The UK Global Tariff – UKGT and Turkey – UK Free Trade Agreement

The UK Global Tariff – UKGT and Turkey – UK Free Trade Agreement
  • Post last modified:October 6, 2020
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On May 19, 2020, the UK Government announced its new tariff regime, the UK Global Tariff (UKGT), which will replace, in the UK, the Common Customs Tariff of the EU as from January 1, 2021. The UKGT will apply to trade with all countries with which the UK is about to concluded or rolled over a free trade agreement, including Turkey.

This new UK Global Tariff will apply to all goods that are imported into the United Kingdom. As part of this, the UK government will introduce its “Most Favoured Nation” (MFN) tariff policy effective, January 1, 2021. And will consequently not be participating in the EU’s January 2021 suspension round.

Adam Marshall, director general of the British Chambers of Commerce, said said: “While the new tariff regime will provide the government with some leverage in future trade talks, it also demonstrates the importance of reaching a UK-EU agreement to avoid substantial increases in costs for businesses on both sides of the Channel.”

The UKGT also provides a level of continuity and protection, maintaining tariffs to a number of UK sectors and industries, including tariffs on agricultural products such as lamb, beef, and poultry to be maintained. Also, 10% tariff on cars to be maintained.

“Our new global tariff will benefit UK consumers and households by cutting red tape and reducing the cost of thousands of everyday products.”

Liz Truss, The international trade secretary of the UK

What is covered by the UK Global Tariff?

Under the new regime, the tariffs on more than 6,000 products will be streamlined or simplified, with the aim of cutting costs for businesses and consumers.

  • Simpler and easier to use than the EU’s CET, and UKGT will be in pounds (£), not euros.
  • No tariffs below 2% – needless tariffs with admin-burden removed
  • Certain complex calculations eliminated, e.g. biscuits
  • Tariff cuts on 100+ products that support a sustainable economy
  • Removed UK tariffs on products the UK does not produce, e.g. olives

Turkey is one of Britain’s top destinations for a trade deal after the European Union and the US

UK world news story released on May 20th: “For Turkey, UK’s aspiration is to continue with zero tariff trade on all goods traded in the EU-Turkey Customs Union, by implementing a FTA by the end of 2020”. On trade agreements overall, however, there is still quite a way to go.

“Turkey is probably the closest country that has the capacity to produce this sort of material, due to a massive textile centre. It shows how this is a first-choice country to get supplies from”

Chris Gaunt, chairman of the British Chamber of Commerce in Turkey.

Turkey and the UK invest extensively in each other at both the governmental and business level. British firms invested around $409 million in Turkey in 2018, with Turkish firms investing around $323 million in Britain over the same period. Over the past 10 years, the U.K. poured $7.2 billion in investment into Turkey, and Turkey invested $2.5 billion in the U.K.

According to Telegragh: “some Turkish business chiefs are disappointed with the timeline of post-Brexit trade negotiations, as any deal with Ankara can only take place once a wider agreement with the EU is concluded. And there are also concerns that any future talks will be severely restricted in scope due to Turkey being a member of the EU’s customs union, which means that many of its tariffs are decided by Brussels. “

Industry sources say early trade talks between the British and Turkish governments are ongoing, but on a smaller scale than planned due to the pandemic.

Furthermore, on a post on Hurriyet Daily, that said, “the bigger problem in the view of analysts is the tight timeline the UK has imposed on the negotiations with the EU. Experience suggests that free trade arrangements are not easily or rapidly negotiated. Indeed, they take at least two to three years, and in some cases longer.

This makes it highly unlikely that the U.K. will be able to negotiate a free trade deal with Europe by end 2020. In the case of the EU-Canada free trade deal, it took seven years to negotiate. Now the UK is seeking a free trade deal with both the EU and the U.S. This means that it will prioritize those two negotiations and leave negotiations with other countries like Turkey for another day”.

UKGT, free trade agreement, tariffs, commodity codes

Which countries has the UK trade agreements?

Signed trade agreements

  • Andean countries
  • CARIFORUM trade bloc
  • Central America
  • Chile
  • Eastern and Southern Africa (ESA) trade bloc 
  • Faroe Islands
  • Georgia
  • Iceland and Norway
  • Israel
  • Jordan
  • Kosovo
  • Lebanon
  • Liechtenstein
  • Morocco
  • Pacific states
  • Palestinian Authority
  • South Korea
  • Southern Africa Customs Union and Mozambique (SACUM) trade bloc
  • Switzerland
  • Tunisia

Trade agreements in discussion

  • Australia, what you need to know about exporting food to Australia
  • New Zealand
  • Algeria
  • Bosnia and Herzegovina (Western Balkans)
  • Cameroon (Central Africa)
  • Canada
  • Côte d’Ivoire
  • East African Community (EAC)
  • Egypt
  • Ghana (Western Africa)
  • Mexico
  • Moldova
  • Montenegro (Western Balkans)
  • North Macedonia (Western Balkans)
  • Serbia (Western Balkans)
  • Singapore
  • Ukraine
  • Trade with Andorra, San Marino, and Turkey will be influenced by the trade agreement that the UK will reach with the EU, as they are part of customs unions with the EU.

Signed mutual recognition agreements

  • Australia,
  • New Zealand
  • United States of America
  • Switzerland
  • Israel
  • Japan

Click here to access the full UK Global Tariff schedule.

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