members of these agreements are still able to negotiate separate trade agreements with other countries. These agreements are authorized by WTO rules, although they give preferential access to partner countries and not to all WTO members. The UK wants a free trade agreement with the EU, based on the precedents of previous EU free trade agreements with Canada, Japan and South Korea. The UK is also working to extend the free trade agreements it currently enjoys through EU membership, which will end at the end of the transition period, and to conclude new agreements with countries such as the United States, Australia and New Zealand. Today, the free trade agreement is the most common form of regional integration. For example, 84% of regional trade agreements notified to the World Trade Organization (WTO) are free trade agreements. This trend can be explained very simply. To sign such an agreement, it is not necessary to harmonize national legislation or tariffs, geographical proximity of partners is not necessary, etc. At the same time, free trade agreements govern access to strategic markets. This means that they allow the integration of economic sectors at the necessary level, while ensuring maximum respect for the sovereignty of these countries and making the best efforts. Following this contribution, we will look at « real-world » trade in the light of these two factors that influence trade policy and see what this means for the UK`s trade efforts.
A free trade agreement is an agreement between two or more countries to facilitate trade and remove trade barriers. The aim is to eliminate tariffs completely from day one or over a number of years. Some key points in the history of European trade show the effectiveness of the two sets of economic arguments raised in the introduction. The central point is that even in a world without tariffs and other direct trade barriers, trade costs would be influenced by a series of regulatory measures. A tariff can make it more difficult to sell a product in a given market because it increases the price; A health standard or performance requirement, with complex technical requirements that involve high compliance costs, can make selling impossible. The emergence of global value chains in developed economies as a driver of trade and the growing importance of services in national GDP and trade have been greatly appreciated by the development of effective regulation and the reduction of regulatory fragmentation. Recent OECD work indicates, for example, that even for countries (such as the United Kingdom), low restrictions on trade in services, differences in regulation and the time and time required to overcome them can result in tariff costs of between 20% and 75%. The UK government does not go that far, but it seems to have sufficiently integrated the theory that ministers, under the leadership of their International Trade Minister, have positioned the Uk as a global defender of free trade.