After months of wrangling, the UK formally left the EU and its trading bloc on December 31. The post-Brexit deal, namely the EU-UK Trade and Cooperation Agreement, was agreed just a week before the end of the transition period on Christmas Eve and has marked a new era for the UK-EU relationship.
The deal is a unique cooperation between the parties as it goes beyond the traditional EU free trade agreements which often included a limited number of privileges on goods. The Brexit deal, on the other hand, covers a broader range of matters including investment, competition, state aid, tax transparency, air and road transport, energy and sustainability, fisheries, data protection, and social security coordination.
Let’s take a look at the key points that make up this comprehensive trade agreement spanning over 1,200 pages.
According to the EU-UK Trade and Cooperation Agreement, British goods will have access to the EU single market without tariffs and quotas. The UK, which makes 46 per cent of its exports to the EU, will continue to sell goods at no additional cost. The same privilege will apply to EU countries exporting to the UK.
Businesses offering services will no longer have an automatic right to access the EU markets and will now face restrictions. All service providers, including banks, insurance companies, and accountancy firms, will need to comply with the countries’ individual laws and regulations to which they provide services.
While the deal offers exceptional privileges for the trading of goods, the services section is said to be “an average FTA, enabling activity up to a point”. This has not been welcomed by the services sector, which accounts for 80 per cent of the UK economy, and the British service providers are unhappy about the fact they were largely left out of the deal.
This was one of the most disputed areas of negotiation as both sides resisted on preserving a dominant presence in UK waters. Ultimately, the UK left the common fishery policy, and the new agreement provides for a quota of 25 per cent of the value of the EU catch in UK waters. The cut will be phased in over five years to allow both the EU and the UK fleets to adapt to the new arrangement. There will also be a transition period during which the EU will have stable access to the UK waters. After the transition period ends, the UK will have complete control over its fisheries and will be able to impose higher quotas.
There are no restrictions on short trips for touristic purposes. However, both the EU and UK national will need a valid visa or permit for stays exceeding 90 days in a 180-day period.
EU pet passports will no longer be valid. People wishing to travel with pets will need to go through a new prolonged process.
The UK will no longer participate in the Erasmus exchange programme allowing EU students to study in any chosen member state. However, the government ensures that it will continue to support students to study and work abroad. The Department of Education has already declared its plan to replace the Erasmus programme with a new scheme that will provide similar opportunities and cover countries across the world.
There will no longer be automatic recognition of professional qualifications. This means professionals such as doctors, nurses, pharmacists, architects and veterinary surgeons will no longer benefit from free movement and will need to seek recognition in the member state they intend to practice. The same will apply to EU professionals intending to practice in the UK.
European Court of Justice and Dispute Resolution
Dispute settlement was another heated topic of the negotiations due to the EU’s insistence on agreeing on a particular arbitration mechanism. The UK no longer has to apply EU law or follow the jurisdiction of the European Court of Justice. If either party claims trade is being distorted, they will need to refer the matter to an independent arbitration tribunal.
What happens next?
Britain, being the first country to leave the EU bloc, will continue to enjoy some of the benefits it enjoyed as a member state. Nevertheless, leaving the customs union and the single market will inevitably affect the British economy.
The deal surely is a success in terms of trading of goods. However, the government is criticised to have done little to placate unease in the services sector as the deal falls short for many, including engineering, creative industries, financial and legal services. Consequently, the country is still in the dark about the long-term implication of Brexit for the services industry.