International Trade 2021

Last Updated December 11, 2020


Law and Practice


Linklaters is a leading international law firm, headquartered in London. Led by partners Charlotte Morgan and Nicole Kar, the firm's trade practice advises governments and corporates across the full spectrum of international trade matters, including WTO policy and law; market access under bilateral and multilateral trade agreements; trade remedies (anti-dumping measures, countervailing duties, and safeguards); subsidies; government procurement; technical regulations and conformity assessments; investment screening; investment disputes; and negotiations and dispute settlement under trade agreements. The trade practice draws upon the expertise of Linklaters' other practice areas, such as international arbitration, financial regulation, intellectual property, and environmental law; it also benefits from the trade practice experience of its alliance firms, Webber Wentzel and Allens.

The UK is a member of the World Trade Organization (WTO). It is party to the plurilateral Agreement on Trade in Civil Aircraft (TCA) in its original form.

At the time of writing, the UK was preparing to accede to the revised Government Procurement Agreement, the Trade Facilitation Agreement, subsequent agreements amending the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the TCA, and the ministerial declarations constituting the Information Technology Agreements. The UK was bound by these until 31 January 2020 by membership of the EU and will continue to be bound until 31 December 2020 (the end of the “transition period”) under the terms of its withdrawal from the EU.

At the time of writing, the UK had concluded 22 free trade agreements (FTAs) covering 50 countries and territories to replace existing EU FTAs. These FTAs, which are very similar to the existing EU FTAs, will come into force at the end of the Transition Period. The most significant of these, on the basis of total UK trade, are with Switzerland, SACUM (the Southern Africa Customs Union and Mozambique) and South Korea.

The two most important differences between the EU and UK FTAs with these third countries are that tariff rate quotas have been reduced and rules of origin have been amended.

The UK and Japan have also signed an FTA based on the EU-Japan FTA but with some further changes (eg, there is a digital trade chapter); the parties expect this to have come into force at the end of the transition period.

The UK generalised system of preferences programme will have come into force on expiry of the transition period. Government policy is to replicate market access provided by the EU generalised system of preferences.

The terms of withdrawal from the EU impose certain obligations of indefinite duration on the UK in relation to Northern Ireland (note that the UK consists of Great Britain and Northern Ireland). These include:

  • EU product legislation and VAT law must continue to apply in Northern Ireland;
  • customs duties and quantitative restrictions on trade between Northern Ireland and Ireland are prohibited;
  • under certain circumstances, customs duties must be levied on trade from Great Britain to Northern Ireland; and
  • the UK must comply with EU state aid law insofar as measures affect trade between Northern Ireland and the EU.

At the time of writing, the UK government has introduced a bill before Parliament that would grant the UK power to override certain of these obligations (the Internal Markets Bill); the EU has, in response, commenced legal proceedings against the UK.

European Union (EU)

At the time of writing, the UK was negotiating an FTA with the EU with the common expressed aim that it would come into effect on the expiry of the transition period. The most significant outstanding issues concerned fisheries and disciplines on state aid.

Regardless of how these issues may have been resolved, and when such an FTA would come into effect, it would represent a marked reduction in integration in comparison with EU membership (however, see 1.3 Other Trade Agreements on Northern Ireland).

While the FTA was expected to provide for tariff-free and quota-free trade in all goods, it was not intended to address key actual or potential barriers to trade in goods “behind the border”. For example, the UK would no longer share technical regulations and sanitary and phytosanitary measures with the EU (raising the possibility of future divergence) and there would no longer be automatic recognition of conformity assessments (which may increase compliance costs in certain industries). Similarly, draft FTA provisions concerning trade in services were to be largely typical for FTAs, falling far short of the free movement of persons, services and capital provided for by EU law.

Such changes reflect the UK objectives of maximising policy space and protecting its legal and regulatory autonomy.

Replacement FTAs for EU FTAs

At the time of writing, there were 17 countries for which negotiations on replacement FTAs had not concluded. Of these, total UK trade is greatest with Canada, Norway and Turkey.

It is likely that most of these FTAs, if and when replaced, will be very similar to the EU FTAs. Changes are likely to be largely restricted to tariff rate quotas and rules of origin. However, negotiating replacement FTAs is expected to be more complicated for Iceland and Norway (which participate in the EU single market as members of the EEA) and Turkey (which is in a customs union with the EU).

Other FTAs

At the time of writing, the UK was also negotiating new FTAs with the USA, Australia, and New Zealand. While the US negotiations were more advanced, there were question marks around the priority that president-elect Joe Biden would place on them. In addition, prospects for the FTA will become more complicated if negotiations are not concluded before expiry of US “fast track” Trade Promotion Authority on 1 July 2021.

The UK had also started engaging with signatories to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) with a view to negotiating accession.

Trade has been a fast-moving area in the UK during 2020. The UK has been developing an independent trade policy, most notably by continuing to negotiate FTAs and representing itself at the WTO.

The key development on the domestic front has been the introduction of the Trade Bill which, among other things, will give the Secretary of State powers to implement the GPA and replacement FTAs in domestic law. The government has also increased the number of consultation mechanisms: the Strategic Trade Advisory Group established in 2019 has been joined by a revamped Board of Trade, 11 sectoral Trade Advisory Groups, a Trade Union Advisory Group and a Trade and Agriculture Commission.

As noted above, at the time of writing the UK continues to pursue multiple trade negotiations. It is likely that some of these will be concluded in 2021.

Negotiations with the USA will be most closely observed, for several reasons: the political importance of a US FTA, being viewed by some as one of the most visible benefits of withdrawal from the EU; public concerns about the impact of such an FTA on food standards, investment and the National Health Service; and the need to reach agreement before Trade Promotion Authority expires.

Her Majesty’s Revenue and Customs (HMRC) is the UK customs authority responsible for national customs policy.

HMRC administers and enforces customs laws and regulations. HMRC works in partnership with Border Force, a law enforcement command within the Home Office, for frontier interventions. HMRC may also work in partnership with other law enforcement organisations.

The UK has a non-statutory mechanism for reporting trade barriers to the Department for International Trade (DIT). Via a digital tool, businesses may report barriers to trade and investment overseas. Reports are assessed and prioritised by a market access team in the DIT, which seeks to resolve trade barriers through informal and technical engagement with the partner country. The government publishes details of the barriers it has helped to remove.

During 2020 the UK prepared for the end of the transition period, including its departure from the EU customs union. Much of the required legislation has already been passed, specifically the European Union (Withdrawal) Act 2018, the Taxation (Cross-border Trade) Act 2018 and a number of statutory instruments (SIs) made under each. Although customs matters will largely be governed by domestic legislation, some relevant EU legislation is being retained and modified. By the time of writing, 2020 had seen further SIs made and others awaiting approval by Parliament. These were primarily aimed at facilitating trade, introducing some permanent measures (eg, making it easier for solvent compliant importers to defer duties without providing a customs comprehensive guarantee) and measures designed to minimise disruption when the transition period ends (eg, temporarily waiving the requirement for Entry Summary declarations).

