The World of International Organizations

U.K. and E.U. reach post-Brexit trade deal

An Italian-sculpted statue of King Richard I, one of the few non-British artworks at Parliament (AN/John Heilprin)

Breaking what seemed an interminable Brexit deadlock, Britain reached a tentative free-trade deal on Thursday to lessen the chaos of its departure from the European Union, the world’s biggest trading bloc.

The deal came only one week before the deadline, ensuring that businesses in the United Kingdom and the remaining 27 nations in the E.U., the second-largest economy after the United States, can keep trading without tariffs or quotas when an 11-month transition period for the U.K.’s departure ends on New Year’s Day. Britain officially left the E.U. on January 31.

British voters chose to leave the E.U. by a margin of 52-48 percent in 2016. The government spent the next three years figuring out how to extract itself from the E.U.’s political framework, including its parliament. It then took another nine months of bitterly fought negotiations — while Britain was allowed to remain part of the E.U.’s customs union and single market, as a trade deal was being worked out — to avoid leaving without the economic chaos of any set of rules in place.

The trade deal covers trade in goods and services, along with key topics such as investment, data protection and fishing. It allows for tariffs and quota-free trade in goods that meet rules of origin, and permits both sides to set rules aimed at protecting reputations and quality. A separate E.U. agreement allows British exports of live animals and animal products.

“It is four and a half years since the British people voted to take back control of their money, their borders, their laws, and their waters and to leave the European Union,” British Prime Minister Boris Johnson said in a statement.

“We have taken back control of laws and our destiny,” said Johnson, whose 2019 landslide election win was based on a promise to finish Brexit. “We have taken back control of every jot and tittle of our regulation. In a way that is complete and unfettered. From January 1 we are outside the customs union, and outside the single market.”

Though the deal cost Johnson some major concessions on fishing rights in British waters and government aid for businesses, he emphasized the U.K. has clinched the “biggest trade deal yet,” a raft of agreements worth £670 billion, or US$910 billion a year — 57 percent of which flow from the E.U. to the U.K. — that will “allow our companies and our exporters to do even more business with our European friends.”

It essentially favors the E.U., like most trade pacts among parties unequal in size. Without a deal, new tariffs would have brought hardship, particularly for British exporters and ports, and stranded trucks on both sides. The E.U. is the U.K.’s biggest trading partner. Last year, 43 percent of all U.K. exports — worth £294 billion, or US$393 billion — went to the E.U., according to parliamentary figures. Services, mainly finances and business, accounted for 42 percent of exports.

The crucial negotiations over fisheries set up a transition lasting until June 2026 for converting from the current quota shares in British waters to new quota shares, which allows the E.U. to keep fishing for the time being in British waters. After June 2026, both sides will have to negotiate access and the amount of fish that can be caught in each other’s waters.

British students and youth can no longer participate in the E.U.’s Erasmus exchange program due to negotiators’ lack of agreement over the cost of British membership. About 15,000 British university students participated each year. Johnson called it “a tough decision” to leave the program, but said the U.K. would create a new mechanism to send students abroad.

British and European parliaments must still approve the deal, which authorities say is the largest bilateral trade pact in history and the first to create market barriers rather than remove them. The full text runs 1,246 pages and is accompanied by supporting documents. If approved by both sides, the U.K.-E.U. trade deal will take effect on New Year’s Day.

Time to ‘move on’ for the E.U.

Johnson has said he envisions a “Global Britain,” independent of Brussels, that is free to decide for itself on economic and political matters. E.U. officials were concerned, however, that the U.K. might undermine the European economy by seeking to adopt lax rules on environmental and social concerns that could give it a competitive trade advantage.

The U.K. is leaving the European single market, which covers the European Economic Area — the E.U. plus Iceland, Liechtenstein and Norway, three of the four nations the belong to the European Free Trade Association. The fourth is Switzerland, which created its own free trade agreement with the former European Economic Community in 1972. The U.K. is also leaving the customs union, which abolished tariffs and created a common external tariff to non-members.

The European Commission’s chief negotiator, Michel Barnier, said the protection of E.U. interests was “front and center” throughout the difficult negotiations. Commission President Ursula von der Leyen called it a “fair and balanced” deal for both sides that ensures fair competition and provides much-needed predictability for Europe’s fishing communities.

“We have, finally, found an agreement. It was a long and winding road. But we have got a good deal to show for it,” she said in a statement. “It is fair and balanced. And it is the right and responsible thing to do for both sides. The negotiations were very tough. But with so much at stake, for so many, this was a deal worth fighting for.”

With the deal, von der Leyen added, “it means that we can finally put Brexit behind us. Europe will be able to move on.”

It was more than a year ago that U.K. lawmakers voted overwhelmingly to authorize the first December national election in almost a century. That vote backed Johnson’s Conservative Party, running under the slogan of “Get Brexit done,” a pitch that appealed both to anti-immigrant sentiments and people’s longing to restore the grandeur of British sovereignty.

But the free movement of people and goods between Ireland, an E.U. member, and Northern Ireland, part of the U.K., remains an issue. An open border led to growth in both territories. Nationalist parties gained support in Northern Ireland and Scotland, where elections loom next year, despite both voting overwhelmingly to remain in the E.U. four years ago.

“Before the spin starts, it’s worth remembering that Brexit is happening against Scotland’s will,” Scotland’s First Minister Nicola Sturgeon, leader of the Scottish National Party, said of the U.K.-E.U. trade deal. “And there is no deal that will ever make up for what Brexit takes away from us. It’s time to chart our own future as an independent, European nation.”

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