European Union: Impact Of Historic "Brexit" Vote On International Trade

Last Updated: 28 June 2016
Article by Nikolay Mizulin and Edouard Gergondet

On June 23, 2016, the citizens of the United Kingdom ("UK") voted to leave the European Union ("EU"). This unprecedented decision will have significant implications for everyone and is likely to raise complicated and novel legal issues. Its impact on international trade, in general, and the free movement of goods and services, in particular, is the subject of this Legal Update.

While the economic effects of Britain's decision to exit the EU ("Brexit") are already being witnessed, the legal consequences are, for the most part, likely to develop and materialize over a longer period of time. Indeed, although Article 50 of the Treaty on the European Union provides for the possibility of a member state leaving the EU, this provision has never been used before, so its actual application raises many questions.

What is sure, however, is that the rights and duties incurred by the UK as a member state of the EU will not vanish overnight, as emphasized by the Joint Statement on the outcome of the UK referendum by Donald Tusk, president of the European Council; Martin Schulz, president of the European Parliament; Mark Rutte, holder of the rotating Presidency of the Council of the EU; and Jean-Claude Juncker, president of the European Commission.

Although the rights and obligations of the UK are likely to be phased out over a transition period, the UK will continue to benefit from the free trade provisions of the EU until it is officially no longer a member state.

Intense negotiations are expected to begin shortly between the EU and the UK, and the outcome of such negotiations will define the future of the EU-UK relationship. It will also shed light on the actual trade impact of Brexit.


Although not definitive yet, WTO Director General Roberto Azevędo has hinted that the UK would likely need to undergo the negotiations process with all WTO members again in order to adjust its schedule of concessions and commitments and thereby benefit from the trade provisions and guarantees of the multilateral institution. Regardless of how this process plays itself out, it is almost certain that the UK will remain a Member of the WTO and, as such, remain subject to WTO commitments and obligations.


The UK withdraws from the EU but maintains its membership in the European Economic Area ("EEA") between the EU, Norway, Liechtenstein and Iceland.

From a customs point of view, by participating in the EEA, the UK would remain competent to establish its own, independent customs provisions, including its own external customs tariff, valuation and preferential origin rules, which may differ from that of other EEA members. It would also be able to maintain its own trade defense legislation and would be allowed to apply anti-dumping and anti-subsidy measures against other EEA members.

Goods customs cleared in the UK will not benefit automatically from free movement within the EU. Similarly, goods from the EU that are customs cleared in the UK would only be imported free of any duty or other measures that may apply if they satisfy the preferential rules of origin set forth in the EEA Agreement.

EEA members have access to the Single Market, to the extent that they have incorporated into their domestic law the relevant acquis communautaire. Consequently, from a regulatory standpoint, the UK, by participating in the EEA, would be required to implement the relevant EU provisions and standards pertaining to the Single Market in order to participate in the Single Market. Hence, regulatory harmonization would be more significant under this scenario.

The UK would be able to benefit from the free-trade agreements ("FTAs") concluded by the EEA Members, although it would need to abide by the rules set forth therein, notably on preferential origin of goods and services.

The UK becomes a member of the European Free Trade Agreement ("EFTA") with Norway, Liechtenstein, Iceland and Switzerland.

There are two major differences between the UK becoming a member of the EFTA and the UK's participation in the EEA. First, re-joining the EFTA would permit the UK to ensure duty-free access for goods between the EU and the UK, although the freedom of movement of people and free trade in services would not be covered. Second, the UK would not be compelled to adopt the acquis communautaire, which may lead to greater regulatory divergence, thus creating greater risks of additional non-tariff barriers to trade.

The EU and the UK negotiate a customs union, similar to that with Turkey.

Another possibility would see the UK negotiate a customs union with the EU, similar to the one enjoyed by Turkey. This would lead to a convergence of customs provisions with the UK applying the EU's Common Customs Tariff and the EU's tariff nomenclature and also generally most, if not all, of the customs legislation of the EU.

Goods would benefit from circulation between the EU and Turkey, once customs cleared in one of the two countries. Regulatory requirements of the EU would likely need to be implemented into the UK. The UK would, however, remain free to adopt its own trade defense measures, including against the EU. Moreover, the UK would be competent to enter into FTAs with third countries independently but would not benefit from those concluded by the EU. This, however, may create additional complications.

The UK negotiates a FTA with the EU, similar to that with South Korea or Canada.

A fourth possibility is that the UK negotiates a FTA with the EU, similar to the ones the EU has with South Korea and Canada. Depending on the scope of the negotiations, the situation would be similar to that of being part of the EEA or EFTA.

In general, however, the UK would maintain its independence in terms of customs provisions. The free circulation of goods between the EU and the UK would only be granted to goods benefiting from preferential origin under the provisions of the FTA. The UK would thus, here also, be able to adopt its own trade defense measures and also to conclude its own FTAs.

In terms of regulatory convergence, the extent to which the UK would adopt the EU's standards would depend largely on the content of the negotiations and cannot be foreseen at the present stage.

The UK withdraws from the EU without any specific trade agreement with the EU.

Finally, the UK may withdraw from the EU without any specific trade agreement or relationship with the EU. In such a scenario the UK would regain an absolute customs sovereignty, meaning that goods would be customs cleared in the UK based on their own external tariff, classification, valuation and other customs rules. Moreover, the UK would be able to adopt anti-dumping or anti-subsidy measures against imports from the EU, and vice-versa. However, there would be no free circulation into the EU of goods customs cleared in the UK, and UK goods would be subject, upon importation into the EU, to the external tariff of the EU. Similarly, the UK would no longer be able to benefit from the provisions of the free trade agreements concluded by the EU and would have to negotiate new agreements on its own.

From a regulatory point of view, the EU's decisions, directives and regulations would no longer apply in the UK, provided that they are not previously incorporated into national legislation.

If the UK remains a member of the WTO, the sole provisions governing trade between the EU and the UK would, under this scenario, be those of the WTO agreements.

For sector-specific information on the potential impact of the Brexit, please consult our pages dedicated to the topic.

Originally published June 27, 2016

Learn more about our International Trade and Government Relations practices.

Visit us at

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2016. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.