In addition, the UK announced its new UK Global Tariff in May 2020, which in part departs from the EU Common External Tariff with effect from the end of the transition period. More detail on the UK Global Tariff can be found in the UK Trends & Developments chapter in this guide.

To assist businesses to adapt to the new customs and import processes that will be in place after the transition period, the UK has introduced two online tools:

  • “Trade with the UK”, which provides detailed information on tariffs, taxes and rules for those seeking to export to the UK; and
  • “Check How to Export Goods”, which provides information for those seeking to export from the UK to over 160 countries.

These complement the pre-existing “trade tariff” tool, which can be used to classify goods as well as to look up duties, etc.

The most significant pending change to UK customs in the coming year is the UK’s departure from the EU customs union. This will result in significant changes to customs processes and import measures for UK-EU trade, regardless of whether an FTA is concluded (which would only allow traders to claim zero duties provided goods meet the relevant rules of origin, rather than exempt traders from customs processes and import measures).

Trade in goods between the EU and Great Britain will, over the course of the year, come to be treated in a manner similar to trade between the UK and the rest of the world. A number of traders are expected to operate customs processes for the first time. The following summarises the transition for some of the key requirements, as at the time of writing.

From January 2021:

  • traders need a GB Economic Operator Registration and Identification number to move goods between Great Britain and the EU;
  • if importing controlled goods or excise goods, traders must complete a full customs declaration (simplified declarations are permitted under some circumstances);
  • if importing other goods, the trader can choose to delay the customs declaration and payment of import duty for up to six months, provided they keep sufficient records of the imported goods;
  • there is no need to submit "entry summary" declarations at this stage;
  • traders making delayed declarations and those importing controlled goods using simplified declaration procedures must have access to a duty deferment account, although rules will be introduced to permit many businesses to do so without providing the guarantee that is normally required;
  • payment of most import VAT may be postponed for VAT-registered traders (and must be for certain traders, including those delaying their declaration) but will otherwise be reported and paid through the customs process;
  • payment of VAT on consignments not exceeding GBP135 in value will be collected at the point of sale, rather than the point of importation, and accounted for via the VAT return;
  • if importing high-risk live animals and high-priority plants and plant products, there will be physical checks at the point of destination or other approved premises and it will be necessary to obtain relevant documentation and to pre-notify for certain movements; and
  • export declarations will be required for all exported goods.

From April 2021:

  • all products of animal origin and all regulated plants and plant products will require pre-notification and the relevant health documentation as for the rest of the world.

From July 2021:

  • full customs declarations must be made at the point of importation for all goods arriving from the EU and import duties must be paid for the goods to be released;
  • entry summary declarations must be submitted; and
  • any goods subject to sanitary and phytosanitary controls will need to arrive at an established point of entry with an appropriate Border Control Post.

There will be no change to trade in goods between Northern Ireland and the Republic of Ireland, including in respect of customs measures. At the time of writing, it was unclear what changes might be made to introduce restrictions on trade between Great Britain and Northern Ireland to prevent smuggling, with negotiations ongoing between the UK and EU.

From the end of the transition period, the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) will be the main legislation governing the imposition of sanctions by the UK. It gives the government power to create specific sanctions regimes by regulations. The potential scope is wide: sanctions can be imposed to meet international obligations, to prevent terrorism, to protect national security or international peace and security, to further UK foreign policy objectives, to promote resolution of armed conflicts and protect civilians in conflict zones, to support human rights and international humanitarian law, to prevent the spread and use of weapons of mass destruction, and to promote respect for democracy, the rule of law, and good governance.

As a practical matter, individual SAMLA regimes are drafted thematically (eg, the Chemical Weapons (Sanctions) (EU Exit) Regulations 2020) or geographically (eg, the Syria (Sanctions) (EU Exit) Regulations 2020).

UN sanctions implemented under EU law and EU autonomous sanctions implemented before the transition period ended (and which have not been replaced by equivalent SAMLA regimes) have been retained and modified as UK sanctions. They continue to be supplemented (for example, in respect of penalties) by UK regulations.

Other primary legislation bearing on sanctions include the Counter Terrorism Act 2008 and the Anti-Terrorism, Crime and Security Act 2001.

UK sanctions include financial sanctions (eg, asset freezes and restrictions on providing financial services), trade sanctions (eg, prohibiting exports, imports, technology transfer, service provision, and land acquisition), immigration sanctions (eg, travel bans), and aircraft and shipping sanctions.

Her Majesty’s Treasury (the “Treasury”), and more particularly the Office of Financial Sanctions Implementation (OFSI), implements financial sanctions. The Department for International Trade implements trade sanctions. The Home Office implements immigration sanctions.

Financial sanctions are primarily enforced by the National Crime Agency, although where a breach involves foreign bribery or complex fraud, it may also be investigated by the Serious Fraud Office. Trade sanctions are enforced by Her Majesty’s Revenue and Customs and the Home Office’s Border Force. Border Force also enforces immigration sanctions.

Generally, the UK sanctions regime applies to all persons who are within, or undertake activities within, UK territory as well as to all UK persons wherever located.

The UK sanctions list details of those designated under regulations made under SAMLA, for all types of sanctions. For sanctions regimes other than those implementing UN sanctions, the Secretary of State typically has the power to add persons to the list. For those implementing UN sanctions, the persons sanctioned by the UN are automatically made subject to the relevant SAMLA regime and will be added to list on that basis. Retained EU sanctions regimes list the sanctioned persons in an annex.

At the time of writing, OFSI also maintains two lists of persons subject to financial sanctions. The first is the “consolidated list”, which includes all designated persons subject to financial sanctions. The second is a list of entities subject to specific restrictive measures (relating to transferable securities and money market instruments) for undermining or threatening the sovereignty, territorial integrity and independence of Ukraine.

In addition, a list of groups or organisations proscribed under the Terrorism Act 2000 is maintained by the Home Office.

The UK does not impose any comprehensive sanctions or comprehensive embargoes against countries or regions (although if the UN were to impose such sanctions or embargoes, the UK would implement them domestically).

Under SAMLA, the government can impose sanctions on persons identified not only by name but by description.

It is also possible for the government to impose partial embargoes against countries using powers under the Export Control Order 2008.

The UK does not impose any secondary sanctions.       

Criminal penalties for breaching sanctions regimes under SAMLA are set out in the applicable regulations.

In general, the maximum penalties for breaching sanctions is set at:

  • seven years’ imprisonment and a fine for financial sanctions;
  • ten years’ imprisonment and a fine for trade sanctions;
  • six months’ imprisonment and a fine for breaching reporting requirements; and
  • two years’ imprisonment and a fine for breaching confidentiality requirements.

In addition, the Treasury may impose monetary penalties for financial sanctions breaches under the Policing and Crime Act 2017. Where the breach or failure relates to particular funds or economic resources and it is possible to estimate the value thereof, the permitted maximum penalty is the greater of GBP1 million and 50% of the estimated value. Otherwise, the permitted maximum penalty is GBP1 million. The amount will depend on the specific facts of each case, considering aggravating and mitigating factors. If a monetary penalty is payable by a corporate body a separate penalty may also be imposed on an officer under certain circumstances.

