The UK and the European Union (EU) made recent headlines for their collective decision to extend negotiations surrounding the Brexit trade deal, discarding the initial deadline of 31st December, which was supposed to signal the close of the transition period. The Withdrawal Agreement between the two parties had established this 11-month transition period, ending on the last day of 2020, during which the UK would maintain their participation in the EU’s Customs Union and Single Market.
The goal of such a period was to foster smooth transition, rather than inducing shock from abrupt changes by ensuring continuity that would allow both sides to secure a coordinated Brexit. This was aimed at minimising disruption for citizens, businesses, public administrations, along with international partners.
Divergence Over Key Issues
In the negotiations concerning the post-Brexit trade agreement, three major issues have emerged as significant points of contention: level playing field, governance, and fisheries.
Firstly, the Level Playing Field refers to the measures necessary to ensure an equitable environment for businesses in both the UK and the EU, including the role of the European Court of Justice. Disagreements have arisen over the EU’s demand for a mechanism facilitating tariff-free trade while maintaining fair competition for businesses through a regulatory “level playing field.” The UK has rejected such an “evolution mechanism” or “equivalence mechanism” which intends to prevent the UK from undercutting the EU if the latter increases its standards in areas such as environmental regulations or workers’ rights.
Governance and Fisheries
The second issue revolves around governance. The UK expresses a desire to conduct bilateral talks with EU leaders, a request misaligned with the EU’s proposal that any mechanism should be overseen by a joint committee of EU-UK officials, responsible for arbitration in cases of disputes.
Finally, discussions concerning fisheries primarily focus on the EU’s fishing fleets’ access to UK waters. Reports suggest that France is leading this discussion, demanding access rights for a duration of at least 10 years. This demand has been met with resistance from the UK, who claim it falls short of their criteria for achieving control by leaving the bloc.
Consequences of Failed Negotiations
Should no deal be agreed upon before the December deadline, a no-deal Brexit on World Trade Organisation (WTO) terms beginning on 1st January is the most likely outcome. In such a situation, the UK would immediate exit the EU without any formalised agreement concerning the separation process, causing the UK to exit both the single market and customs union arrangements overnight.
This would necessitate the UK’s immediate departure from EU institutes and entities such as the European Court of Justice and Europol, and cessation of contributions to the EU budget. The absence of a trade deal would cause cross-Channel trade to revert to WTO rules, leading to increased prices due to tariffs, additional paperwork for importers, and implementation of border checks and taxes for goods travelling between the UK and the EU.
Moving Forward
The way forward requires a balanced approach between a hard and soft Brexit, aiming for a semi-soft Brexit to mitigate the shock citizens may face when leaving the EU. The EU will continue forward as a bloc of 27 countries, holding tight to the core idea that pooling resources is the best approach for achieving common goals. As the UK moves away from the EU, other global nations will need to adjust to align with the shifting landscape of power and politics.
