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This Thursday, the European Union and the United Kingdom reached an agreement on Brexit that will regulate bilateral trade relations from January 1, 2021, when the United Kingdom completes its exit from the European Union. The agreement, defined by the Financial times An “amicable divorce” governs various aspects of future relationships, some of which will still be subject to micro-negotiations in the coming weeks and months. The full text has not yet been released to the newspapers, but they have obtained details on the most important points.
What the deal provides, in summary
The agreement will allow the two parties to continue exchanging goods without imposition or tariffs, so you will not have to pay when the goods cross their respective borders, or quotas, that is, there will be no limits on the quantities of goods traded. It will also allow the continuation of existing cooperation in certain sectors such as security, energy and transport.
The agreement will also offer British and European companies preferential access to the counterpart market: “preferential” with respect to the minimum rules established by the World Trade Organization, that is, those established for countries whose commercial relations are not regulated by treaties. specific. Despite the guarantees contained in the treaty, however, as of January 1, 2021, the economic relations between the United Kingdom and the European Union will be more limited than those existing to date.
In fact, the fact that we have reached an agreement does not mean that things remain the same. Even with the agreement there will be new border controls, which could mean new costs for companies.
– Read also: “Europe can now look forward”
In terms of visas and freedom of movement, British citizens will no longer be able to work, study, start a business or live in the European Union freely, and must apply for visas for stays longer than 90 days. The agreement also establishes the end of the free movement of EU citizens in the United Kingdom, a novelty indicated by the British government as one of the benefits of Brexit. Starting in January, the new British immigration law will come into force, which provides for a points system and will make it very difficult for unskilled workers to move into the country, and which does not provide preferential lanes for European citizens.
Furthermore, the UK government will no longer participate in the Erasmus + exchange program. Johnson said the program will be replaced by another, called the Turing Scheme, named after the mathematician Alan Turing. According to Johnson, the “Turing Scheme” will allow UK students to study not only at European universities, but also at the “world’s best universities”. The United Kingdom will also emerge from a whole series of European programs, including some less known but considered very important such as Galileo, the European satellite system that allows greater precision in the use of GPS technology.
The European Commission has circulated a short summary of all the more immediate benefits that the UK will lose by leaving the Union.
The European Commission has just released this infographic on the #Brexit EU-UK trade agreement vs. EU membership: pic.twitter.com/eYH2hX2cf4
– Nick Stylianou (@nmsonline) Dec 24, 2020
The three most discussed topics
The announcement of the agreement was found after lengthy discussions on three issues in particular: the rules to prevent British companies from competing unfairly with European companies in the medium-long term (the so-called level playing field), the dispute resolution mechanism and European fishermen’s access to British waters.
On the regulation of fishing, an issue of little economic importance but of great symbolic and political value both for the United Kingdom and for countries such as France, Denmark and the Netherlands, an agreement has been reached that foresees, in the next five and a half years, a 25% reduction in fish caught by European vessels in British waters. Today, EU fishermen catch around a third of the fish in British waters each year, for a total value of around € 650 million. But this figure will have to decrease as stipulated in the agreement, with the effect of increasing the amount of fish available to British fishermen.
According to the British Fishermen’s Trade Association, informed of the final commitment by the government, the proportion of fish that European fishermen will be able to catch will have to be reduced by 15% the first year and then by 2.5% each year from then up to 25% in 2025. It means that by 2026 British fishermen will be able to catch around € 160 million more fish than current levels.
The UK had initially called for a much larger reduction (between 60 and 80 per cent) and more quickly (three years). Access to British waters after the transition period will depend on future negotiations between the parties.
On the call level playing field, the two parties have agreed on a minimum level of environmental, social and labor rights standards below which no one can fall.
The agreement provides for the possibility of intervening if the United Kingdom or the European Union believe that the other party is competing unfairly. The measures taken to restore fair competition will be evaluated in arbitration within 30 days of their approval, with possible compensation if the measures are judged excessive or unfair. This part of the agreement is to prevent the UK from relaxing rules on environmental protection or workers’ rights to gain a competitive advantage over countries that must comply with stricter European rules – a possibility Johnson had repeatedly alluded to in the last years.
The most important point is that, according to the reconstruction of the British government, the United Kingdom will not be subject to any kind of jurisdiction of the Court of Justice of the European Union, an institution based in Luxembourg that aims to ensure compliance with the law. community. It was a request that Boris Johnson had wagered a lot on, calling for the establishment of an independent arbitration. Once the final text is published, it will be necessary to understand if it really is.
What the agreement does not regulate
Financial Services First: This means that the City of London, the UK’s largest financial center, will leave the single market for services at the end of the Brexit transition period on December 31. The two parties have established that the new rules of access to their respective financial markets will be decided unilaterally by the United Kingdom and the European Union. As the Financial times, banks and financial operators have recognized that the future system will be more fragmented than existing arrangements and less stable.
How important is the agreement
The agreement reached on Thursday is very important, because in the absence of a commitment, a scenario of No deal: The United Kingdom would have left the European Union without an agreement, in a disorderly way, tariffs and quotas on goods would have been introduced with probably very serious consequences for the British economy and for that of the countries that have more intense commercial relations with the UNITED KINGDOM.
It should also be considered that when the United Kingdom was in the European Union it automatically formed part of the trade agreements that the Union had signed with more than 70 countries. With Brexit, the country also automatically abandoned these treaties. The UK government has already renegotiated and concluded trade deals with 58 of these countries so that existing relationships can continue, but others are still under discussion.
– Read also: The UK will no longer participate in the Erasmus program
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