The future deal on UK-EU relations will bring profound changes, with both sides being forced to adjust after Britain’s 30-year membership in the European Single Market ends.
the commercial agreement between London and Brussels will offer British and European companies preferential access to each other’s markets, compared to basic World Trade Organization rules – ensuring that imported products will be free of tariffs and quotas.
But economic relations between the UK and the EU from January 1, when the deal is due to enter into force, will be on more restricted terms than they currently are.
“Everyone has to prepare for a situation next year which will be very different from today,” said an EU official.
A trade deal similar to the one negotiated between the two parties will leave Britain facing a 4% loss of its potential gross domestic product over 15 years from EU membership, according to the UK’s Office for budgetary responsibility. Failure to reach an agreement would have resulted in a potential GDP loss of nearly 6 percent, the budget watchdog estimated.
Here are some of the advantages conferred by the UK-EU future relationship agreement, which also includes security cooperation – and important areas where Britain’s ties to the bloc will fall short of existing agreements.
1. Trade in goods
The starting point of the EU and UK for future negotiations on the relationship was that they should lead to a tariff-free agreement on trade in goods between the two sides. They also did not want quantitative restrictions on the volume of goods that could be sold duty free.
This has been negotiated, which means the deal will go beyond what the EU has done with any other advanced economy outside of the European single market.
But this agreement is still a very different situation from joining the single market and the EU customs union.
Once implemented, from 1 January a strict customs and regulatory border will exist between the EU and the UK, and goods will be subject to checks and controls that can only be smoothed at the margins by the cooperation.
The agreement will include facilities such as cooperation on trusted trader systems, but none of these measures will erase border controls.
“The agreement provides for continuous and sustainable air, road, rail and maritime connectivity, even if market access is lower than what the single market offers,” said the European Commission.
2. Fair trade competition
The EU’s offer on tariff free trade was conditional on the UK agreeing to maintain a “level playing field” in fair trade competition in areas such as environmental standards.
Brussels also wanted the UK not to have unlimited room for maneuver in granting state aid to valued industries, giving them a competitive advantage.
The agreement includes common binding principles on state aid, applicable in the courts of both parties, which would be able to recover illegal subsidies.
It also includes a carefully negotiated “rebalancing mechanism” to deal with a situation where parties’ regulations in areas such as labor rights diverge over time.
The mechanism, which would be subject to independent arbitration, would allow the disadvantaged party to impose tariffs to restore fair competition.
But, crucially for the UK, it will not be required to follow EU rules directly or be subject to the jurisdiction of the European Court of Justice.
Being outside the European single market has other regulatory consequences for Britain. For example, UK companies will no longer be able to assume that UK watchdog product authorizations will allow their products to be placed on the European market.
The agreement creates a five-and-a-half-year transition period during which EU fishermen will have guaranteed access to UK waters.
EU quotas in UK waters will decrease during the transition by 25 percent from current levels, which will increase the amount that UK fishermen can get. EU vessels currently catch around € 650 million of fish in UK waters each year.
Once the transition period is over, access for EU vessels to UK waters will in principle depend on annual negotiations between the two parties. These discussions will also determine the overall amounts of different species that can be caught.
If the access of EU boats to UK waters were to be revoked by the UK, the bloc will have the right to take compensatory action. These include the retaliatory shutdown of EU waters to British vessels and the imposition of tariffs on British fish.
The agreement also links UK access to the EU energy market to access to UK fisheries waters.
The UK has avoided EU demands for cross-retaliatory power to strike other parts of the UK economy if a fish dispute escalates.
Nonetheless, the agreement provides a last-resort “safeguard” option that would allow each party to take emergency action to protect coastal communities, subject to the dispute settlement provisions in the agreement.
The agreement enshrines the principle that Britain is now outside the EU’s common fisheries policy: an independent coastal state, sovereign over its waters.
4. Financial services
The City of London will leave the EU’s single market for financial services at the end of the Brexit transition period on December 31.
Both sides said new market access deals for UK and EU financial services firms should be based on unilateral decisions by Britain and the bloc, rather than being provided for in the trade agreement.
These so-called equivalency decisions involve each party assessing whether the other’s financial services regulation is as stringent as its own.
Banks and traders have recognized that the proposed system is more piecemeal than existing agreements and less stable. The EU did not announce new equivalency decisions on UK access to EU markets alongside the trade deal on Thursday, leading to uncertainty in key areas including trade stocks and derivatives.
The two parties plan to establish a regulatory dialogue on financial services based on a separate memorandum of understanding.
Current British and European expats have their rights protected by the UK’s 2019 Withdrawal Agreement with the bloc, but big changes in migration agreements will come into effect on January 1.
The British will no longer enjoy European freedom of movement: the right to travel to any EU member state and seek to work and live there on the same basis as the citizens of the country.
Instead, the British will rely on a visa waiver program to travel to the EU for short stays, and member states’ national rules on the right to work.
Ending the free movement of EU nationals to the UK has been identified by the UK government as one of the benefits of Brexit, allowing the country to design a new immigration system.
The EU and UK have made efforts to stress the importance of continued cooperation in the fight against terrorism and organized crime, although discussions in this area have been complicated by Britain’s determination to escape the jurisdiction of the ECJ.
But before the deal was finalized, EU chief negotiator Michel Barnier confirmed that the parties had found ways to maintain “close cooperation” on critical issues, including the work of countermeasures agencies. the crime of the Europol and Eurojust bloc, and the division of criminals. DNA data.
Brussels said the agreement “builds new operational capabilities, taking into account that the UK, as a non-EU member. . . will no longer have the same facilities as before ”.
The agreement establishes that security cooperation can be suspended if the UK breaks with the European Convention on Human Rights.