What Does the Agreement with the EU Mean for the UK?
On Christmas Eve 2020, almost four and a half years after the Brexit referendum, the United Kingdom and the European Union finally reached a trade and cooperation agreement to govern their future relationship. The agreement, which was approved by both sides and came into force on January 1, 2021, covers a wide range of issues, from goods and services to fisheries and security. But what are the key points and implications of the agreement for the UK?
First of all, the agreement secures tariff-free and quota-free trade in goods between the UK and the EU, as long as the goods meet the agreed rules of origin and standards. This means that UK exporters can avoid paying tariffs or quotas on their goods sold to the EU, and vice versa, which should reduce the costs and barriers of trade. However, the agreement does not eliminate all non-tariff barriers, such as customs checks, regulatory divergence, or licensing requirements, which may still affect some sectors or products. Moreover, the agreement only covers trade in goods, not services, which account for about 80% of the UK economy and may face new restrictions or barriers.
Secondly, the agreement provides for a level playing field between the UK and the EU, by committing both sides to maintain certain labor, environmental, and competition standards, and by establishing a mechanism to ensure that either side can take remedial measures if the other side deviates from these standards. This means that the UK cannot gain an unfair advantage over the EU by lowering its standards or undercutting its prices, but it also means that the UK cannot diverge too much from the EU`s standards or risk losing access to some of its markets. Additionally, the agreement includes provisions on state aid, which limit the scope and duration of subsidies that the UK can provide to its companies, especially in sectors that may affect the EU`s interests.
Thirdly, the agreement sets out the rules for cooperation in various areas, such as transport, energy, security, and law enforcement. For example, the UK and the EU can still participate in some of the EU`s programs and agencies, such as the Horizon Europe research program or the Europol police cooperation, but they cannot have the same level of participation or influence as before. Moreover, the agreement recognizes the sovereignty and autonomy of both sides, and allows them to negotiate new agreements with other countries, but not at the expense of the agreement with the EU.
Fourthly, the agreement resolves the long-standing issue of fishing access and quotas, by granting the EU a transition period of five and a half years to gradually reduce its fishing activities in UK waters, and by providing for annual negotiations on the access and quotas thereafter. This means that the UK can take back control of its waters and its fishing industry, but it also means that the EU may lose some of its traditional fishing rights and may have to adapt to new arrangements.
Overall, the agreement with the EU represents a compromise between the UK`s desire for sovereignty and control, and the EU`s need for coherence and cooperation. It avoids the worst scenarios of a no-deal or a hard Brexit, which could have caused severe disruptions and uncertainties for businesses and individuals on both sides. It also provides a basis for further negotiations and adjustments, as the UK and the EU may discover some of the unintended consequences or challenges of the agreement in the coming years. Therefore, the agreement with the EU is a necessary but not sufficient condition for the UK`s economic and political success in the post-Brexit world, which will depend on many other factors, such as innovation, productivity, resilience, and diplomacy.