UK, EU agree a Brexit trade deal

The UK and EU have finally agreed to a Brexit trade deal after months of tough negotiations, the UK government and the EU officials said.

The U.K. and the EU announced Thursday they have agreed a trade deal that will avoid tariffs when Britain exits the Brexit transition period at the end of the year.

“We have finally found an agreement. It was a long and winding road but we have got a good deal to show for it. It is fair and it is a balanced deal,” European Commission President Ursula von der Leyen told a news conference in Brussels.

Boris Johnson told reporters: “This deal means a new stability and new certainty in what sometimes has been a fractious and difficult relationship.”

“A deal is done,” a British government spokesperson said, hailing the “fantastic news for families and businesses in every part of the UK.”

“We have signed the first free trade agreement based on zero tariffs and zero quotas that has ever been achieved with the EU,” the British source added.

The deal is “the biggest bilateral trade deal signed by either side, covering trade worth €747 billion (£668 billion, $909 billion) in 2019,” according to the source. The text of the deal, said to be made up of around 500 pages, has yet to be released.

What did EU leaders say?
EU Commission chief Ursula von der Leyen said at a press conference that the two sides “finally” reached a deal.

“It was a long and winding road, but we have a good deal to show for it,” she said on Thursday.

She added that the UK and the EU will continue cooperating on areas of mutual interest, naming climate, energy, security, and transport.

“I believe, also, that this agreement is in the United Kingdom’s interest. It will set solid foundations for a new start with a long-term friend. And it means that we can finally put Brexit behind us, and Europe is continuing to move forward,” she added.

Von der Leyen said she felt “relief” after long and exhausting negotiations. She added that “parting is such sweet sorrow” — a line from the Shakespeare play Romeo and Juliet.

She quoted the American-British poet T.S Eliot: “What we call the beginning is often the end and to make an end is often the beginning.”

“It is time to leave Brexit behind, our future is made in Europe,” she said in closing.

Michel Barnier, the EU’s chief negotiator said “the clock is no longer ticking” — a reversal of his warning in August after a round of trade talks left the two sides exasperated.

He said the EU will support fishermen. Fisheries had been a key sticking point throughout Brexit talks.

He said he regrets that the UK had chosen not to participate in the Erasmus program student exchange program. He also said the agreement reached on free movement was not a sign of historically close ties.

What did the UK say?

Johnson called the deal “a jumbo, Canada-style free trade deal.

He recast Britain as “an independent coastal state.”

“We’ve taken back control of our laws and our destiny,” said Johnson, adding that the UK would now be”unfettered.”

He said the EU was “a very noble enterprise” but that the UK had always had a difficult relationship with the bloc.

Under the new deal, the UK had now become the EU’s “flying buttress,” an architectural metaphor to describe a structure of stone, built against a wall to strengthen or support it.

“This deal expresses what the people of the country wanted in 2016,” he added.

Addressing the key fisheries issue, he said the UK government would support fishing communities with an investment boost to modernize fishing industries. “We will be able to catch and eat prodigious amounts of fish.”

The share of UK fish will rise to two-thirds from around half of all fish caught in UK waters.

On trade and business, Johnson said: “It will not be a bad thing” for the EU to have “a prosperous dynamic and contented UK on your doorstep.”

Johnson expressed hope that innovation in the UK would drive business at home, in Europe and globally.

Johnson dismissed a reporter’s question about the UK following the EU rules on tax, worker’s rights and tariffs, and on London accepting the “level playing field” with the EU that it had long resisted.

Crucially, the UK will no longer be under the jurisdiction of the European Court of Justice, stressed the UK leader.

On dropping out of the Erasmus program, Johnson said the UK was replacing it with a Turing program, named after mathematician Alan Turing, where students will be able to spend time at universities around the world.

Both business leaders and the general public as a whole will breathe a sigh of relief after concerns that a No Deal scenario would have ruptured historically close trade ties.

jsi/dj (AP, AFP, dpa, Reuters)

The draft Trade and Cooperation Agreement consists of three main pillars:

EU interpretation of the Deal.

• A Free Trade Agreement: a new economic and social partnership with the United Kingdom

• The agreement covers not just trade in goods and services, but also a broad range of other areas in the EU’s interest, such as investment, competition, State aid, tax transparency, air and road transport, energy and sustainability, fisheries, data protection, and social security coordination.
• It provides for zero tariffs and zero quotas on all goods that comply with the appropriate rules of origin.
• Both parties have committed to ensuring a robust level playing field by maintaining high levels of protection in areas such as environmental protection, the fight against climate change and carbon pricing, social and labour rights, tax transparency and State aid, with effective, domestic enforcement, a binding dispute settlement mechanism and the possibility for both parties to take remedial measures.
• The EU and the UK agreed on a new framework for the joint management of fish stocks in EU and UK waters. The UK will be able to further develop British fishing activities, while the activities and livelihoods of European fishing communities will be safeguarded, and natural resources preserved.
• On transport, the agreement provides for continued and sustainable air, road, rail and maritime connectivity, though market access falls below what the Single Market offers. It includes provisions to ensure that competition between EU and UK operators takes place on a level playing field, so that passenger rights, workers’ rights and transport safety are not undermined.
• On energy, the agreement provides a new model for trading and interconnectivity, with guarantees for open and fair competition, including on safety standards for offshore, and production of renewable energy.
• On social security coordination, the agreement aims at ensuring a number of rights of EU citizens and UK nationals. This concerns EU citizens working in, travelling or moving to the UK and to UK nationals working in, travelling or moving to the EU after 1st January 2021.
• Finally, the agreement enables the UK’s continued participation in a number of flagship EU programmes for the period 2021-2027 (subject to a financial contribution by the UK to the EU budget), such as Horizon Europe.

