Exporters of goods, and businesses more generally, will have heaved a huge sigh of relief on Christmas Eve when the trade deal between the EU and the UK was announced. The agreement means we will sidestep the worst possible outcome of trading on WTO terms, avoiding tariffs and quotas on British exports to the remaining 27 EU members.
This was rightly portrayed as good news. But suggestions that this trade deal puts to bed all of the outstanding issues are wide of the mark. It is likely that signing this deal is the beginning of a protracted – perhaps permanent – state of negotiations between the UK and the EU, for there is much that is still to be settled.
The good news first. Tariff and quota free trade for goods, no
duel certification requirements (including food and animal produce, so
important for our region), freedom of movement for business travellers with no
need for visas for trips of up to 90 days – this and much more will be broadly
welcomed by businesses which have faced massive uncertainty for months.
However, exporters using components sourced from outside the EU could still face tariffs on goods due to ‘Rules of Origin’ – this could impact sectors such as car-making in the future.
There are also big holes which still need to be plugged. The greatest of these is services, which make up 80 per cent of the British economy, and which are not covered by the new deal. There is still no agreement on mutual recognition of professional qualifications for example, or clarity on passporting for the financial services sector.
Another important omission is data. The deal does not provide the adequacy agreement which would allow information to flow freely between the UK and customers in the EU, which in an increasingly connected world is vital. There is an interim solution under which the UK will effectively be rule-takers from Brussels; but this will run for no more than six months.
For agriculture and food producers, which faced potentially the most stringent tariffs, the deal is a big win; for the fishing industry, the 25 per cent of quota which will be gradually returned to the UK fleet is smaller than the industry hoped for, but maintaining free access to EU markets for their catch is probably rather more important.
For businesses, there is a commitment to provide them with clear and accessible information, but no timeline for doing so; uncertainty seems sure to be around for some time yet.
Overall, the deal is a big relief, but there is definitely unfinished business, and much, much more still to be negotiated. Hopes that a comprehensive trade-deal would be ‘done and dusted’ by 31st December look to have been over-optimistic; the Brexit circus is set to rumble on.’.