Government report: UK needs transitional EU trade agreement to protect businesses

A new government report recommends a transitional trade agreement for the UK and EU during Brexit negotiations to avoid costly tariffs.

The report, Brexit: trade in goods, published today by the House of Lords EU External Affairs Sub-Committee examined the risks to the UK’s trade in goods with the EU after Brexit.

Once Brexit negotiations are triggered, the UK will have two years to negotiate a trade deal with the EU. This is “inherently ambitious”, said Baroness Sandip Verma, and the government will need to find a transitional agreement with the EU before then.

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Any future trade deals with the EU must avoid any tariffs of trade, said Baroness Verma, chairman of the EU External Affairs Sub-Committee.

Trade between the EU and UK is worth almost £357 billion every year, making the EU the UK’s largest trading partner.

“The Government will also need to increase Whitehall’s preparedness for administering UK-EU tariffs and non-tariff barriers to UK-EU trade,” commented Baroness Verma.

The report found that the manufacturing and primary commodities sectors, which are large employers, need to be protected from any new barriers to trade in order to boost growth in the UK. According to the report, supplies and components move between the UK and mainland Europe many times during production and any UK-EU tariffs would greatly increase costs for both sides.

Leaving the EU customs union would add even more costs for UK companies, the report added.

It goes on to suggest that the UK should continue to participate in other EU agencies, like the European Medicines Agency, in order to protect trade.