BP 83 – How Much Free Trade in UK Free Trade Agreements?
Download Briefing Paper 83 Briefing Paper 83 - July 2024 Adriana Brenis, Michael Gasiorek and Manuel Tong Koecklin Key points Introduction UK exports and MFN tariffs Preference utilisation rates Rules Of Origin Determinants of preference utilisation Conclusion Key points The UK has signed continuity agreements with South Korea (2019) and Canada (2020), to maintain the terms of the previous EU deals with both trading partners, as well as the Trade and Cooperation Agreement with the EU (2021). In 2022, the EU, Canada and Korea accounted for 45.2%, 1.5% and 1.1% of UK exports respectively. These deals provide for zero preferential tariffs on most UK exports to these countries. In practice, not all exports utilise the preferential tariff rates. In 2021, under the UK-EU deal, the ‘Preference Utilisation Rate’ (PUR) was 69%, rising to 74% in 2022. For UK-Korea, the rates were 60% and 56% respectively, while for Canada they were only 30% and 52%. Preference utilisation will typically depend on the level of the Most Favoured Nation (MFN) tariffs. The higher the tariff, the greater the incentive to use the preference. Other factors such as the value of trade; as well as how difficult it is for firms [...]
