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Jakarta, CNBC Indonesia – On Thursday (12/24/2020) yesterday, Christmas Eve, the UK and the European Union (EU) finally made history by reaching a post-Brexit trade deal. This is certainly good news not just for the UK and the EU, but for all countries, from an economic perspective.
Brexit, or Britain’s exit from the EU, came after Britain, which was then headed by Prime Minister (PM) David Cameron, held a referendum in June 2016. The referendum result shows that 52 % of citizens want Great Britain to leave the EU.
As a result of these results, Cameron finally resigned as number 1 in the British government, replaced by Theresa May, who initiated the UK’s “divorce” process from the EU.
Negotiations between the UK and the EU repeatedly stalled, until finally Prime Minister May also resigned in July 2019 and was replaced by Boris Johnson.
On January 31, 2020, Prime Minister Johnson finally managed to achieve a British “divorce” from the EU after being together for 47 years. However, Britain still has a 1-year transition period ending on December 31, 2020. During the transition period, there were no significant changes in Britain’s relationship with the European Union on all fronts, only its status was officially “divorced”.
During this transition period, negotiations between the two parties were held again to decide what the relationship between the two would look like after December 31, 2020. The negotiations also stalled repeatedly and the market was concerned about the possibility hard Brexit. This means that Britain will simply leave without any privileges, including access to a single market, where British products can freely enter and leave the EU without import duties.
Hard Brexit is something that market players fear, because it could lead the UK economy to a sharp decline, as well as drag the economies of other European countries.
The economic downturn in Europe certainly runs the risk of spreading to other countries, as a result the UK-EU trade deal made it easier for many parties and certainly had a positive impact on financial markets.
Last Thursday, Britain and the EU announced that they had reached a “zero-zero quota” agreement, meaning there would be no high import tariffs or restrictions on the quantity of products both sides sell. So there will be no hard Brexit, Britain is “on good terms” with the European Union.
Prime Minister Johnson and the President of the European Commission, Ursula von der Leyen, appreciated the agreement.
“The debate with European partners is sometimes very fierce, but I think this is good business for the whole of Europe,” Prime Minister Johnson said at a news conference.
Meanwhile, von der Leyen said the deal was fair and balanced, as well as appropriate and responsible for both parties.
In the agreement, both parties cannot provide subsidies for export earnings. Prime Minister Johnson emphasized that if this is done by both the EU and the UK, they both have the right to increase import tariffs.
Then with regard to the fishing agreement, EU and UK fishers can still fish in both waters for the next 5.5 years. After that, each year there will be negotiations on fishing quota issues.
These agreements will still be ratified andvote by the British Parliament on Wednesday of next week.
