The following is Best for Britain's written evidence to the House of Commons' Business and Trade Committee’s inquiry on UK trade with the US, India and EU.
The inquiry is into the UK’s trade deals with three of its most important partners: the United States, India, and the European Union.
As part of this work, the Committee will scrutinise the detail and implementation of three recent developments: the India Free Trade Agreement; the US-UK Economic Prosperity Deal; and the outcomes agreed following the recent UK-EU Summit.
The Committee is interested in finding out how these agreements and frameworks will affect people and businesses across the UK, and the likely economic, social, environmental and other impacts. The Committee is also interested in priorities for the UK’s ongoing negotiations with the US and EU.
Do the agreements represent a good deal for the UK?
The UK-India Free Trade Agreement, UK-EU Strategic Partnership and UK-US Economic Prosperity Deal all offer the prospect of improved outcomes for UK businesses and consumers. It is worth noting that the three agreements differ significantly from each other in nature and scope. The agreement with India is a genuine, comprehensive free trade agreement. The most significant outcomes stemming from the UK-EU Summit in May 2025 will take months or even years to negotiate and implement. The US deal was primarily an exercise in damage limitation. For different reasons, the UK Government can feel pleased with the outcomes it has arrived at with each partner.
The UK Government predictions suggest the India and EU agreements will only have a modest impact on UK GDP in the long-term. The India FTA is estimated to add 0.1% to UK GDP by 2040, while the combined impact of the Sanitary and Phytosanitary (SPS) and Emissions Trading Systems (ETS) measures with the EU, assuming they are successfully negotiated, is estimated to add 0.3%, or around £9 billion, to UK GDP by 2040. The UK-US EPD, by contrast, will not grow UK GDP; instead it has reduced the level of US tariffs on certain UK industrial exports, most notably steel, aerospace and cars, after President Trump hiked levies on these sectors earlier in the year.
These agreements promise to deliver very real benefits to businesses operating in specific economic sectors. Scottish whisky producers will benefit from lower Indian tariffs. UK agrifood businesses trading with EU countries will see lower costs once certificates and inspections are no longer required as a consequence of the SPS deal the UK and EU have committed to. And car manufacturers were surely entitled to breathe a sigh of relief following the announcement that tariffs on cars exported to the US would be reduced from 27.5% to 10% for the first 100,000 units.
The India FTA reduces and removes tariffs on exports from both parties, leading to freer trade - but at present India accounts for only 2% of UK trade by value. The United States is a much more significant trading partner for the UK, accounting for around 10% of UK imports and 16% of exports by value - but the EPD applies to only a small number of sectors. It was necessary, from the UK Government’s perspective, to act in order to try to preserve jobs in steel, aerospace and car manufacturing that were put at risk by the earlier imposition of US tariffs. But the EPD does not deliver any new benefits for UK firms. The European Union is the UK’s largest trading partner, by far, accounting for half of all UK trade (53% of imports, 48% of exports by value). So it is unsurprising that even though the UK has agreed to align with EU standards in a relatively small number of areas - agrifood, energy, emissions trading schemes - the deal with the EU, if its various elements are successfully concluded in the coming months and years, is expected to deliver a bigger boost to UK GDP than the India and US agreements combined. Trade diminishes with distance, so improvements to the UK’s trading relationship with its closest neighbour will deliver far greater benefits than deals with countries on the other side of the world.
A more expansive trade deal with the EU, encompassing alignment on goods and services trade, is not currently on the table. But independent research by Frontier Economics, and commissioned by Best for Britain, showed that alignment with the EU on goods would add up to 1.5% to UK GDP in the long run, and alignment on goods and services would add up to 2.2% (these projections are based on a scenario of zero US tariffs; the research also showed that UK-EU alignment would help both sides to lessen the impact of US tariffs). If driving economic growth remains the UK Government’s number one mission, it should do everything it can to ensure that UK-EU alignment on goods trade, and on particular service sectors, are considered at future UK-EU Summits.
To what extent has the Government achieved its stated negotiating objectives?
Although the deal with the EU applies only to a limited number of sectors, and detailed negotiations for each are still to take place, the UK-EU Summit of May 2025 must be seen as a significant success for the UK Government. It has restored stability and rebuilt significant trust with the UK’s largest trading partner. This is important for the UK economy and jobs, and also matters in the context of the greater UK-EU defence cooperation necessitated by the US withdrawing from its role as guarantor of European security.