Under retained EU sanctions regimes, the Secretary of State may issue licences for activity otherwise prohibited. A licence may only be provided in relation to certain categories of expense (eg, basic expenses, legal fees and disbursements, and satisfaction of prior contracts).

Not all SAMLA sanctions regimes provide for licences for all prohibited activities. Where they do provide a licensing regime, however, they are less prescriptive than those in the retained EU sanctions regimes. The Treasury (in respect of financial sanctions) or the Secretary of State (in respect of other sanctions) may make licences on such terms as they think appropriate. The Treasury has previously given guidance in relation to other domestic sanctions regimes that it will take the stated policy objectives of the regime in question into account when considering licence requests.

Some specific sanctions offences are strict liability offences, but most offences tend to require the person in question either to have knowledge or a reasonable cause of suspicion concerning the circumstances (eg, in respect of an asset freeze, knowledge or reasonable cause to suspect that the person is dealing with frozen funds or economic resources).

OFSI does not mandate particular standards of sanctions compliance. However, it publishes guidance for regulated sectors: businesses in such sectors are expected to have risk-based compliance systems. OFSI has stated in its Monetary Penalties Guidance that, if a person merely falls below a high standard of compliance, it will consider whether it is proportionate to impose a penalty. OFSI can also respond to breaches without imposing penalties, such as requiring details of how a party proposes to improve their compliance or referring regulated professionals or bodies to their relevant professional body or regulator.

The SAMLA regimes create reporting obligations for financial sanctions. In general, certain businesses (“relevant firms”) must inform the Treasury if, in the course of business, they come to know or have reasonable cause to suspect that someone is subject to financial sanctions or has committed an offence relating to financial sanctions. These businesses include (among others) financial service providers, statutory auditors, accountants, lawyers, tax advisers, estate agents, and casino operators.

Where SAMLA regimes include trade sanctions, and general licences are available for use, a person must give notice to the Secretary of State within 30 days of first doing anything authorised by the licence.

The retained EU regimes include a general reporting requirement: this is an obligation applicable to all individuals and legal entities to provide any information that would “facilitate compliance” with the regime to the Treasury as soon as practicable. This is applicable to individuals and legal entities in the UK or under UK jurisdiction. Examples of information to be reported can be found in the OFSI General Guidance. UK regulations enforcing retained EU regimes include specific reporting obligations for a “relevant institution” and a “relevant business or profession”. Broadly, this includes financial and credit institutions, and businesses or professions which involve dealing with or advising on finance or credit.

At the time of writing, government policy was to retain the Council Regulation (EC) No 2271/96, commonly known as the EU blocking regulation. A draft statutory instrument modifying that regulation to correct deficiencies resulting from withdrawal (eg, substituting “UK” for “Community”) was awaiting approval by each House of Parliament.

Article 5 of the regulation will, when amended, prohibit certain persons with a UK nexus from complying with the sanctions listed in its annex (broadly speaking, US secondary sanctions relating to Cuba and Iran) and allows for the recovery of damages resulting from the application of those sanctions. The Secretary of State will have the power to change the sanctions listed in the annex.

Breach of Article 5 is a criminal offence punishable by an unlimited fine.

During 2020 the UK has continued to prepare for the replacement of individual EU sanctions regimes with UK regimes under SAMLA.

It introduced its first operative SAMLA regime, the Global Human Rights Sanctions Regulations 2020, dubbed the UK’s Magnitsky Act. Initial targets included Russian, Saudi, and Burmese individuals and two North Korean organisations.

The Policing and Crime Act 2017 has also been amended in a number of ways relevant to sanctions. Criminal offences relating to retained EU financial sanctions carry a maximum sentence of seven years’ imprisonment on indictment, up from two years. Financial sanctions breaches are now included on the list of offences for which a Deferred Prosecution Agreement (DPA) may be available. A DPA is an agreement approved by the Crown Court between an organisation and a designated prosecutor who is considering prosecuting for an offence and is applicable only to legal persons in England and Wales. Financial sanctions breaches are now also within the scope of offences for which Serious Crime Prevention Orders may be imposed by a court. These are intended to prevent, restrict or disrupt further engagement in serious crime by an individual or an organisation.

The coming year will see the bedding down of the UK’s fully autonomous sanctions regime under SAMLA. While the general theme has been continuity in substance, there are differences between the retained EU sanctions regimes and the new SAMLA regimes. As and when the remaining retained EU sanctions regimes are replaced, those responsible for business compliance should carefully scrutinise their replacements.

After the transition period ends, export controls in the UK will be primarily governed by the following pieces of legislation:

  • Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items (Recast) (Retained EU Legislation) (the “Regulation”); and
  • the Export Control Act 2002 (the “Act”).

The Regulation puts into effect the UK’s international commitments concerning export controls.

The Act gives the Secretary of State powers to conduct an independent export controls policy, to be made by order. The Export Control Order 2008 (the “Order”), made under the Act, implements most of the UK’s unilateral export controls policy and supplements the Regulation. Other orders made under the Act provide for the enforcement of export control aspects of retained EU sanctions and export controls on objects of cultural interest.

In addition to the export control regimes under the Regulation and the Act, there will be two other UK regimes retained from the EU, not otherwise covered in this chapter. These regimes:

  • implement the UK’s international obligations concerning illicit manufacturing of and trafficking in firearms, their parts, components and ammunition; and
  • govern trade in goods that could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment.

Alongside export control, the UK operates controls on technology transfer, technical assistance, transit through the UK, and certain trade between third countries involving UK nationals. These regimes are not further covered in this note.

Legal powers are vested in the Secretary of State for International Trade. The unit within the Department for International Trade responsible for export controls is the Export Control Joint Unit.

The Customs Enforcement Policy Team at Her Majesty’s Revenue and Customs is responsible for enforcing export controls, although compliance audits are conducted by the Export Control Joint Unit.

Export controls under the Regulation apply to “exporters”. Depending on the circumstances, this may mean the following natural or legal persons, or partnerships, resident or established in the UK:

  • a person on whose behalf an export declaration is made;
  • a person who holds a contract with a consignee in a third country;
  • a person who has the power to determine to export the item in question; or
  • a person party to a contract on which the export is based.

Export controls under the Order apply to all persons; the Order prohibits any person from exporting the relevant products.

The UK does not maintain any list of restricted persons for export control purposes (although exports to specific individuals may be separately prohibited under the UK sanctions regime).

The Regulation lists goods that it controls in Annex I. The list sets out those goods covered by the Australia Group, the Chemical Weapons Convention, the Missile Technology Control Regime, the Nuclear Suppliers’ Group, and the Wassenaar Arrangement. The Secretary of State may update Annex I to reflect changes to UK international obligations and commitments.

