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LONDON / BRUSSELS (REUTERS) – Britain closed a close Brexit trade deal with the European Union on Thursday (December 24), just seven days before it exits one of the world’s largest trading blocs in its most significant global turnaround. since the loss of the empire.
The deal means it has veered from a chaotic ending to a tortuous divorce that has shaken the 70-year project to forge European unity from the ruins of World War II.
The President of the European Commission, Ursula von der Leyen, told reporters: “It was a long and winding road. But we have a lot to prove. It is fair, it is a balanced deal and it is the correct and responsible thing for both parties. “
British Prime Minister Boris Johnson tweeted a photo of himself inside Downing Street, raising both arms in a thumbs-up gesture of triumph.
“We have regained control of our destiny,” he told reporters. “People said it was impossible, but we have regained control.”
“We will be an independent coastal state,” he said. “We will be able to decide how and where to stimulate new jobs.”
The EU’s top negotiator, Michel Barnier, was able to say for the first time in four long years: “The clock is ticking.”
While the last-minute deal avoids the bitter end of the saga on January 1, the UK is ready for a much more distant relationship with its biggest trading partner than almost anyone expected at the time of the 2016 referendum.
A deal seemed imminent for almost a day, until haggling over the amount of fish EU vessels should be able to catch in British waters delayed the announcement of one of the most important trade deals in recent European history.
Britain formally left the EU on January 31, but has since been in a transitional period in which rules on trade, travel and business remained unchanged until the end of this year.
Details of the deal have not yet been made public, but if the parties have reached an agreement on zero tariffs and quotas, this will help smooth trade in goods that account for half of their $ 900 billion (S $ 1.2 trillion) in annual trade.
He will also support peace in Northern Ireland, a priority for US President-elect Joe Biden, who warned Johnson that he must abide by the 1998 Good Friday peace agreement.
Even with a deal, the halt from January 1 is certain, when Britain ends its often strained 48-year relationship with a Franco-German-led project that sought to unite the ruined nations of post-German Europe. World War II into a global power.
Tony Danker, CEO of the Confederation of British Industry, gave the deal a grudging welcome: “Arriving so late, it is vital that both parties take instant action to keep trade moving and services flowing.”
After months of talks that were at times undermined by both Covid-19 and rhetoric from London and Paris, the leaders of the 27 EU member states have projected a deal as a way to avoid the nightmare of a “no exit”. agreement”.
But Europe’s second-largest economy will continue to abandon both the EU’s single market of 450 million consumers, which the late British Prime Minister Margaret Thatcher helped create, and its customs union.
The British pound extended its gains and rose as high as $ 1.3620. Lastly, it was up 0.7 percent to $ 1.3591, with the potential to rise to a two-and-a-half-year high above $ 1.3625.
When Britain shocked the world in 2016 by voting to leave the EU, many in Europe hoped that it could stay closely aligned. But that was not to be. Von der Leyen said that “parting is such a sweet pain.”
Johnson, the face of the pro-Brexit campaign, had claimed that since 52 percent had voted to “regain control” of the EU, they were not interested in accepting the rules of either the single market or the customs union. .
The EU did not want to grant unlimited privileges to a free and deregulated British economy outside the bloc, potentially encouraging others to leave.
The result was a tortuous negotiation on a “level playing field” in competition, which the EU demanded in exchange for access to its market.
The trade pact will not cover services, which account for 80 percent of the British economy, including a banking industry that positions London as the only financial capital to rival New York.
At best, access to the EU market for UK banks, insurers and asset managers will be spotty.
JPMorgan said the EU had secured a deal that allowed it to retain almost all of its advantages from trade with the UK, but with the ability to use regulations to “select” between sectors where the UK had advantages, such as services.
Brexit activist Nigel Farage said the deal would keep the UK too aligned with the EU, adding that he hoped this would be the beginning of the end of the bloc.
Even with an agreement, trading in goods will have more rules, more red tape, and more costs. There will be some disruption in the ports.
Everything from food safety regulation and export standards to product certification will change.
The UK, which imports some $ 107 billion more a year from the EU than it exports there, had fought to the end over fish, a totemic problem, but worth less than 0.1% of GDP.
In essence, the most ambivalent member of the EU is exiting the bloc’s orbit on New Year’s Eve into an uncertain future with a business relationship that, on paper at least, is distant.
At the stroke of midnight in Brussels, both sides will be depleted.
The EU loses its main military and intelligence power, 15 percent of GDP, one of the two largest financial capitals in the world and a champion of free markets that had acted as a major brake on the ambitions of Germany and France.
Without the collective power of the EU, the UK will largely stand alone, and depend much more on the US, when negotiating with China, Russia and India. It will have more autonomy but it will be poorer, at least in the short term.
With an economy only one-fifth the size of the EU remaining, Johnson needed a trade deal to minimize the Brexit disruption, as the new coronavirus has damaged the British economy and other major industrial powers.
The Bank of England has said that, even with a trade deal, Britain’s gross domestic product is likely to be hit by 1% from Brexit in the first quarter of 2021. And Britain’s budget forecasters have said that the economy will be 4% smaller in 15 years than it would have been if Britain had stayed in the bloc.
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