• A new partnership for our citizens’ security

• The Trade and Cooperation Agreement establishes a new framework for law enforcement and judicial cooperation in criminal and civil law matters. It recognises the need for strong cooperation between national police and judicial authorities, in particular for fighting and prosecuting cross-border crime and terrorism. It builds new operational capabilities, taking account of the fact that the UK, as a non-EU member outside of the Schengen area, will not have the same facilities as before. The security cooperation can be suspended in case of violations by the UK of its commitment for continued adherence to the European Convention of Human Rights and its domestic enforcement.

• A horizontal agreement on Governance: A framework that stands the test of time

• To give maximum legal certainty to businesses, consumers and citizens, a dedicated chapter on governance provides clarity on how the agreement will be operated and controlled. It also establishes a Joint Partnership Council, who will make sure the Agreement is properly applied and interpreted, and in which all arising issues will be discussed.
• Binding enforcement and dispute settlement mechanisms will ensure that rights of businesses, consumers and individuals are respected. This means that businesses in the EU and the UK compete on a level playing field and will avoid either party using its regulatory autonomy to grant unfair subsidies or distort competition.
• Both parties can engage in cross-sector retaliation in case of violations of the agreement. This cross-sector retaliation applies to all areas of the economic partnership.

Foreign policy, external security and defence cooperation is not covered by the Agreement as the UK did not want to negotiate this matter. As of 1 January 2021, there will therefore be no framework in place between the UK and the EU to develop and coordinate joint responses to foreign policy challenges, for instance the imposition of sanctions on third country nationals or economies.

The Trade and Cooperation Agreement covers a number of areas that are in the EU’s interest. It goes well beyond traditional free trade agreements and provides a solid basis for preserving our longstanding friendship and cooperation. It safeguards the integrity of the Single Market and the indivisibility of the Four Freedoms (people, goods, services and capital). It reflects the fact that the UK is leaving the EU’s ecosystem of common rules, supervision and enforcement mechanisms, and can therefore no longer enjoy the benefits of EU membership or the Single Market.  Nevertheless, the Agreement will by no means match the significant advantages that the UK enjoyed as a Member State of the EU.

Big changes coming: getting ready 1 January 2021

Even with the new EU-UK Trade and Cooperation Agreement in place, there will be big changes on 1 January 2021.

On that date, the UK will leave the EU Single Market and Customs Union, as well as all EU policies and international agreements. The free movement of persons, goods, services and capital between the UK and the EU will end.

The EU and the UK will form two separate markets; two distinct regulatory and legal spaces. This will create barriers to trade in goods and services and to cross-border mobility and exchanges that do not exist today – in both directions.

The Withdrawal Agreement

The Withdrawal Agreement remains in place, protecting amongst other things the rights of EU citizens and UK nationals, the EU’s financial interests, and crucially, peace and stability on the island of Ireland. The full and timely implementation of this agreement has been a key priority for the European Union.

Thanks to intensive discussions between the EU and the UK in the Joint Committee and the various Specialised Committees, the Withdrawal Agreement – and the Protocol on Ireland and Northern Ireland, in particular – will be implemented on 1 January.

On 17 December, the EU-UK Joint Committee met to endorse all formal decisions and other practical solutions related to the implementation of the Withdrawal Agreement. As part of these mutually agreed solutions, the UK has agreed to withdraw the contentious clauses of the UK Internal Market Bill, and will not introduce any similar provisions in the Taxation Bill.  

Next steps

The entry into application of the Trade and Cooperation Agreement is a matter of special urgency.

• The United Kingdom, as a former Member State, has extensive links with the Union in a wide range of economic and other areas. If there is no applicable framework regulating the relations between the Union and the United Kingdom after 31 December 2020, those relations will be significantly disrupted, to the detriment of individuals, businesses and other stakeholders.
• The negotiations could only be finalised at a very late stage before the expiry of the transition period. Such late timing should not jeopardise the European Parliament’s right of democratic scrutiny, in accordance with the Treaties.
• In light of these exceptional circumstances, the Commission proposes to apply the Agreement on a provisional basis, for a limited period of time until 28 February 2021.

The Commission will swiftly propose Council decisions on the signature and provisional application, and on the conclusion of the Agreement.

The Council, acting by the unanimity of all 27 Member States, will then need to adopt a decision authorising the signature of the Agreement and its provisional application as of 1 January 2021. Once this process is concluded, the Trade and Cooperation Agreement between the EU and the UK can be formally signed.

The European Parliament will then be asked to give its consent to the Agreement.

As a last step on the EU side, the Council must adopt the decision on the conclusion of the Agreement. LINK https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2531

Financial services

According to The Financial Times:

The City of London will exit the EU’s single market for financial services at the end of the Brexit transition period on December 31.

Both sides have said that the new market access arrangements for UK and EU financial services companies should be based on unilateral decisions by Britain and the bloc, rather than be provided for in the trade agreement.

These so-called equivalence decisions involve each side evaluating whether the other’s financial services regulations are as tough as its own.

Banks and traders have acknowledged that the proposed system is more piecemeal than existing arrangements, and less stable. The EU did not announce any fresh equivalence decisions on UK access to the bloc’s markets alongside the trade agreement on Thursday, resulting in uncertainty in key areas including share trading and derivatives.

The two sides plan to put in place a regulatory dialogue on financial services based on a separate memorandum of understanding.