The Order sets out other goods that are subject to export controls in Schedule 2 (military goods) and Schedule 3 (dual-use goods). (The body of the Order also sets out two ad hoc export controls, not considered further here.)

Control of exports of military goods extends worldwide, whereas control of exports of specific dual-use goods targets “prohibited destinations”. The Secretary of State may modify goods subject to export controls by further order but can only impose export controls on:

  • military equipment;
  • goods on which military technology is recorded or from which it can be derived;
  • goods intended, designed or adapted for use in the development or production of military equipment or military technology;
  • objects of cultural interest; and
  • goods the exportation or use of which the Secretary of State has determined is capable of having a “relevant consequence”.

There are five kinds of “relevant consequence” under the following headings:

  • national security of the UK and other countries;
  • regional stability and internal conflict;
  • weapons of mass destruction;
  • breaches of international law and human rights; and
  • terrorism and crime.

As well as controls based on the lists referred to at 4.6 Sensitive Exports, the UK operates catch-all controls.

Under the Regulation and the Order, unauthorised export of items that are not listed are prohibited in certain circumstances. These include where:

  • the Secretary of State has informed the exporter that the items are or may be intended for use in connection with weapons of mass destruction;
  • the purchasing country or country of destination is subject to a UK arms embargo and the Secretary of State has informed the exporter that the items are or may be intended for military end-use;
  • the Secretary of State has informed the exporter that the items are or may be intended for use as parts or components of military items set out in Schedule 2 to the Order that were previously exported contrary to UK export controls;
  • the exporter is aware that the items are or may fall into any of the categories above (in which case the exporter must notify the Secretary of State, who will decide if export shall be authorised); or
  • the exporter has had grounds to believe that the items are or may be intended for purposes relating to weapons of mass destruction and, having made all reasonable enquiries as to proposed items, is not satisfied that they will not be used for such purposes.

The Order sets out penalties for breach of export controls (including in respect of breaches of the Regulation). Maximum penalties for offences range from a GBP1,000 fine to an unlimited fine and ten years’ imprisonment.

The exporter (and any agent of the exporter concerned in the exportation) may also suffer penalties under the Customs and Excise Management Act 1979. These include fines, imprisonment, and forfeiture of the goods.

Authorisations are available in respect of prohibitions under the Regulation. There are several different kinds, as outlined below.

  • Retained General Export Authorisations: there are six such authorisations annexed to the Regulation. They permit any exporter to export specific listed goods to specific destinations, subject to compliance with certain conditions. The Secretary of State may prohibit an exporter from using such an authorisation if there is reasonable suspicion about its ability to comply. The Secretary of State may introduce new National General Export Authorisations.
  • Individual export authorisations: these are granted by the Secretary of State to one exporter for one end user or consignee. They may cover multiple items.
  • Global export authorisations: these are granted by the Secretary of State to one exporter for a type or category of item for one or more specified end users and/or one or more specified third countries.

Licences are also available from the Secretary of State in respect of prohibitions under the Order. Unlike the Regulation, the Order does not prescribe particular forms of authorisation/licence.

As a general rule, any breach of an export control or of requirements relating to the application for or use of an authorisation or licence is a strict liability offence. However, there are exceptions:

  • export of goods controlled by the Order to destinations other than a prohibited destination is an offence if the exporter knows that the final destination of the goods is a prohibited destination and that before reaching that final destination no processing or working is to be performed on the goods;
  • some catch-all controls, by their nature, depend on the exporter being aware of a situation or not being satisfied that goods will not be used for some purpose; and
  • in applications for licences, it is an offence to make a statement or furnish a document that is false in a material particular only if a person knows that it is false or is reckless as to whether it is false.

The Order provides for separate offences with higher maximum penalties, where a person has been “knowingly concerned” in activities prohibited or restricted by export controls “with intent to evade” the relevant prohibition or restriction.

A person who wishes to use a general authorisation or licence must register with the Secretary of State within 30 days of their first use of it.

An export declaration must be made for all exports. An export authorisation or licence under which an export is made must be indicated on the export declaration.

The key development regarding export controls over the past year has been the retention and modification of EU export control law. Export controls are now generally applicable to trade between the UK and the EU.

There are no significant pending changes to export controls in the UK.

The regime governing AD/CV duties and safeguard measures is changing significantly due to the UK’s departure from the EU.

The new regime is set out in the Taxation (Cross-border Trade) Act 2018 and the Trade Bill 2019-21. At the time of writing, the Trade Bill had passed the House of Commons and was awaiting passage in the House of Lords. Following its enactment, it is expected to come into force when the transition period ends.

Once the Bill comes into force, two authorities will govern the imposition of AD/CV duties and safeguard measures.

First, the Bill establishes the Trade Remedies Authority (TRA). The TRA replaces the existing Trade Remedies Investigations Directorate (TRID) (a temporary body in the Department for International Trade, pending the Bill’s passage). The TRA is an independent, arm’s-length body, and not part of the Department. Upon requests by particular industries or (exceptionally) the Secretary of State, the TRA will open investigations into whether it should recommend trade remedies. This involves:

  • determining whether the legal conditions for imposing the remedy are met;
  • calculating the amount of duty that may be imposed; and
  • confirming that the remedy is not against the UK’s economic interest.

Second, if the TRA recommends imposing remedies, the Secretary of State decides whether to accept the recommendation. The Secretary of State may only reject the TRA’s recommendation if satisfied that:

  • it is not in the UK’s public interest to accept it (a broad concept left undefined in the legislation); or
  • the TRA’s determination that the remedy was not against the UK’s economic interest was not reasonably made (a high bar under English law).

Measures are administered by Her Majesty’s Revenue and Customs (HMRC). Physical customs inspections are conducted by the Home Office’s Border Force.

The TRA can initiate reviews when applications are made by interested parties, or on its own initiative. “Interested parties” include trade associations, UK producers, importers, exporters and foreign governments. Reviews of measures already in place are addressed in 5.9Frequency of Reviews and 5.10 Review Process.

As set out above at 5.3 Petitioning for a Review, UK producers can apply for investigations at any time.

All “interested parties” may participate in a review. Interested parties include producers of goods in the UK, importers, exporters and foreign governments. Moreover, anyone who makes themselves known to the TRA may participate as “contributors” in a review, whether or not they are an “interested party”. These “contributors” have fewer rights than interested parties but can nonetheless make submissions during the investigation. Current practice is that interested parties and contributors must register within 14 days of the review commencing in order to participate.

The two-stage process for imposing duties and safeguards is set out at 5.1 Authorities Governing Anti-dumping and Countervailing (AD/CVD).

The TRA aims to: assess applications for new investigations within 40 days of receipt; produce provisional determinations within nine months of initiation, depending on the remedy sought; and produce final determinations within 13 months after initiation, again depending on the remedy sought. These timelines are broadly in line with WTO requirements and existing EU practice. However, they are not contained in the regulations themselves, only in guidance. The guidance emphasises that the TRA may not meet these timelines because of competing priorities or difficulties in transitioning to the new regime.

