The future relationship agreement between Great Britain and the EU would bring far-reaching changes as both sides are forced to adapt to the end of Great Britain’s 30-year membership in the European single market.
The London-Brussels trade agreement is designed to give UK and EU companies preferential access to each other’s markets compared to the basic rules of the World Trade Organization – to ensure that imported goods are free of tariffs and quotas.
However, economic ties between the UK and the EU from January 1, when the deal entered into force, would be on tighter terms than they are now.
According to the British Bureau of Budgetary Responsibility, a trade deal similar to the one negotiated between the two sides will bring the UK a loss of 4 percent of potential gross domestic product to EU membership over a period of 15 years. Failure to reach an agreement would have resulted in a potential GDP loss of nearly 6 percent, the fiscal watchdog estimated.
Below are some of the benefits of the proposed future UK-EU deal, which will include security cooperation – and the key areas where UK ties to the bloc will lag behind existing arrangements.
The containers are unloaded from ships in the port of Felixstowe. © Neil Hall / EPA / Shutterstock
1. Trade in goods
The starting point of the EU and the UK for the future relationship talks was that they should lead to an agreement without tariffs on trade in goods between the two sides. Nor did they want any quantitative restrictions on the volume of goods that could be sold duty-free.
This was negotiated, which meant that the deal should go beyond what the bloc has done with any other advanced economy outside the European single market.
However, the expected agreement is still a very different issue than membership of the EU internal market and the customs union.
Once implemented, there will be a tough customs and regulatory border between the EU and the UK from January 1st, and goods will be subject to controls and controls that can only be smoothed out by working together on the fringes.
2. Fair business competition
The EU’s offer of duty-free trade was contingent on the UK’s willingness to maintain a level playing field for fair business competition in areas such as environmental standards and labor rights.
Brussels has also sought to ensure that the UK does not have unlimited room for maneuver to disburse state aid to valuable industries, which gives them a competitive advantage.
This level playing field issue has been one of the most difficult aspects of the talks, and the likely outcome is aimed at ensuring that businesses on both sides compete fairly.
What is crucial for the UK, however, is that it is not 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 the UK. For example, British companies can no longer assume that product approvals from British watchdogs will enable their goods to be placed on the European market.
A British fishing boat off the south east coast of England © Glyn Kirk / AFP / Getty Images
The proposed agreement provides for a transition period of five and a half years during which EU fishing boats guarantee access to British waters.
EU quotas in UK waters will decrease from their current levels, although the bloc will retain significant fishing rights.
EU boats are currently catching around EUR 650 million in fish a year in UK waters, but this is expected to decrease by up to 25 percent, which has a positive impact on the fishing opportunities for UK boats.
For the EU, the outlined agreement would mean that its boats would have guaranteed access to UK waters during the transition. After the deadline, access depends on the annual negotiations between both sides. These conversations will also determine the total amount of different species that can be caught.
For the UK, the principle should be anchored that Great Britain is now outside the EU’s common fisheries policy: an independent coastal state with sovereignty over its waters.
4. Financial services
The City of London will leave the EU single market for financial services at the end of the Brexit transition period on December 31.
Both sides have stated that the new market access rules for UK and EU financial services companies should be based on unilateral decisions by the UK and the bloc.
In these so-called equivalency decisions, each side assesses whether the other side’s financial services regulations are as strict as their own.
Banks and merchants have recognized that the proposed system is piecemeal than existing agreements and less stable.
Ending free movement of EU citizens in the UK has been identified by the UK government as one of the benefits of Brexit. © Oli Scarff / Getty Images
Current UK and EU expatriates have their rights protected by the 2019 UK Withdrawal Agreement with the bloc, but major changes to the migration arrangements will take effect from January 1st.
The British will no longer benefit from European freedom of movement: the right to go to an EU member state and 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 free movement of EU citizens in the UK has been identified by the UK government as one of the benefits of Brexit, which allowed the country to develop a new immigration system.
The EU and UK have tried to highlight the importance of continued cooperation in the fight against terrorism and organized crime, although talks in this area have been hampered by the UK’s determination to escape the jurisdiction of the ECJ.
However, ahead of the breakthrough in the talks that put both sides at the forefront of announcing an agreement, EU negotiator Michel Barnier confirmed that they have found ways to “work closely” on key issues, including the work of the blocs. maintain crime prevention agencies Europol and Eurojust, as well as the exchange of DNA data of criminals.