Saturday, May 21

Brexit trade deal means “freedom”, but at a cost: the arguments will be far from over | Brexit

TThe new EU-UK trade and cooperation agreement will make it difficult to trade goods and services between the two partners. While the trade agreement offers tariff and quota-free trade (provided exports meet strict local content requirements), it does little to facilitate trade in services, and the UK failed to substantially reduce the need for more controls. post-Brexit. and bureaucracy.

The government explicitly prioritized regaining the ability to establish its own laws on withholding the economic benefits of EU membership. Against this metric, the negotiations can be considered a partial success. The UK successfully rejected the EU’s demands to follow its subsidy rules now and forever, to maintain specific environmental and labor rules, and to involve the European court of law in trade disputes.

But it did not avoid adhering to strict conditionality. Britain now has the ability to diverge from EU rules in the future, but doing so could lead to it losing the benefits of the trade deal and the re-imposition of tariffs, for example. Freedom, but not free.

Where the UK tried to maximize business opportunities, its efforts largely failed. British negotiators failed to convince the EU to reduce the frequency of border controls on food products imported from the UK (such as prawns and lamb); it did not ensure that UK professional qualifications were recognized across the EU; did not include provisions allowing UK testing centers to continue to certify products for the EU market; and it failed to win the argument in favor of allowing imported foreign parts (such as auto components) from Japan and elsewhere to count toward the thresholds in the agreement’s rules of origin, which determine whether or not a product can be traded duty-free. .

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This is not to say that the UK did not get anything it wanted. The EU agreed to make it easier for electric vehicles and batteries to qualify for duty-free trade, for example. But the concessions are not as generous as the UK would have liked, and they are only temporary.

This trade deal is not the end of the story, either. It marks only the beginning of the UK’s new relationship with the EU and it will inevitably evolve over time. Next year, for example, the UK will have to decide whether to link its own carbon pricing scheme to that of the EU, find out whether personal data of EU citizens can still be stored on UK servers. Kingdom and re-enter the discussions on the operation of the maritime border between Northern Ireland and Great Britain.

There is also the outstanding issue of financial services equivalence – a unilateral EU decision on whether to allow certain UK financial companies to continue to sell directly to EU customers. Even if such permission is granted, we should not assume that it will be permanent.

The UK will also have to decide whether to use the newfound freedom to deviate from EU norms and approaches and, if so, whether it is willing to accept the consequences of doing so. If you decide to do it, years and years of disputes and reviews await you.

In the long term, it is inevitable that all successive UK governments will want to renegotiate or alter aspects of the relationship with the EU. This could involve promises of re-entry into the Erasmus scheme or deeper regulatory reintegration commitments to smooth the border both between Great Britain and the EU, and between Great Britain and Northern Ireland. We could also see an elected government with a mandate to break the agreement and start over.

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But whatever the future holds, the tough decisions will not go away: further liberalization of trade in services, for example, would at least require the UK to accept freedom of movement. And bargaining with the union from the outside will remain an unpleasant experience: ask the Swiss.

The EU-UK relationship will slide down the news agenda, but it will not completely disappear. Our proximity to each other and the fact that the EU remains the UK’s most important economic partner means that negotiations on one thing or another will continue for decades to come.

Sam Lowe is a senior fellow at the Center for European Reform and a former member of the Strategic Trade Advisory Group at the Department of International Trade.

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