At various stages in the investigation (initiation, provisional determinations, final determinations, and the Secretary of State accepting or rejecting the recommendation) the authorities publish notices summarising their findings and the reasons for their decision. In between these stages, non-confidential versions of documents submitted by review participants are available on the authorities’ website for public access.

UK law does not prohibit the imposition of AD/CV duties or safeguards on goods from any specific countries. However, at the time of writing, the UK is negotiating and implementing various FTAs which may soon affect this. Assuming that these take effect on 1 January 2021, it is likely that the UK will not be permitted to impose AD/CV duties or safeguards on a small number of jurisdictions, reflecting agreements reached to “roll over” existing EU trade agreements with certain countries (notably Switzerland and Liechtenstein, who have already signed agreements with the UK). However, these arrangements are the exception rather than the rule – most EU FTAs allow bilateral trade remedies, and the UK’s new FTAs seem likely to reflect this starting point.       

Duties are typically in place for five years, unless the TRA recommends (and the Secretary of State accepts) that a lesser period suffices. Measures may be reviewed in two main ways. First, interim reviews can take place during the life of the measure to determine whether the measure should be varied or revoked during its five-year lifespan. These reviews generally cannot happen until at least one year after the measure commenced (unless the TRA decides to initiate its own review sooner). Secondly, expiry reviews may take place to determine whether to extend measures beyond five years.

These reviews can only be initiated between three and 12 months before the expiry of the measure. Other types of review – absorption reviews (to determine whether duties have been absorbed by exporters or importers), new exporter reviews (to determine appropriate rates for exporters who did not export the goods during the initial investigation), circumvention reviews (see 5.2 Government Agencies Enforcing AD/CVD Measures) and scope reviews (to determine whether certain goods should be removed from the measures’ scope) – can take place at any point.

As set out at 5.3 Petitioning for a Review, a review may be initiated by the TRA or interested parties.

In conducting the review, the TRA broadly has the same investigative powers as it has in ordinary investigations. It can adopt these procedures to the extent that it considers them relevant. The two-stage procedure set out in 5.1 Authorities Governing Anti-dumping and Countervailing (AD/CVD) also applies. First, the TRA determines whether the legal conditions for imposing the duty are met, calculates the amount of duty that may be imposed, and confirms that the remedy is not against the UK’s economic interest (an exception to this is absorption reviews, in which the TRA is not permitted to reassess the economic interest test). Secondly, the Secretary of State determines whether to accept this determination in the public interest.

The UK has a two-stage appeal process. First, interested parties may ask the TRA to reconsider its decision. Reconsideration will usually be processed by a different team within the TRA. Where the reconsideration relates to a point of law, the TRA may immediately refer the matter to the Upper Tribunal before concluding the reconsideration. The Upper Tribunal is independent of the government and comprises judges and experts (such as economists).

If interested parties are not satisfied with reconsideration by the TRA or by decisions of the Secretary of State, they may appeal to the Upper Tribunal. In determining these appeals, the Upper Tribunal must apply the principles of judicial review. This means that it will not re-make substantive decisions on the merits, but only consider whether they have been made in accordance with the legislation. Because of the technical nature of the TRA’s decisions and the policy judgments involved in the Secretary of State’s decisions, the Upper Tribunal will likely show significant deference to the TRA or Secretary of State’s decision.

The UK’s regime is entirely new and largely untested. The TRA will have to develop an entirely new set of practices, albeit in accordance with WTO requirements and likely reflecting existing EU practice.

A peculiarity of the UK’s position is that it must consider how to treat measures previously in effect by virtue of its EU membership. Following consultation with industry, the UK decided to terminate many EU measures and temporarily “maintain” others, pending the outcome of “transition reviews”. At the time of writing, six such reviews have been initiated.

As set out at 5.12 Key Developments Regarding AD/CVD Measures, the TRA is developing entirely new practices, and practitioners are watching closely.

The two key tests the regime sets out before a measure can be imposed are particularly hot topics.

First, the TRA must determine whether the remedy is in the UK’s economic interest. This involves considering factors set out in legislation (including the effect on and economic significance of affected industries and consumers, the likely impact on particular geographic areas or groups, and the likely consequences for the competitive environment and for the structure of markets for goods), but also such other matters as the TRA considers significant. It remains to be seen how the TRA will apply this multifactorial test. Industry groups in the UK have expressed concern, even though the legislation presumes the test is met unless the TRA determines otherwise.

Secondly, the Secretary of State is asked to determine whether the remedy is in the UK’s public interest. This concept is undefined in the regime and leaves the Secretary of State with considerable discretion. This was an intentional and integral part of the regime, which aims to separate political and technocratic decision-making, but it is yet to be seen how this will be applied in practice (if it is used at all).

The UK has traditionally taken a permissive approach to inward foreign investment. The UK has been an outlier among its international peers in not having a standalone foreign investment regime. The government is, however, expected to introduce a standalone foreign investment screening regime in the imminent National Security and Investment Bill (“Bill”) and to establish a new agency, the Office for Investment, which will be the guiding hand for investment flows into the UK.

The government has the power to review transactions on public interest grounds under the Enterprise Act 2002 (EA02). This allows the Secretary of State (SoS) for Business, Energy and Industrial Strategy (or the Secretary of State for Digital, Culture, Media and Sport for media mergers) to issue a Public Interest Intervention Notice or European Intervention Notice (“intervention notice(s)”) to review a transaction on specified public interest grounds. For the SoS to issue an intervention notice, a transaction must be reviewable under UK merger rules (with the exception of certain “special public interest” cases involving defence contractors or media businesses).

The public interest considerations are currently: national security (including public security), financial stability, media plurality and, as of June 2020, to combat, and to mitigate the effects of, public health emergencies. The SoS has a residual ability to add or remove public interest considerations by statutory instrument approved by both Houses of Parliament.

Sectoral legislation may also apply to inward investments into the UK in regulated sectors; however, these regimes are beyond the scope of this chapter. For completeness, we also note that the SoS has the power under the Industry Act 1975 to block an acquisition by an overseas entity of an "important manufacturing undertaking" although this legislation has never been used.

The SoS is the key decision-maker and is responsible for issuing an intervention notice and for determining the outcome of a public interest review.

Where the SoS issues an intervention notice, the Competition and Markets Authority (CMA) prepares a report in relation to the public interest consideration. In preparing the report, the CMA consults other government departments, sectoral regulators, industry associations and consumer organisations. The CMA reports to the SoS at Phase 1 and Phase 2 of the process.

While the SoS must consider the CMA’s findings on public interest matters, it is not bound by the CMA's recommendations (other than on competition and jurisdictional matters). As noted above, the SoS is the ultimate decision-maker.

For a transaction to be reviewable under the public interest regime, there must be jurisdiction under the UK or EU merger rules (with the exception of “special public interest” situations).

