Can a UK-EU Free Trade Area preserve the benefits of the Customs Union or Single Market in some sectors?

• A narrow sectoral approach to concluding a Free Trade Area (FTA) between the EU and the UK would contravene World Trade Organization (WTO) law. • However, if the EU and UK agreed a broad tariff-free FTA, WTO rules would not prevent them from maintaining benefits of the Customs Union and the Single Market in a few key sectors. • Customs Union-like conditions could be achieved by co-ordinating external tariffs in some sectors and agreeing on relaxed Rules of Origin. • Single Market-like access could be approximated through sectoral Mutual Recognition Agreements. • An agreement on trade in services would need to liberalise services trade in a broad range of sectors relative to what the UK has listed in its schedules under the WTO, but could then go much deeper in a subset of sectors. • These approaches to liberalising trade would still fall short of current market access levels even in the selected sectors and would also re-create some of the limits to independent trade policy arising from the UK’s Membership of the EU.