A few months after the UK definitive departure from the EU, this work offers a comprehensive analysis of the trade relations between the two Parties and of their future perspectives in light of the scenario disclosed by the COVID-19 pandemic and by the Trade and Cooperation Agreement (TCA). The analysis highlights the deep commercial links between the two areas, characterized by the juxtaposition between the EU’s large surplus in goods trade and the UK’s dominance in the exchange of services. The outcome of the 2016 referendum had a modest impact on trade between the two blocs, although on both sides of the Channel a process of adaptation to the new setting is ongoing since several years also through the research for new trading partners. The TCA represents a good result compared to the dreaded alternative of a no deal, but a reduction in business at the EU-UK border seems still inevitable. On the one hand, goods producers and traders now have to comply with product-specific rules of origin to be exempted from duties: additional costs and efforts will be therefore needed to deal with customs red tape and to re-arrange production systems and supply chains. On the other hand, the vagueness of the TCA provisions on trade in services leaves crucial issues unsettled, as in the case of equivalence determinations. The overall picture looks more favorable to the EU than the UK, but the medium-to-long term effects on both Parties will mostly depend on their willingness and ability to restore a climate of mutual confidence and cooperation.
A Look at EU-UK Trade Relations in Light of Brexit, Pandemic and the Trade and Cooperation Agreement