First, there must be a “relevant merger situation”. The UK merger rules capture minority acquisitions where one party acquires “material influence” in another. This may arise at shareholdings of as low as 10-15%, particularly in the case where there is also board representation or specific industry knowledge or expertise held by the investor and may exceptionally be obtained by other means alone (eg, board representation or contractual rights). In addition, the UK merger thresholds must be met, namely: (i) the target’s UK annual turnover exceeds GBP70 million; or (ii) the merger results in the creation or enhancement of a 25% share of supply or purchase in the UK (or in a substantial part of it).

Reduced jurisdictional thresholds were introduced in June 2018 for transactions in the military and dual-use, computer processing and quantum technology sectors. These reforms lowered the turnover test to GBP1 million and removed the requirement for an increment under the share of supply test. In July 2020, the reduced thresholds were extended to the AI, cryptography and advanced material sectors.

As mentioned above, a “special public interest intervention notice” may be issued where a transaction does not meet the UK merger thresholds for transactions involving government defence contractors and for certain media mergers.

The SoS may also issue a European Intervention Notice where a transaction is being reviewed by the European Commission – however, this will no longer apply after 31 December 2020.

There is no standalone foreign investment regime and no formal filing or notification is required. Transacting parties may engage in informal discussions with the government (often to test appetite for the issuance of an intervention notice).

No items or parties are exempt from review.

As there is no mandatory foreign investment review, there are no sanctions for failure to notify.

Where an intervention notice is issued, the SoS or CMA may impose an initial enforcement order to prevent the transaction from completing or preventing business integration in the case of completed mergers.

Following a public interest review, the SoS may require behavioural or structural remedies to mitigate national security concerns (including unwinding a deal and prohibiting re-acquisition for a specified period). Commitments addressing public interest concerns have been required in 12 of 20 deals reviewed under the EA02 to date. Two transactions have recently been abandoned following national security concerns raised by the government (namely Aerostar/Mettis Aerospace and Gardner Aerospace/Impcross). No transactions have been formally blocked under the EA02 provisions.

Subject to limited exceptions (eg, for SMEs), where the SoS issues a public interest intervention notice the transaction is subject to the standard UK merger filing fees. No merger fee is payable in “special public interest” cases.

The government introduced a new ground of intervention in June 2020 to allow scrutiny of the foreign acquisition of companies involved in combating, or mitigating the effects of, public health emergencies (which the government statements indicated may be construed broadly to capture internet service providers and companies active in the food supply chain). In July 2020, the government also lowered the thresholds for intervention in the AI, cryptographic authentication technology and advanced material sectors.

These reforms reflect growing political unease over the perceived national security risks posed by foreign ownership of sensitive areas of the UK economy – particularly technology sectors, and a wider concern over the perceived potential for opportunistic acquisitions of UK companies that are undervalued as a result of COVID-19 and Brexit-related currency depreciation.       

The forthcoming Bill is expected to radically overhaul the UK’s public interest regime by introducing a standalone foreign investment regime.

The government first published details of its proposals to create a standalone national security regime in its 2018 White Paper on National Security and Investment. The White Paper proposed a voluntary notification regime with expansive powers for the government to call transactions in for review. This new regime would cover a wider set of transactions (potentially up to 200 per year), including minority shareholdings, “bare” assets, property and, in certain circumstances, loans.

Further details on the Bill are expected to be announced imminently and it remains to be seen whether the White Paper proposals will be adopted, or whether there will be a mandatory notification requirement for certain transactions. In any case, the Bill is likely to mark the end of the UK’s lighter touch approach to foreign investment screening, bringing the UK into line with its international peers.

The COVID-19 pandemic and associated government measures restricting business activities has led to the UK, like many other countries, granting unprecedented levels of government support to businesses. These ad hoc subsidies are not expected to continue longer than it takes for the pandemic to be brought under control.

The UK has not traditionally operated extensive subsidy programmes. Until the end of the transition period, it had been bound by the strict state aid provisions of EU law. Even among EU members, the UK was notable for its comparatively low level of subsidies. Since the referendum to withdraw from the EU, however, the UK government has developed an industrial strategy and has indicated that it will change its approach to state aid while respecting WTO law.

Agricultural subsidies are significant, at around EUR4 billion, a legacy of the EU Common Agricultural Policy (CAP). At the time of writing, the government has introduced an Agriculture Bill that would gradually replace the former subsidies regime with a new one. Two types of subsidy will be available: those for public goods (eg, ensuring environmental outcomes) and those related to agriculture. The latter would include subsidies for starting production, improving productivity, and supporting ancillary activities by producers. It is not clear at present what balance there will be between these two types of agricultural subsidy.

Another important category of subsidies concerns research and development (R&D). Public expenditure is largely channelled through UK Research and Innovation (UKRI), a non-departmental public body with an annual budget of over GBP10 billion. Of this, more than GBP1 billion is allocated to its subsidiary, Innovate UK, to support businesses directly, with businesses competing for funds made available for specific purposes. Eligibility can include such conditions as making use of the subsidies in the UK. In addition, other UKRI expenditure, while mostly focused on supporting academic research, also includes some funding which benefits businesses.

Local Enterprise Partnerships, bodies that bring local government and business together, are the usual source of regional development subsidies and traditionally rely on central government funding.

Great Britain has by default retained EU product-specific technical regulations as independent national product-specific regulations (Northern Ireland is directly subject to EU technical regulations under the Withdrawal Agreement). These are not aimed at reducing imports or encouraging domestic production and are not inherently discriminatory.

Great Britain has also largely retained EU conformity assessment requirements. One key change is the replacement of the CE mark by the new UKCA mark. A transitional period during which CE marks are acceptable (provided there has been no divergence in technical regulations) ends on 30 June 2023 for medical devices and 31 December 2021 for other regulated goods.

A related change concerns recognition of EU conformity assessment bodies (CABs). In many cases, a manufacturer may perform conformity assessments and declare that its product meets the relevant technical regulations without third-party involvement, in which case there is no need for recognition. However, UK regulations require the manufacturer of more sensitive products to engage a third party for parts of the conformity assessment, normally a CAB accredited by the UK Accreditation Service (UKAS). Without a mutual recognition agreement between the UK and the EU, some manufacturers will need to arrange additional conformity assessment procedures (CAPs) with UKAS-accredited CABs (and, conversely, those already using UKAS-accredited CABs will need additional CAPs with CABs accredited in the EEA) to maintain access to both the UK and EEA markets following the end of the CE mark transitional period, even if the underlying technical regulations remain identical.

The UK has negotiated the continuation of mutual recognition in respect of CAPs for some products with Australia, Israel, Japan, New Zealand, Switzerland and the USA.

Great Britain has by default retained EU sanitary and phytosanitary (SPS) regulations as independent national SPS requirements (Northern Ireland is directly subject to EU SPS requirements under the Withdrawal Agreement). These are not generally aimed at reducing imports or encouraging domestic production. However, a number of EU SPS measures retained by the UK have faced criticism for being protectionist or for not being scientifically based and some have been subject to successful legal challenges at the WTO on various grounds. The most controversial retained SPS measures are the regimes for controlling genetically modified organisms, novel foods, pathogen-reduction treatments for poultry and hormone-treated beef.

