In a post-Brexit world, trade agreements are of paramount importance. Its been just over a year since the UK left the European Union, and it could be argued, with finalised agreements and trade talks imbued with potential, the UK has embraced its independent outlook. The free trade deal between the UK and European Union (EU) came into force on 1 January 2021. Since then, several moves have been made internationally to develop future trading relationships.
Deals to continue with existing trading agreements have already been made with 63 countries therefore we can expect successful trade to continue here without change. This forging ahead with trade agreements internationally has had a positive effect on the Forex trade market, following initial gains as a trade deal was reached back in December.
Whats Happened So Far?
Back on 22 October, the UK signed its first trade deal outside of EU agreements with Japan, the UK-Japan Comprehensive Economic Partnership Agreement (CEPA). Not only the first new deal but a substantial one, with the total value of UK-Japan imports and exports over £31bn in 2019. This initial economic partnership deal gestures the potential of a far-reaching global Britain.
As a trade deal was reached on 24 December, the Association for Financial Markets in Europe (AFME) predicted positive growth, a deal on goods will lay the groundwork for future equivalence and further negotiations on financial services.
The UK announced an application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 30 January 2021, a free trade area with Asia and Pacific nations including Australia, Canada, Japan, and New Zealand. According to Dharshini David, Global Trade Correspondent, this particular trade partnership is a hugely positive one, Pacific Rim nations represent 13% of global income and 500 million people – and the UK would retain the freedom to strike deals elsewhere.
A positive signal for the UK would be the United States joining CPTPP, finalising a sought-after US-UK trade deal that becomes more likely with the new US administration.
Whats Yet to be Finalised?
Agreements with Canada, Albania, Jordan, and Mexico are due to be finalised imminently, with either preferential tariffs, or under existing WTO trade terms. Trade agreements have also been put in place with countries that had existing arrangements before 1 January 2021. For members of WTO, trade continues on WTO terms, and trade with 45 eligible developing countries will take place under the UKs Generalised Scheme of Preferences (GSP).
The most recent deal is the Enhanced Trade Partnership with India, confirmed on 10 February, which will add a huge investment into industries including technology and life sciences.
Trade negotiations inevitably affect financial markets, meaning this India-UK deal presents a dynamic time for investments on the forex market. The market is now more accessible than ever before, meaning investors can gain full market exposure and embrace opportunities to see success.
Even as we live in turbulent times, one thing is for certain, trade agreements will never cease to have several effectors and repercussions. With the volatile, unwavering after-effects of Covid-19 in the UK as well as the ongoing navigation of international trade discussions, this year is set to be one we wont quickly move on from.