Appropriately enough, on Christmas Eve 2020, British Prime Minister Boris Johnson, filling in for a presumably “shielding” Santa, proudly announced a much-promised and eagerly awaited Christmas present for the entire British nation. He was mistaken, however, in describing it as a “free trade agreement”, as it actually appeared to be the result of a series of gladiatorial contests, in which each side had to make a succession of compromises and concessions, which are now being framed as “wins”, “losses”, or even “draws”, depending on which side which you belong to. One British media source, for example, referred to “leaked information”, marking the contest at 28 wins for the UK against 11 for the EU. In any case, there is no true “free trade” as originally envisaged by those who coined the term and expounded its virtues. In a world where national self-interests predominate and protectionism is spreading, international trade guided by comparative advantages and other such rational but potentially unpopular economic mechanisms is rapidly becoming a thing of the past as trade is heavily influenced by strategic, political, social, ethical and other considerations.
Cutting it finely to the finish line, Mr Johnson and Ms Ursula von der Leyen, the supposedly Anglophile President of the European Union, signed the seven-part EU-UK Trade and Cooperation Agreement at 2 30 pm on 24 December, ending the likelihood of a so-called “Australian-style” Brexit, more commonly understood to be a “No-Deal Brexit”, and promising a “Canada plus-plus” deal instead. There were continued talks almost up to the very end, demonstrating the preference for a deal on the part of both sides, given that trade with the EU is worth around £668 billion a year to the UK and accounts for around 43 per cent of all UK exports and 51 per cent of all UK imports.
The voluminous 1,246-page (including 800 pages of annexes and footnotes) post-Brexit trade agreement, was duly published simultaneously by the EU and the UK on the morning of 26 December, alongside a 34-page summary provided by the UK government. The next step is the expected ratification of the deal in the UK by the Houses of Parliament on 30 December, enabling the UK to regain its “independence” or at least some semblance of freedom, come New Year’s Day 2021.
Given the importance of trade between the EU and the UK, the UK has fared particularly well on the trading front, achieving a unique zero-tariff quota deal with the EU. All goods and produce from the UK that meet certain rules of origin can be sold in the EU market without tariffs or quotas, subject, however, to the “friction” caused by non-tariff barriers, such as filling in customs declarations (additional paperwork) and the need to adhere to EU standards. The “level playing field” so desired by the EU will be hopefully be achieved through due attention to matters that underpin trade, such as environmental protection, social and labour rights, tax transparency, and State aid (subsidies) and fairness of competition-all of which help ensure un-distorted trade. Unfair trading practices, if identified, will call for rebalancing mechanisms, involving punishment of the guilty side by way of the unilateral imposition of tariffs as needed.
There are several changes in the ways in which the EU and the UK will interact henceforth, some of particular importance to the supporters of Brexit. Upholders of British sovereignty will be pleased to note that dispute resolution between the EU and the UK will now be subject to the provisions of international law as applicable between sovereign nations, rather than being decided by the European Court of Justice. On the other hand, when it comes to other aspects of sovereignty, there is a more mixed picture. Compromise on the vexed issue of fishing rights has resulted in a five-and-a-half transition period, over which the UK will see its fishing quota gradually uplifted to the tune of 25 per cent of the value of the EU catch in UK waters. It is up to impartial observers to decide whether this EU concession on fishing rights equates to a “feast of fishes” following on an “oven-ready deal”, as Mr. Johnson puts it. Then when it comes to Northern Ireland, sovereignty remains compromised, as Northern Ireland stays within the EU’ single market for goods, creating a border in the Irish Sea between Great Britain and Northern Ireland in order to avoid a hard border in the island of Ireland, between Northern Ireland and the Republic of Ireland. .
Some aspects of the pre-existing harmonisation of UK practice with the rest of the EU will inevitably be affected when Brexit is finally “done”. Despite a stated commitment to continued cooperation on security issues, the UK will assume ‘third country’ status and thereby lose its membership of such cross-border security ventures as Europol, Eurojust and the Schengen Information System (SIS2), a “real-time” crime database. The mutual and automatic recognition of all professional qualifications will cease. The UK’s participation in the Erasmus student exchange programme, dating back to 1987, will also come to an end as it casts its nets wider through a planned global exchange scheme, named after the computer scientist Alan Turing.
Finally, some areas receive little mention, of which the most important is the financial services sector. In particular, there is no provision for financial service providers to access the EU’s financial markets. There is thus a need for further work on the matter of equivalence of financial services and on shared financial regulatory oversight.
There is much small print to be pored over and digested in the coming days, but time is short, and despite any residual unhappiness on the part of so-called “hard Brexiters” it is almost certain that the roadmap has been laid out for the UK to embark on its post-Brexit journey, although at times still almost hand-in-hand with the EU. Who knows what surprises 2021 has in store for us, but it behoves us all to stay optimistic and hope for the best.
Ashis Banerjee