On the India FTA, the current UK Government has successfully concluded what its predecessors began. Under Boris Johnson’s administration, talks with India stalled repeatedly, despite the then Prime Minister quipping, in April 2022, that he wanted to conclude a deal “by Diwali”. It is the highest-value FTA the UK has agreed since Brexit, and fulfils a specific pledge made in the 2024 Labour general election manifesto. Even if India is a relatively minor trade partner for the UK, reduced tariffs are likely to generate meaningful medium-term benefits for UK exporters of goods including cars, electrical machinery and whisky.
Two significant areas which remain to be negotiated between the UK and India relate to the Double Contributions Convention (DCC), an agreement by which Indian and British workers would not expect to pay national insurance contributions in both host and home countries; and potential exemptions from a UK carbon border tax. On the latter, the likelihood of an agreement being reached will depend on both negotiations between the UK and Indian governments, and the UK and EU negotiations on ETS alignment and CBAM exemptions.
The UK-US EPD was not an agreement the UK sought. Rather, it represents, from the UK’s perspective, an attempt to reduce the impact on UK businesses from tariffs introduced unilaterally by President Trump. As noted below, the deal was welcomed by representatives from UK steelmaking and car manufacturing for reducing and removing product-based tariffs and reverting to the 10% baseline levy.
How should Parliament judge the success of these agreements over the coming years?
The nature and scope of the three agreements differ from each other in fundamental ways. They should therefore be treated, and assessed, separately.
The UK-US EPD was a reaction to the imposition of US tariffs. Unlike the India and EU agreements, the primary intention of the US agreement was not to promote new trade, or to introduce reforms to generate additional exports of specific products, but to avoid damage to key UK industries. The car manufacturing and steel making industries were at the greatest risk, facing tariff rates of 27.5% and 25% respectively.
In April 2025, around a month after the 25% steel levy came into effect, UK Steel Director Gareth Stance stated: “We cannot afford to wait any longer as our exports are being damaged, and our market is being undercut by rising imports… bold, decisive and significant interventions are needed now”. In the same month, and just two days after the additional 25% tariff was applied to UK car exports (a 2.5% levy was already in place), Jaguar Land Rover announced it would pause all shipments to the US.
The announcement of the EPD on 8 May 2025 reduced tariffs on UK cars to 10% on the first 100,000 units (roughly the same number as were exported to the US in 2024). It was welcomed enthusiastically by the UK car and steel industries. JLR Chief Executive Adrian Mardell said, “We warmly welcome this deal which secures greater certainty for our sector and the communities it supports. We would like to thank the UK and US Governments for agreeing this deal at pace”.
Since the return of Donald Trump to the White House, the US has become a fundamentally unreliable trading partner. The President’s announcements on tariffs have been erratic, unpredictable and fast-paced. In some cases they have had far-reaching consequences, for businesses and workers. In this context, the UK secured as good an agreement as could be hoped for. Even if the lower 10% tariff on cars was cited by JLR in July 2025 as a major factor in its announcing 500 redundancies, the UK Government deserves credit for acting at pace to prevent a bad situation from becoming even worse.
It is likely that the EPD will deliver the hoped-for economic impacts for the UK if the tariff reductions on steel and aluminium come into force via Executive Order, and if the EPD stays in place for the remainder of Trump’s term in office. Both are subject to the whims of the US President, and therefore fall beyond the remit of the Committee and Parliament more generally.
As the only genuine free trade deal of the three, the India agreement should arguably be the most straightforward to assess - for Parliament, economists and academics. Tariffs on a wide range of products from both sides will be reduced; everything else being equal, this will lead to Indian businesses exporting more product to the UK, and vice versa.
The UK Government’s press release announcing the India FTA states that the combined impact of lower tariffs and reduced regulatory barriers to trade should “increase UK exports to India by nearly 60% in the long run – this is equivalent to an additional £15.7 billion of UK exports to India when applied to projections of future trade in 2040”. Towards the end of this parliament (assuming it runs until 2028 or 2029) it should be possible to judge whether exports are on track, ahead of schedule or lagging behind this projection. Likewise, it should be possible to say whether the UK Government’s estimated £4.8 billion boost to UK GDP by 2040 appears to be on track.
