The UK announced at the beginning of 2020 its decision to leave the European Union, with one-year time to formalize the transition process. Boris Johnson has always insisted that the UK would be fine even if no deal were to be reached. However, his government has acknowledged that a chaotic exit would bring gridlock at Britain’s ports, temporary shortages of goods, and confusion regarding labour movement.
Conflict this Year
The transition period negotiations lasted for almost nine months, saw multiple rounds of talks, failure to agree on terms multiple times. On 23 December, after both Boris Johnson and Ursula von der Leyen stepped in to save the talks, the two sides, in principle, agreed on a post-Brexit deal on trade and other issues. The negotiators worked right into Christmas Eve to secure the provisional deal for a post-Brexit relationship; the only remaining were fair-competition issues, negotiators tussled over EU fishing rights in the UK waters.
Failure of a deal would have led to tariffs being applied to many UK exports that would have included 10 per cent on cars and more than 40 per cent on lamb imports. Businesses on both sides would have met with tens of billions in costs if the deal were to fall apart. The failure would have also led to chaos on Britain’s borders with the EU starting 1 January 2021. Businesses were actively involved in lobbying in favour of a deal to avoid switching to WTO terms. How can the negotiation process in the Brexit transition period be looked at, for future trade disputes?
The signing of the deal was the major outcome. On 28 December, representatives of the EU members unanimously passed the trade deal, and the deal was signed on the 30 December 2020. This concludes the possibility of disruption that a no-deal Brexit would have caused. The success of the negotiations amid the pandemic and other uncertainties will be followed by a new era for the UK after 40 years of being a member of the EU. Initial analyses of the legal text copy that outlines how the relationship would operate in the future, under ten different categories.
Issues in the background
Fishing Rights: fishing remains an emotional issue in the relations between the UK and the EU. More than 60 per cent of the tonnage in the English Waters is said to be caught by foreign boats. This is due to the common fisheries policy where every country’s fleets have access to each other’s waters, apart from the first 12 nautical miles. Brexit or not, the EU ministers gather in December every year to decide/discuss the volume of fish that can be caught from each species. These national quotas are generally divided using historical data from the 1970s where the UK fishing industry got a bad deal.
With Brexit, the UK wants to ensure that the British fishing grounds prioritize British boats, but the EU wants to ensure access for its boats and places a “fair deal” on fisheries as a precondition for a free trade agreement. During the negotiations, the UK initially wanted an 80 per cent cut in the value of fish caught by the EU boats, while the EU proposed an 18 per cent cut. A 25 per cent cut was agreed upon which will be phased in over a transition period lasting five and a half years.
‘Level-playing field’ 49 per cent of UK’s international trade is said to be with the EU. It was essential to ensure that the businesses on one side do not receive an unfair advantage over their competitors. The UK and the EU have agreed on measures that commit both of them to maintain common standards on workers’ rights and many social and environmental regulations. Hence, the UK will have to stick to state aid regimes’ common principles and an independent competition agency to assess them.
Dispute resolution: The dispute resolution would be based on a ‘rebalancing clause’ that would give both the parties if there are significant divergences. The dispute mechanism would include imposing tariffs. The clause is seen as being stricter than the existing legal mechanisms of the EU.
The European Court of Justice: The EU dropped its demand to include the ECJ for playing a direct role in policing the governance of the agreement failure. One place where the ECJ would play a direct role would be in Northern Ireland that has a special status under the terms of the withdrawal agreement.
Travel: the UK nationals will need a visa if they want to stay in the EU more than 90 days in a 180-day period, they will be able to use their EHIC’s which will remain valid till they expire. The two sides have agreed to cooperate on international mobile roaming, and the British citizens will not need an International Driver’s Permit to drive in the EU.
Financial Services: A conclusive decision was not agreed regarding financial services. There is an agreement to continue talking about financial services regulation in the future, and it is expected that the companies would have to apply to specific EU countries to be allowed to operate there. The access that the UK companies had to the EU single market ends with 31 December 2020.
Data: the UK and the EU want data to flow across borders as smoothly, and it is expected that the EU will recognize formally that the UK data rules are roughly the same as its own. The EU has agreed to a specified period of four months, extendable by a further two months, in which, data can be exchanged the same way. The decision on data would be subject to the EU and UK, not making changes to their existing data protection rules.
Product standards: the UK government hoped for an agreement on conformity assessment, which did not go through. A failure of this agreement would require businesses to get checked twice before certification to sell products in the UK and EU. There have been no agreements on recognizing each other’s sanitary and safety standards for exporting food of animal origin. There will, however, be some measures in place that would make it easier for large companies to operate across borders.
Security: The UK will lose access to the EU’s key databases but will have continued access to, the system that cross-checks fingerprints across the continent. Security co-operation between the two will no longer be based on “real-time” access. However, an agreement has been reached on extradition, the UK’s role in Europol, which would allow it to sit in on meetings but not directly say in decisions.
Professional Qualifications: Many people from various professions like accountants, chefs, work in different EU countries, did not have to worry about crossing borders multiple times while the UK was part of the EU. With the agreement, the professional qualifications would not be recognized automatically, making it harder for the UK labour movement who will have to apply to individual countries to try and get their qualifications accepted with, no institutional guarantees.
Northern Ireland Protocol: the protocol was agreed ‘in-principle’ on 9 December 2020 to avoid introducing a hard border on the region in the event of a no-deal Brexit. The protocol would implement checks, regulation, and paperwork in the region. It was agreed that the British-governed region would remain in the EU customs union and a single market for goods after 31 December 2020. With the deal signed, it is yet to be known what happens now.
Internal Issues: the agreement between the EU and the UK has been approved by the EU members and is expected to be discussed in the UK parliament starting 30 December. The UK’s opposition was known to have prepared their own legal teams to properly scrutinize the bill. The parliamentarians were called for an immediate discussion once the deal was announced.
Perspectives in 2021
The rush to get an agreement resulted in the conclusion of one, but with a high cost. With so much at stake, it seems like any deal would have been better than no-deal. The complexity of the negotiation processes shows the delicate nature of the relations in the region. There remains a multitude of technical arrangements relating to trade that need to be addressed in the months following the agreement, which could pose barriers to the agreement’s conclusive outcomes.
The success of the deal despite the hardships is commendable. However, the announcement’s timing allows less space for preparedness to face the changes that emerge from 1 January 2020. Parts of the legal documents that have been revealed also show many issues requiring further discussions/ negotiations to conclude the terms. The current border restrictions due to the new variant in the COVID-19 could be beneficial to ease the transition process starting 31 December 2020.