The EU's other trade agreements

“Mr Clarke, why can't we deal through the World Trade Organisation with the European Union, as all the rest of the world do?”

Audience Member, BBC Question Time, 20 October 2016

It’s not correct that the “all rest of the world” trades with the EU under World Trade Organisation (WTO) rules.

As part of the EU, the UK faces no formal trade restrictions when it trades with other countries in the EU single market.

If it leaves without negotiating an alternative trade agreement, UK businesses will trade with EU businesses under WTO rules.

The rules say that the EU generally has to apply the same tariffs (taxes on imports and exports) to every WTO member country it trades with.

But there are exceptions.

Tariffs don’t have to apply equally to countries that are part of a regional free trade agreement or customs union.

The EU has finalised 48 trade agreements which make it easier for businesses to trade across borders, some of which apply to trade with multiple countries. There’s differences of opinion about whether the UK will have to renegotiate all these deals outside of the EU.

With no alternative trade agreement, UK businesses would face higher tariffs than those other non-EU countries.

We’ve previously published pieces on:

1. What it means to be in the EU single market
2. Options for trade arrangements after the UK leaves the EU
3. The current state of UK trade with other EU countries