Even though the EU deal contains the least detail of the three, and consists to a large extent of a series of agreed topics where negotiations will now take place, the anticipated benefits are more extensive than those for the US or India agreements. In his speech at the UK-EU Summit on 19 May 2025, Keir Starmer stated that:-
- The SPS deal “will mean lower food prices”.
- The Defence and Security Partnership “will open the door to working with the EU’s new defence fund – providing new opportunities for our defence industry, supporting British jobs and livelihoods”.
- The cooperation on Emissions Trading Schemes will “save UK businesses from having to pay £800 million in EU carbon taxes”.
- The agreement on energy cooperation will “drive down bills over the long term”.
- The deal on steel tariffs will save the UK steel industry £25 million per year.
- The Youth Experience Scheme will permit young Brits to “travel and work freely in Europe… with all the appropriate time limits, caps and visa requirements”.
Towards the end of this Parliament, the Committee will be able to judge, in the first instance, whether negotiations have concluded, and formal deals have been introduced, for each of these topic areas.
Assuming negotiations have concluded, the Committee should assess how far the UK Government’s stated ambitions, as listed above, have come to pass, or the extent to which progress is being made towards achieving them. It should be noted that even when agreements on various elements of the deal are concluded, it will not be in the UK Government’s gift to guarantee any associated cost savings are passed onto consumers: food prices are set by supermarkets and their supply chains, gas and electricity bills are set by energy companies. There is therefore an important role for the Committee to play in helping to ensure the technical conclusion of negotiations are accompanied by real-world improvements that are felt by the British public.
Specifically, even before the SPS and ETS deals have been concluded, Chief Executives of the largest UK supermarkets and energy companies could be invited to give evidence to the Committee to describe how these agreements would help reduce prices and bills for consumers.
With reference to the Prime Minister’s comments to the Liaison Committee on 21 July 2025, where he said he views the new UK-EU relationship as being “iterative. It is not just to monitor what we have agreed; it is to go further,” the Committee should assess whether, by the end of this Parliament, the UK and EU have indeed moved onto negotiations on new topics, beyond those announced at the May 2025 UK-EU Summit.
What is likely to be the impact of the agreements on the UK’s economy?
In a study published in April 2024 for the Centre for Business Prosperity at Aston Business School, Prof Jun Du, Prof Gregory Messenger and Dr Oleksandr Shepotylo assessed the likely economic impact of a UK-EU SPS agreement. The research found that the benefits to the UK agrifood sector could be considerable: a 22.5% increase in exports, a 5.6% increase in imports, and an extra 0.2% to the agricultural sector’s value added.
The authors reached two further findings which are likely to be of interest to the Committee. First, the type, structure and enforceability of the agreement would have an impact on the effectiveness of any SPS deal arrived at. The authors conclude that a “supplementing agreement” to the Trade and Cooperation Agreement (TCA) would be the best outcome. It would benefit from relying on the Trade Specialised Committee on Sanitary and Phytosanitary Measures. This committee was established under the TCA as a forum for the UK and EU to discuss SPS measures, and would therefore be well placed to monitor progress and navigate complexity. In addition, any new agreement negotiated after the introduction of the TCA would by default take the form of a supplementing agreement, meaning it may be more straightforward to negotiate than other options (such as a new standalone treaty or an amendment to the TCA).
Second, the authors consider an SPS agreement to be an important intermediate step on the way to a broader improvement in UK-EU relations. They state, “An agreement can be viewed not just as an economic instrument but also as a strategic step towards rebuilding a more constructive and trusting relationship between the two regions. This agreement could set the stage for future negotiations on more complex issues, such as the mutual recognition of professional qualifications”. Successfully navigating an SPS agreement would therefore be consistent with the UK Prime Minister’s desire for the negotiations to be “iterative”. In this interpretation, the prospect for aligning on goods and services trade, a far greater prize in economic terms than what is currently on offer, remains intact.
In a December 2024 report for the Centre for European Reform, John Springford provided a “low” and a “high” estimate for the impact of a UK-EU youth mobility scheme (since renamed in the Common Understanding as a “Youth Experience Scheme”). The low estimate suggests a scheme could raise UK GDP by around 0.04% over 10 years, while the high estimate suggests GDP could rise by 0.45% over the same period. As Springford noted in the report, “forecasting migration is notoriously difficult”.
