Trade Agreements and Their Impact on International Shipping from the UK

What are trade agreements? These are negotiated terms regarding trade between two or more countries. They might include tariffs, quotas, restrictions on imports and exports, and provisions (e.g., intellectual property rights, investment protection, etc.). Currently, the UK is legally bound by 38 trade agreements that impact international shipping to a total of 47 countries.

How do these trade agreements affect cross-border trade from the UK? It all depends on each of the documents. Therefore, in this article, we will look into the most popular markets for international shipping and how these trade agreements regulate exports to these markets in particular. Did we spark your interest? Then read on.

What Is a Trade Agreement?

A trade agreement is a treaty signed between two or more countries. It is signed to smoothen and facilitate trade between the interested countries. There are three main types of them, namely:

• Unilateral – These trade agreements offer one-sided, non-reciprocal trade preferences, typically provided by developed countries to developing ones, to incentivize economic growth.

• Bilateral – Signed between two countries and offering the same conditions on both sides of the deal, typically signed to facilitate trade between these states.

• Multilateral – Trade agreements signed by more than two countries, where all the countries benefit from the same preferential trade conditions and requirements when trading with each other.

Trade agreements also fall under several different categories, depending on their conditions. Here’s a list of them:

• Regional trade agreements (RTA) – treaties signed between regions. They can be broken down into:

  • preferential trade areas,

  • free trade areas,

  • customs union,

  • common market,

  • economic union,

  • full integration.

• Bilateral investment treaties (BIT) – treaties signed between two countries in order to ensure that investors receive national or most favored nation (MFN) treatment (the one that is better).

• WTO agreements – treaties including goods, services, intellectual property, standards, investors, etc., regarding trade circulation.

• Suspension agreements – treaties signed by a foreign country to protect the other party's domestic business.

• Intellectual property (IP) agreements – treaties signed to protect patents, copyrights, and trademarks of the intellectual property creators while giving the other parties the right to use portions or the whole of it for a limited period of time and for a defined fee.

Trade Agreements and International Shipping from the UK – How Are They Connected?

Knowing that trade agreements affect the conditions on which international trade occurs, let’s dig a bit deeper into the legislation and take a glimpse at the legislation regarding the most popular UK export markets.

Canada

How much does it cost to ship products to Canada? Well, it’s definitely cheaper than for some other countries since the trade agreement between this country and the UK. What does impact? The provisions on:

• trade in goods - including provisions on preferential tariffs, tariff rate quotas, rules of origin, and sanitary and phytosanitary measures,

• trade in services and investment,

• intellectual property, including geographical indications,

• government procurement.

It’s worth noting that the UK is currently negotiating better conditions with Canada, so it is possible that this trade agreement will become even more preferential or might include additional areas of international trade in the future.

United States

If you know how much it costs to post to America, you probably realize that…it’s no different for the UK than for the other countries. This is because the US and UK do not have an active trade agreement.

Australia

The UK and Australia trade agreement is remarkable, as it removes tariffs from all British goods. What is more, it removes a lot of traditional bureaucracy, making exporting goods from the UK to Australia quicker and easier. This is especially helpful for small and medium e-commerce businesses, which would otherwise have to struggle with all the formalities and fees.

France

Like in the case of the United States, there are currently no trade agreements between France and the UK directly. However, on Brexit, the UK has signed the EU-UK Trade and Cooperation Agreement, which offers a lot of benefits for British exporters, for instance:

• zero tariff and quotas on goods that comply with the rules of origin,

• leveling the playing field by agreeing on transport connectivity.

The Takeaway

As you can see, trade agreements and international shipping are closely connected. The better the treaty, the easier (and less expensive) it is to export your goods from the UK to the target country. Thankfully, the UK has over 30 trade agreements with various states, so the choice of markets that you can enter on preferential conditions is wide, and they indeed regulate most main cross-border sales directions (apart from the US).

Did you find this article helpful? If yes, you should also read: ICS2 Explained: Answering 5 Key Questions to help you to be prepared.