Researching free trade agreements

What is a free trade agreement (FTA)?

If you’re looking to export a product or service to a different country, you need to know the terms and conditions for doing so. These will directly affect how much it’ll cost you to export.

A trade agreement is a legal document that sets out any rules that cover trade between 2 or more countries. For example, some trade agreements enable countries to accept each other’s imports without product-testing them.

Meanwhile, a free trade agreement (FTA) allows trading to be less restricted. Significantly for exporters, tariffs, border taxes and quotas can be reduced under the terms of this kind of agreement. This can be appealing for exporting businesses, as it costs less to get goods to customers in FTA markets.

But, FTAs do not mean the end of border checks. Different countries still have different rules and standards for imports, and customs have to make sure entry requirements are met.

Making the most of FTAs

If the general conditions look right, an FTA could make that market an even stronger contender for your business. FTAs can make markets more accessible to you, help to cut costs and make your exporting more profitable.

But for an FTA to offer real opportunity for your company, it has to complement your overall business strategy. So it’s worth checking which markets have signed trade deals with the UK or are in consultation to do so. You can check later in this lesson.

Then, with expert help, you can search the FTA’s terms to see which ones could benefit your business, or think about how you could adapt your business strategy to make the most of them.

For example, if you’re a fashion exporter with an interest or existing presence in Asia, you may want to benefit from the UK’s trade agreement with Japan. It makes exporting clothing to Japan easier with fewer restrictions and reduced duties.

You can include FTAs in the mix of factors you’ll look at when choosing a market to export to – such as ease of doing business, freight costs, and customer demand.

Finding more advice and information

For any trade agreement to be useful, you need to assess how it might benefit your business – understanding how its terms might be good for your exporting.

However, they’re lengthy and complex documents, written in legal language. So you may find explainers useful, such as videos and articles that break down the top level significance of an agreement. Just make sure these come from sources you can trust. It’s also worth getting expert advice on how an FTA could apply to your product.

You can:

• speak to your local International trade adviser
• get help from DIT officials in embassies, consulates and high commissions
• speak to a lawyer for tailored legal advice

Current UK FTAs

EU – Trade and Cooperation Agreement

Benefits to exporters include:

• no tariffs on the movement of goods deemed to be of UK origin between the UK and the EU
• legal guarantees that many UK service suppliers won’t face trade barriers when selling into the EU
• ongoing freedom of movement for UK professionals - depending on activity - so they can continue doing business in the EU

Find out more on this Trade and Cooperation Agreement

Japan – UK-Japan Comprehensive Economic Partnership Agreement (CEPA)

Benefits to exporters include:

• reduced trade costs for exporting to Japan. This will vary across goods and services
• reduced regulations and red tape on the trade of services to Japan

Find out more on the UK-Japan CEPA

The UK has signed three new trade agreements since leaving the EU. These are not yet in force. Both countries’ parliaments must complete their respective domestic procedures for the agreements to come into effect.

Australia – UK-Australia Free Trade Agreement (FTA)

Benefits to exporters include:

• tariff-free exports of goods
• unprecedented access for service providers
• more opportunities to trade digitally

Find out more on the UK-Australia FTA

New Zealand – UK-New Zealand Free Trade Agreement (FTA)

Benefits to exporters include:

• removal of tariffs on a range of goods
• cutting of red tape for advanced tech and service companies

Find out more on the UK-New Zealand FTA

Singapore – UK-Singapore Digital Economy Agreement (DEA)

Benefits to exporters include:

• open and inclusive digital markets
• free and trusted cross-border data flows

Find out more on the UK-Singapore DEA

The UK is also looking at improving trading conditions with additional countries through negotiating FTAs with them.

Other UK trade agreements

Check the full list of trade agreements the UK has with countries around the world.

These agreements seek to continue the effects of trading agreements that had applied when UK businesses traded with these countries while the UK was in the EU.