A Retrospective View on the EU UK Trade Deal: Challenges, Opportunities, & Impacts

When the EU-UK Trade and Cooperation Agreement (TCA) was signed in December 2020, it marked the culmination of years of intense negotiations, public debate, and political upheaval. The United Kingdom’s decision to leave the European Union in the 2016 referendum sent shockwaves through both economies, and the trade deal that followed was built to provide a new framework for a post-Brexit relationship.

Now, several years on, we can begin to assess how this landmark agreement has reshaped not only the economic landscape but also the political, social, and industrial dimensions of both the EU and the UK. 

The transition has not been without challenges – tariffs, labour market concerns, and the complexity of Ireland / Northern Ireland’s status have all emerged as significant hurdles. At the same time, though, new opportunities for investment and trade have surfaced as businesses and governments adjust to the new realities.

So as the dust settles and new trade patterns begin to emerge, the question remains: Has the trade deal lived up to its promises, or has it created new obstacles in an already complex environment? Read on as we take a closer look at the EU-UK Trade Deal, or contact the clearBorder team today for expert and independent trade consultancy services. 

Recap: What Was the EU UK Trade Deal? 

The EU-UK Trade and Cooperation Agreement (TCA), signed on December 24, 2020, came into force at the beginning of 2021, defining the relationship between the UK and the EU after Brexit. It replaced the UK’s membership in the EU’s single market and customs union with a new set of rules for trade, security, and cooperation.

• The deal allowed for tariff-free and quota-free trade on goods between the UK and EU, but it introduced several new checks, regulatory requirements, and customs procedures at the borders. 
• Services, especially financial services – a key part of the UK economy – were largely excluded, leaving future negotiations necessary for this vital sector. 
• The agreement also addressed key issues like fishing rights, state aid, and the level playing field – the latter aiming to prevent either side from gaining a competitive advantage by undercutting regulations.

Despite the agreement being struck just days before the transition period ended, it did little to prevent the disruption that businesses and industries faced as they adapted to new processes and paperwork.

The TCA remains a cornerstone of post-Brexit relations, but many traders agree: it has not been a complete solution to the economic and political complexities of the UK’s departure from the EU.

The Context 

The EU-UK Trade Deal emerged from the 2016 Brexit referendum, where the UK voted to leave the EU, driven by concerns over sovereignty and migration. After officially leaving the EU in January 2020, the UK entered a transition period while negotiating its future relationship with the bloc. 

As the global pandemic disrupted supply chains and business operations, the stakes for reaching an agreement grew even higher. The December 2020 agreement was therefore seen as a lifeline for businesses dependent on EU-UK trade, even if it left unresolved questions about key sectors like financial services, labour migration, and Northern Ireland’s special status under the protocol.

The full impacts of this deal are being felt across industries, with mixed results depending on sector and geography. While the deal was designed to avoid the chaos of a no-deal exit, it has ushered in a new reality for UK-EU relations, marked by uncertainty, adaptation, and ongoing renegotiations.

Challenges Facing EU & UK Traders

The EU-UK Trade Deal, while providing a framework for trade post-Brexit, has not come without its challenges. Both EU and UK traders have faced numerous hurdles as they navigate the new trading environment. 

Key challenges include:

• Customs and Border Delays: With the end of free movement of goods, new customs checks, and paperwork requirements have led to delays, particularly at key ports. Importers and exporters face longer processing times for shipments, especially when dealing with complex customs documentation.
• Rules of Origin: Under the Trade and Cooperation Agreement, goods must meet specific “rules of origin” criteria to qualify for tariff-free trade. This has placed a burden on businesses to prove the origin of their products, especially those with complex supply chains.
• Increased Costs: Businesses now face additional costs related to customs declarations, compliance with new standards, and professional services such as customs brokers. Moreover, companies are experiencing higher shipping and transport fees due to disruptions at borders.
• Labour Shortages: The end of free movement of people has led to significant labour shortages in sectors such as agriculture, construction, and hospitality. Both the EU and UK are grappling with recruiting and retaining workers, especially those with specialised skills.
• Regulatory Divergence: As the UK sets its own regulatory standards, divergence from EU rules has created uncertainty for businesses, especially those involved in industries like manufacturing and food. This can result in higher compliance costs and further barriers to trade.
• Northern Ireland Protocol: The unique status of Northern Ireland, still part of the EU’s single market for goods, has led to challenges in moving goods between Great Britain and Northern Ireland. Traders face complex rules and checks, with political tensions further complicating the situation.

