Will a free trade agreement (FTA) allow goods to be exchanged between the UK and the EU as they are today?
Trading under FTA terms, even a so-called “best in class” FTA, will be of a very different nature compared to the free movement of goods enabled by the EU’s Customs Union and Single Market. In an FTA context, rules of origin and customs formalities will apply; all imports will need to comply with the rules of the importing party and will be subject to regulatory checks and controls for safety, health and other public policy purposes.
That being said, the proposal we are ready to table, as the Political Declaration already announced, will be a very ambitious FTA: no tariffs and no quotas across all goods, including agricultural and fisheries products.
This privileged access is conditioned on the existence of robust provisions ensuring a level-playing field, guaranteeing competition between economic operators on both sides. In addition, the access conditions that the Union grants under the free trade area will be guided by the terms on access and quota shares in the fisheries agreement to be established by 1 July 2020. .
Without an FTA in place by the end of the transition period, tariffs and quotas will apply to all trade in goods between the EU and the UK. In this scenario, we must apply what is known as “MFN tariffs” to the UK. Indeed, under the WTO Most Favoured Nation (MFN) principle, benefits given to one trading partner need to be extended to all other WTO members, unless a preferential trade arrangement, such as an FTA, allows this.
Therefore, without an FTA in place as of 1 January 2021, economic operators and consumers should not expect privileged treatment when dealing with the UK.