What could UK new trade model agreement with the EU look like? Here 3 examples of trade models between UK and EU – Switzerland, Hong Kong and Singapore.
Brexit will change the way United Kingdom trades with the rest of the world. What could its new trade model agreement look like?
Today, more than a month after the UK voted to leave the European Union (EU) in its historic referendum, we will have a look at 3 examples of trade models between UK and EU – Switzerland, Hong Kong and Singapore.
Read NEU’s selection of articles on Brexit for more information on its consequences.
Switzerland: A EU free trade agreement with some exceptions
Unlike the UK who voted to leave the European Union, the Swiss were never part of the Union and even voted against joining it in 1992. Despite this, Switzerland is a member of the European Free Trade Association, and has a free trade agreement with the EU, which gives the country access to the single market for most of its industries.
Yet, some restrictions can be found since Switzerland’s banking sector and some other parts of the services sector do not have full access to the single market. If it follows this model, it would be a disadvantage for the UK as this two sectors represent almost 80% of its economy.
Furthermore, the Swiss have secured their entry on the European markets through exports to the member states by agreeing 120 bilateral treaties with the EU. This agreements also include provisions regarding the free movement of people, agreements that are lately in danger because of a decision to restrict the number of workers arriving from the EU.
Despite not being a member state, as a way to show its unity with Europe, Switzerland contributes with billions of euro to EU projects on culture, research, education or security.
Hong Kong: The Customs Cooperation Agreement with the EU
Another model for UK can be its former colony, Hong Kong. As a founding member of the World Trade Organisation, Hong Kong is known for its open and free multilateral trading system. In 1999 the autonomous territory concluded a Customs Cooperation Agreement with the EU, a treaty that had the purpose to strengthen its trading ties with the EU.
The main benefits of the Agreement are that a big part of the EU exports enter and exit Hong Kong without customs tariffs, there are minimal license requirements, which contribute to making Hong Kong a significant trading partner for the EU. In addition, this makes the EU imports to be a competitor for local products or other imported products, and the foreign companies receive a similar treatment as the local ones.
As it is well-known, Hong Kong is one of the world’s largest film and television content exporters, therefore, with the help of the bilateral agreement the EU has become Hong Kong’s largest merchandise trading partners. With the support of a working visa endorsed by a local employer free movement of people can be easily obtained in Hong Kong.
The country’s data protection laws are amongst the most sophisticated in Asia. However, in view of the recent changes to EU data protection laws such as the forthcoming General Data Protection Regulation, it is likely that an upcoming review of the Hong Kong will result in the implementation of controls regulating overseas data transfers. While unlikely to hinder the free movements of goods and personnel across borders in the media, sports and entertainment industries, it will affect the handling of personal data, and the transfer of data outside of Hong Kong is likely to become more burdensome.
Singapore: The European Union-Singapore Free Trade Agreement (EUSFTA)
Singapore’s open and trade-driven economy allows the city-state to be a major shipping and trade hub in Asia and a popular trading partner for the EU.
Singapore is the first Association of Southeast Asian Nations member who negotiated a free trade agreement with the EU. The European Union-Singapore Free Trade Agreement, who was due to become active at the end of 2015, has experienced some delays in ratification. With similar business and legal practices, Singapore is the largest ASEAN trading partner of the EU, while EU ranks third in Singapore’s global trading partners.
Even though certain provisions within the EUSFTA will result in tariffs being applied for certain products relevant to the media, sport and entertainment industries, this treaty will ensure that EU exporters have duty free access even if Singapore raises duties in the future.
The EUSFTA does not specifically cover free movement of people. In general, working visas can be obtained in Singapore on application supported by a local employer. Processing time routinely takes at least 3 months and there are requirements to protect work opportunities for local residents.
Singapore closely follows the EU’s data protection framework in applying stringent standards for overseas data transfers. The EUSFTA involves a mutual recognition of these standards. In light of its current similarity with EU practices, the recent update of the General Data Protection Regulation is not anticipated to pose any amendments to Singapore’s current laws.