The country voted for ‘getting Brexit done’. But what does that mean? Here’s a rundown of events.
PM Boris Johnson’s aspiration is for Parliament to adopt the latest deal with the EU before Christmas, or at least legislation that implements its terms. Regardless of the need to push aside parliamentary conventions, this timetable might be too tight.
Whenever Parliament approves the Withdrawal Agreement (the ‘deal’), the ratification process can run its course, including a vote in the European Parliament.
After successful ratification, the UK is no longer EU member. However, businesses don’t have to worry yet, as the transition period will ensure trading with the EU continues under the same rules until the end of 2020.
The UK will be a so-called ‘third country’ and a new (legal) relationship with the EU will have to be defined, as things stand before the start of 2021. This relationship comprises trade, customs, security and defence, judicial cooperation, scientific cooperation, cultural cooperation, exchange of data, and fisheries.
Team EU are ready to hit the negotiating table, but we are waiting for nominations in team UK, which may be forthcoming this weekend.
When it comes to trade negotiations the situation is as follows:
Currently, the UK is mostly fully aligned with EU legislation and most goods and services can be sold on the EU and UK markets - no questions asked. In the new situation, for each EU rule and the products, parts, raw materials and services that they codify, a new status has to be found in the cross-border context. The template for this will likely be the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada, which abolishes most tariffs, mutually recognises a number of rules but offers little in the way of an open market for services as we know it.
‘Canada+’ is a term coined by politicians advocating a deep trade relationship with the EU rather than being part of its internal market. The ‘plus’ stands for services trade. With an economy that is predominantly made up of services industries, the Government is keen to lead the way in international services trade. A trade deal along the lines of ‘Canada+’ would go beyond the World Trade Organisation’s General Agreement on Trade in Services (GATS) and indeed go further than the chapter on cross-border trade in services in CETA. This is unprecedented and will not be easy. Not least because people are the ‘raw material’ of services, and negotiating mobility of professionals and staff is extremely difficult. This is especially true for the level of mobility needed to underpin and maintain the intensity of unfettered cross-border EU-UK services trade. Also, a trade deal that includes a chapter on services will have to be ratified by all national, and a number of subnational parliaments of the EU countries, a total of almost 40 parliaments.
My expectation is that tariff-free trade in goods and alignment of many product rules will be achieved in the trade negotiations, but that access for European and UK services providers to each other’s markets will be quite a different story.
For business to continue post January 2021, when a new commercial environment is due, companies in the services sector are well-advised to start studying the rules of their clients’ countries, as well as the potential need for an EU presence and ‘passporting’.
So we can actually know what is going to happen. Let me guide you through the next decade of EU-UK trade.
To be continued ...
I have in-depth knowledge of the EU, its legal framework, institutions and trade policy. I have developed and used this expertise over two decades. I now apply my skills to help businesses through…
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