The UK does not use competition policy or price controls as a means for reducing imports or encouraging domestic production.

Following extensive privatisation during the 1980s and 1990s, only a few enterprises remain publicly owned. Several warrant specific mention in relation to promotion of domestic economic activity.

The British Business Bank is a publicly owned development bank that indirectly finances British small and medium-sized enterprises.

The British Broadcasting Corporation (BBC) and Channel Four Television Corporation are publicly owned significant producers of local audio-visual content, both distributed domestically and exported.

In July 2020, the UK government agreed to purchase 45% of OneWeb, a satellite communications company, including a golden share. Alok Sharma, the Secretary of State for Business, Energy, and Industrial Strategy, referred to the purchase as presenting “an opportunity to further develop our strong advanced manufacturing base here in the UK” although no plans have yet been announced to shift manufacturing from the USA to the UK.

As a result of the retention of EU procurement law as UK law, with limited exceptions and dependent on the value of the public contract meeting the relevant statutory threshold, contracting authorities in the UK must treat economic operators equally and without discrimination. They must base the award of the public contract on the most economically advantageous tender. It would therefore be unlawful, in most circumstances, for UK public bodies to prefer local goods and services.

Great Britain (but not Northern Ireland) has retained the EU framework for geographic indications (GIs). As in the EU, there are two types of GI: the protected designation of origin (in broad terms, for products entirely manufactured within the location, and whose quality or properties are significantly or exclusively determined by the geographical environment) and the protected geographical indication (in broad terms, for products at least partially manufactured within the location and that have a specific quality, goodwill, or other characteristic property that is attributable to geographic origin).

The initial UK GIs are all EU GIs as at the end of the transition period and GIs specified in replacement FTAs and replacement sectoral agreements. Applications for new UK GIs may be made by producers to the Department for Environment, Food, and Rural Affairs (DEFRA).

New UK GI logos have been introduced. Users of the initial UK GIs will have until 1 January 2024 to change packaging and marketing materials; users of new UK GIs will need to use the new UK GI logos immediately. Use of the new UK GI logos is optional for wines and spirits.

Please see the UK Trends & Developments chapter in this guide for other significant issues and developments in the law.


One Silk Street
London EC2Y 8HQ
United Kingdom

0207 456 2000

0207 456 2222
Author Business Card

Trends and Developments


Linklaters is a leading international law firm, headquartered in London. Led by partners Charlotte Morgan and Nicole Kar, the firm's trade practice advises governments and corporates across the full spectrum of international trade matters, including WTO policy and law; market access under bilateral and multilateral trade agreements; trade remedies (anti-dumping measures, countervailing duties, and safeguards); subsidies; government procurement; technical regulations and conformity assessments; investment screening; investment disputes; and negotiations and dispute settlement under trade agreements. The trade practice draws upon the expertise of Linklaters' other practice areas, such as international arbitration, financial regulation, intellectual property, and environmental law; it also benefits from the trade practice experience of its alliance firms, Webber Wentzel and Allens.

UK Trade Policy: Charting a New Course

The year 2021 will be the first since 1972 that the UK has maintained an independent trade policy – and much has happened in trade law in the intervening period. The World Trade Organization (WTO) has been formed and a host of free trade agreements have appeared. The scope of international trade law has expanded greatly: for example, services, procurement and intellectual property are now important elements. Furthermore, the political and technological background to the trading system has changed almost beyond recognition.

Looking at this brave new world, what choices has the UK already made about its trade policy, and what can they tell us about the direction of travel? What other choices must be made in the near future? This chapter considers these questions in the following areas:

  • the new bilateral treaty commitments of the UK;
  • the new import duty regime;
  • UK product regulation, including sanitary and phytosanitary regulation;
  • state aid; and
  • government procurement.

New bilateral treaty commitments

Ever since it initiated its withdrawal from the EU, the UK has been engaging with third countries, primarily negotiating “continuity” agreements to maintain the UK’s benefits under EU agreements. While there are many possible reasons why negotiations with some countries would proceed faster than with others, it is not clear at the time of writing what has caused the significant differences in the timing of these agreements. Likewise, it is unclear when negotiations are likely to be concluded for the remaining countries, with the outstanding replacement agreements now competing for government attention alongside potential new trade partners such as the USA, Australia, New Zealand, and the signatories to the Comprehensive and Progressive Trans-Pacific Partnership.

What does seem to be clear, however, is that the UK government’s work to provide as much continuity as possible in respect of third-country trade may have introduced some constraints on its future room for manoeuvre.

One example concerns the state aid provisions in the UK-Japan FTA. These replicate those of the EU-Japan FTA. In certain ways, they impose obligations on the parties additional to those set out in the WTO Agreement on Subsidies and Countervailing Measures (ASCM). In negotiations with the EU over FTA state aid provisions, some commentators observed that the UK-Japan FTA state aid provisions possibly weakened the UK’s hand since the UK was offering the EU less than what it had just agreed with Japan. The UK’s future approach to state aid is considered in more detail below but, whatever the outcome, it is a reminder that the UK is not starting any negotiation with a blank slate.

Another example concerns geographic indications. Under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), all WTO members must protect geographic indications. However, the line between protection and protectionism is highly contested; the USA has long complained about the EU model (which the UK is retaining, at least for the time being) and the EU practice of exporting it to other countries using FTAs. Should the UK wish to relax its approach to geographic indications, something that would be particularly popular with the USA, it may find its hands tied not only by its Withdrawal Treaty commitment to the EU to continue protecting EU geographic indications indefinitely, but also by its similar commitments under replacement FTAs.

The new import duty regime

One of the key decisions that the UK faced over the last year concerns the levels at which it would set import duties after the transition period ended. Having inherited maximum import duty levels from the EU under WTO law, there was never serious scope for raising duties, but deciding whether to lower any duties and (if so) by how much is a complicated process with many factors to consider. The competing interests of domestic producers and consumers must be weighed, and the overall result must be a viable backdrop for future trade negotiations.

The result is the UK Global Tariff (UKGT), announced on 19 May 2020. The changes in comparison with the EU Common External Tariff provide an important insight into UK trade policy thinking.

First and foremost, the UKGT has been designed to be user-friendly. The government has reasoned that, alongside the level at which duties are set, detailed calculations and paperwork can inhibit trade. As a result, duties of less than 2% have been abolished and remaining duties have been rounded down to regular tariff bands. As for duty calculations, the notorious Meursing table for “composite agrigoods”, the Entry Price System for fresh fruit and vegetables and the Variable Import Duty for cereals have been abolished, seasonal duties are less common and change less frequent, and most threshold duties (caps or floors on duties calculated on an ad valorem basis) have been abolished.

The UKGT has been made much more specific to UK circumstances. Duties have been abolished on various goods which the UK does not produce, certain “key inputs to production”, and some “green” goods. This gives UK consumers and businesses a mixture of immediate welfare and efficiency gains. Retaining duties on other goods provides incentives for other countries to negotiate FTAs and avoids harming UK businesses.