Compounding the difficulties is the continued tension between two of the UK Government’s primary objectives - to increase economic growth and to reduce net migration. A Youth Experience Scheme with a high cap on visa numbers, and which is designed to be as appealing as possible to young UK and EU citizens, would be likely to have a beneficial effect on UK GDP but lead to higher inward migration.
As noted above, the UK Government estimates the combined impact of an SPS agreement and ETS linking measures would add 0.3% to UK GDP by 2040. This would be very welcome, of course, but it would fall far short of the projected growth that could come (according to the Frontier Economics research, cited above) from aligning with the EU on goods and services trade. Therefore, in the coming months, the UK Government should pursue successful conclusions to negotiations in each area not solely for the benefits they may deliver for particular UK sectors or businesses, but also as staging posts on the road towards greater economic growth. The next logical step in this direction would be for the UK and EU to explore mutual recognition of conformity assessments.
Do you believe the three agreements adequately safeguard UK standards in labour rights, environmental protection, consumer protection and food standards?
Arguably, the reason to be most optimistic about the prospects for UK environmental and food standards is the UK’s agreement with the EU. In particular, the sections of the Common Understanding on energy cooperation, SPS and ETS all state that these agreements should ensure the dynamic alignment of the UK with relevant EU rules - rules which are widely acknowledged as being the strongest in the world. Even within the section on the establishment of a common SPS Area, which does include the possibility of a “small number” of areas where exceptions to dynamic alignment can be discussed between the two sides, the document states that an exception could only be agreed if it does not lead to lower standards. As noted in this submission, there are good economic reasons for the UK wanting to place itself more firmly within the EU’s regulatory orbit. But getting closer to the EU also means aligning with EU food standards and environmental protections. Since the EU is considered a world leader in these areas, Brits who care about having high standards should want to help ensure negotiations between the two sides are concluded successfully in the months to come.
The implemented elements of the UK-US EPD do not contain any provisions that could threaten UK standards. However, under President Trump the US has made the protection and expansion of markets for US agriculture a major priority. The UK’s removal of tariffs on US-imported ethanol, at the insistence of the US, has led directly to the closure of the Vivergo ethanol plant in the Humber and the loss of 160 jobs. In addition to such ‘unintended’ knock-on effects on particular businesses and the workers they employ, the UK should be clear-eyed about the potential future impacts on UK environmental and food standards if it expands agrifood trade with the US. So far, the UK has held firm that increasing trade with the US will not be accompanied by any lowering of environmental or food standards. The EPD states clearly that the concessions the UK made in order to conclude the EPD, namely on allowing more US beef into the UK market, “must comply with the importing country’s sanitary and phytosanitary (SPS) standards and other mutually agreed standards”. If these concessions are a necessity to secure at-risk jobs in steelmaking and car manufacturing, there is no cause for concern about the risk of lower standards.
However, if the two sides wish to expand the EPD in future to include trade in additional agrifood products, the Committee should pay close attention to the implications for UK food and environmental standards. The EPD states that both sides “positively support future discussions to strengthen bilateral agricultural trade” and “commit to working together to improve market access for agricultural products”. As has been widely reported in the years since the UK left the European Union, less stringent US food standards permit products including hormone-fed beef and chlorinated chicken. The Committee should be on guard against the risk that a future expansion of market access could open the door to these types of products finding their way into UK supermarkets or restaurants.
The EPD also states that the UK and US intend to “promptly negotiate significantly preferential treatment outcomes on pharmaceuticals and pharmaceutical ingredients. The United Kingdom confirms that it will endeavor to improve the overall environment for pharmaceutical companies operating in the United Kingdom”.
Likewise, the EPD states the two sides “will negotiate an ambitious set of digital trade provisions” and “intend to discuss the principles and criteria used in order to recognize a standard as an international standard”. While the document contains very little detail on these issues (the EPD itself runs to just five pages, and does not constitute a legally binding document) they are further areas in which the Committee should maintain a keen interest.
In summary, while the areas of the EPD which have already been implemented - relating to UK cars, aerospace; and US beef and ethanol - do not impinge on UK standards, there is a risk that further deepening of the UK-US trade relationship could lead to lower standards, on agrifood, pharmaceuticals, digital services and international standards.
The India FTA is unlikely to affect UK standards. The core component of the agreement is the reduction and removal of tariffs.