–Few Details But UK Claims Tariff/Quota-free Access for Goods Exports to EU
By Laurie Laird
LONDON (MaceNews) – With just a week left to run on the current transitional arrangement, the UK has agreed a trade deal with the European Union that will officially end Britain’s membership of the European Union.
The UK left the bloc on 31 January, but remains part of the EU’s single market until the end of 2020. The UK voted to leave the Union in June of 2016 by a narrow 52% majority, ending an often-rancourous relationship with the now-27-nation alliance.
“We have resolved [an issue] that has bedeviled our politics for decades,” said UK Prime Minister Boris Johnson Thursday.
The deal must be ratified by the UK and European Parliaments, but is likely to pass both chambers with ease. UK opposition leader Kier Starmer has signaled his support for the agreement, while German Chancellor Angela Merkel has suggested that member states are familiar with the contours of the deal, removing the need for lengthy deliberations at national level. The German cabinet will discuss the pact on Monday.
Neither UK nor EU leaders provided much detail on the agreement, which will allow the UK to export goods free of tariffs and quotas. Trade in services “feature” in the deal, but financial services are not covered as comprehensively “as we would have liked,” said Johnson. The UK ’s service sector – which accounts for approximately 80% of output – is in surplus with regard to EU trade.
But the two sides managed to overcome a number of issues that threatened to derail the talks, potentially leaving the UK without any deal at all come year end. Fisheries – which comprise less than 1% of the UK economy – proved a particularly nettlesome stumbling block. Current fishing allocations will remain in place for five and a half years, according to Johnson and European Commission President Ursula von der Leyen. “We got a very good deal on fisheries,” said von der Leyen, comments largely echoed by Johnson and other UK officials.
The EU and the UK also came to agreement on the enforcement of a level playing field; EU negotiators have long feared that British deviation from EU regulations – such as state subsidies for industry – could undercut European-made products. The deal allows for either side to impose tariffs should an “independent arbitration” uphold allegations of unfair trading, said Johnson, suggesting that the European Court of Justice will not be involved in litigating such cases. “We brought in safeguards … . There are incentives for both sides to stick to what was agreed,” said von der Leyen.
However, both sides insisted that EU-UK trade will change dramatically from 1 January. “The UK is now a third country,” said von der Leyen. UK exports to the EU will require documentation, potentially delaying shipments that have previously crossed the English Channel with little bureaucracy. UK traders have warned of long queues of piling up at ports in northern France and the eastern England.
Sterling briefly broke above $1.36 following the news of the deal, just below the two-year-high of $1.3624 touched earlier this month, before ending the UK day up 0.4% at $1.3547.
The FTSE-100 index rose 6.36 points, or 0.1%, to 6502.11 in a shortened session that ended before the announcement of the deal. The more-domestically-focused FTSE-250 index rose by 1.37 point to 16,108.71, but has soared by 18% over the fourth quarter, the best performance since 2009.
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Contact this reporter: laurie@macenews.com.
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