The UKGT has been designed with the UK’s generalised system of preferences for less and least developed countries in mind. Some higher import duties remain in the UK Global Tariff so that the relative advantage afforded to GSP beneficiaries is not eroded.

One interesting legal issue that could arise from simplification of import duties concerns the redenomination of specific duties from euros into pounds. While this may be indeed be simpler, exchange rate movements could theoretically result in import duties that exceed the maximum permitted under the UK’s GATT schedule (which remains denominated in euros).

UK product regulation

Throughout the withdrawal process, the UK government has sought to maintain legal continuity for businesses, generally retaining EU law as UK law and making only limited modifications to correct technical deficiencies (eg, substituting references to UK institutions for EU institutions). As a result, UK and EU technical regulations – broadly, the substantive rules that determine whether a particular good could be placed on the market – will be aligned immediately after the transition period.

However, the UK has indicated throughout its negotiations with the EU that it wishes to establish and maintain its regulatory autonomy: it is not willing to “lock in” alignment on technical regulations with the EU. The extent to which the UK will, in practice, diverge from existing technical regulations and/or develop new technical regulations without regard to any that may have separately been developed by the EU is unclear. Continued participation of the British Standards Institute (BSI) in the European Standardisation Organisations (ESOs) may constrain divergence for some products.

Divergence from EU technical regulations could carry both benefits and risks. In specific cases, it may mean technical or cost advantages. However, in many situations it could also require businesses to set up separate manufacturing lines for the UK and the EEA markets, reducing economies of scale. For this reason, industry has generally been supportive of maintaining de facto alignment.

The BSI, referred to above, is the national standards body. It has historically played an influential role in the three ESOs: CEN (the general organisation), CENELEC (the electrical engineering organisation), and ETSI (the telecommunications organisation). Membership of CEN and CENELEC is restricted to the national standard-setting bodies of EU member states, EFTA member states and applicants to either the EU or EFTA. (There is no comparable restriction in the ETSI constitution.)

BSI membership of CEN and CENELEC has, however, been extended to the end of 2021 and the BSI expects that the constitution will be amended to enable its membership to continue thereafter. Should this be the case, the BSI will therefore continue to influence the development of the full range of European standards, including those developed for the purposes of EU product-specific regulation.

To the extent that the UK government also continues to rely on standards to underpin some of its technical regulations, this continued membership could also preserve some degree of regulatory alignment with the EU; in most cases, ESO members are obliged to adopt European standards as national standards and withdraw any competing standards.

Sanitary and phytosanitary (SPS) regulations – which concern matters such as food safety, diseases and pests – will also remain aligned by default. SPS issues have become heavily politicised in the UK, with widespread public opposition to lowering (or, indeed, appearing to lower) food safety and animal welfare standards. Given such political considerations, it appears unlikely that the UK will significantly relax SPS regulations in the foreseeable future.

State aid

The UK will need to consider what domestic framework, if any, should apply to state aid. British politicians have for decades been supportive of strict state aid controls at the EU level, but there are indications that this may be changing. At the time of writing, there were two separate draft regulations laid before Parliament by the government concerning state aid.

The first set, drafted in 2019, would address technical deficiencies in retained EU state aid law (eg, by replacing “European Commission” with “Competition and Markets Authority”) but would leave the UK with a very similar system to that of the EU. The second set, drafted in 2020, reflecting changed priorities, would simply repeal retained EU state aid law – meaning there would be no domestic controls on state aid (the UK will continue to be bound by the more limited ASCM and by certain bilateral treaties such as that with Japan).

The Secretary of State for Business, Energy and Industrial Strategy, Alok Sharma, has stated that public consultations on the future approach to state aid would take place in the course of 2021. More generally, the government appears to desire a more muscular industrial policy than the UK has traditionally had, but the role of subsidies within such a policy remains unclear.

Regardless, this debate will have interesting trade law implications. Throughout 2020, state aid was a key source of contention between the UK and the EU in their future relationship negotiations. Aside from the UK-EU relationship, however, there is the question of how the UK responds to the EU-Japan-USA initiative on tightening the ASCM – an initiative aimed largely, though not entirely, at China.


As with state aid, the UK will have a freer hand over procurement outside the EU, although the UK is retaining EU procurement law as UK law for the time being. Given the amount that governments spend on procurement, EU procurement law has long played an important role in ensuring a level playing field within the single market; it is notable both for its detail and its central principle of non-discrimination.

While the UK has acceded to the WTO Government Procurement Agreement (GPA) and thus will continue to have international obligations relating to procurement (including procedural obligations and a non-discrimination obligation), these are far more limited than EU law obligations. Their scope is also more limited: the GPA obligations only apply in respect of those goods and services, and those procuring bodies that have been listed in the parties’ schedules pursuant to negotiations. Moreover, the parties may discriminate against non-parties, including other WTO Members. The UK does have procurement obligations under replacement FTAs, but these are structured similarly to GPA obligations and only benefit goods and businesses of the individual counterparty.

As a result, the UK would have scope to pursue a procurement policy more like that of the USA, which maintains preferential schemes for domestic goods and services subject to its trade law obligations. This could also be a means for pursuing industrial strategy. The Prime Minister, Boris Johnson, proposed changing procurement law to “back British business” in 2019. According to the Institute for Government, the Cabinet Office has subsequently consulted various stakeholders and was planning a green paper, although this has not yet materialised. As with state aid, watch this space.


One Silk Street
London EC2Y 8HQ
United Kingdom

0207 456 2000

0207 456 2222
Author Business Card

Law and Practice


Linklaters is a leading international law firm, headquartered in London. Led by partners Charlotte Morgan and Nicole Kar, the firm's trade practice advises governments and corporates across the full spectrum of international trade matters, including WTO policy and law; market access under bilateral and multilateral trade agreements; trade remedies (anti-dumping measures, countervailing duties, and safeguards); subsidies; government procurement; technical regulations and conformity assessments; investment screening; investment disputes; and negotiations and dispute settlement under trade agreements. The trade practice draws upon the expertise of Linklaters' other practice areas, such as international arbitration, financial regulation, intellectual property, and environmental law; it also benefits from the trade practice experience of its alliance firms, Webber Wentzel and Allens.

Trends and Development


Linklaters is a leading international law firm, headquartered in London. Led by partners Charlotte Morgan and Nicole Kar, the firm's trade practice advises governments and corporates across the full spectrum of international trade matters, including WTO policy and law; market access under bilateral and multilateral trade agreements; trade remedies (anti-dumping measures, countervailing duties, and safeguards); subsidies; government procurement; technical regulations and conformity assessments; investment screening; investment disputes; and negotiations and dispute settlement under trade agreements. The trade practice draws upon the expertise of Linklaters' other practice areas, such as international arbitration, financial regulation, intellectual property, and environmental law; it also benefits from the trade practice experience of its alliance firms, Webber Wentzel and Allens.

Compare law and practice by selecting locations and topic(s)


Select Topic(s)

loading ...

Please select at least one chapter and one topic to use the compare functionality.