Opportunities For Businesses

That said, the EU-UK Trade Deal has also created a series of opportunities for businesses on both sides to innovate, expand, and reshape their strategies:

• New Global Trade Agreements: The UK is free to strike independent trade deals with non-EU countries. This opens doors for UK businesses to access new markets in Asia, North America, and beyond. Similarly, EU businesses can strengthen trade ties within the bloc or with third countries while maintaining tariff-free trade with the UK.
• Digital Trade: The deal includes provisions to facilitate digital trade, enabling businesses to sell goods and services across borders more efficiently. Companies can tap into the booming e-commerce sector, leveraging the growing demand for online goods and services.
• Service Sector Growth: Although financial services were not heavily covered in the deal, UK firms have the flexibility to innovate and grow in this area. If operating strategically, fintech, legal, and creative services in particular stand to benefit from new, more flexible regulations and greater market access.
• Innovation and Investment: With the UK’s regulatory freedom, businesses have the opportunity to influence and adapt to new UK standards that might be more favourable than previous EU regulations. This could promote investment in sectors such as tech, renewable energy, and advanced manufacturing.
• Increased Focus on Domestic Supply Chains: The challenges posed by customs checks and delays have encouraged both UK and EU businesses to localise supply chains. This shift opens opportunities for domestic suppliers and manufacturers, reducing dependence on complex international logistics.
• Sustainability and Green Trade: Both the EU and UK are focused on becoming global leaders in sustainability. The green economy and trade of eco-friendly goods and services are expected to expand, providing opportunities for businesses specialising in renewable energy, electric vehicles, and sustainable technologies (despite criticism from some commentators over what they see as ineffective action by the UK government). 
• Northern Ireland Access: Northern Ireland’s unique position within both the UK and the EU single market offers opportunities for businesses to operate as a hub for trade between the UK and the EU. Firms can leverage this dual access to maximise market potential.

Lasting Impacts

While some effects were felt immediately, others are gradually emerging as the realities of post-Brexit trade arrangements solidify. 

One of the most notable impacts has been the reintroduction of customs checks and paperwork – despite the tariff-free agreement, these trade frictions have led to delays and increased costs, especially for industries that rely on just-in-time supply chains, such as manufacturing and agriculture. 

This has complicated the flow of goods between the UK and the EU, requiring businesses to adapt to new regulatory burdens and administrative complexities.

Another lasting impact is the Northern Ireland Protocol, which has created unique trade conditions for Northern Ireland, allowing it to remain aligned with certain EU regulations while being part of the UK. This dual access to both markets, while advantageous in some respects, has led to political tensions and logistical challenges for businesses operating across these borders. 

Investment patterns have shifted as well, with many businesses reconsidering where to allocate resources in light of Brexit. Some companies have chosen to relocate operations to EU countries to maintain access to the single market, while others are exploring new opportunities within the UK’s independent regulatory framework. 

Foreign direct investment is adapting, with firms evaluating the long-term stability and growth potential of the UK as it navigates a new phase of global trade relations.

Finally, the trade relations between both the UK and the EU are evolving as both entities seek new agreements with third countries. For UK businesses, this presents new opportunities to access emerging markets, while EU businesses are reconfiguring supply chains and trade routes. 

Making Seamless Cross-Border Trade a Reality 

The EU-UK Trade Deal has undoubtedly reshaped the trading landscape, presenting both challenges and opportunities for businesses – and governments – on both sides. For all operators, navigating this new environment requires: 

• Careful planning
• Compliance with evolving regulations
• Strategic foresight 

Here at clearBorder, we understand the complexities of post-Brexit trade and are dedicated to helping businesses transition smoothly.

Whether you need tailored consultancy services for customs compliance or want to equip your team with the right skills through our trade training courses, we’re here to guide you every step of the way. 

Contact us today to keep your cross-border operations efficient and future-proof.