Everything you need to know about the UK-EU trade deal

Everything you need to know about the UK-EU trade deal

After an intensive four year period, and nine months of discussions, a Brexit Trade Deal between the EU and UK was finally agreed upon on 24th December 2020 and approved on the 31st December 2020, not a moment too soon before the transition period came to an end. This meant that trade regulations have been able to commence at the start of the new year, as hoped.

Prime Minister, Boris Johnson, claimed in his statement that the deal agreed upon was a similar, comprehensive Canada-style agreement for trade. So what are the key points of our new trade operations?

Fishing

This was the sticking point for a while in discussions surrounding a trade deal. Whilst both the UK and EU negotiators seemed pleased with the deal that they finally agreed upon, many UK fishermen have not welcomed the deal as much as they would have hoped.

This is because, whilst their share will be reduced, EU boats will be allowed to continue fishing in UK waters. Their share of the fish will initially fall 15% of its current allowance, with a further 2.5% decrease each following year, declining up to an ultimate amount of 25% up until June 2026, allowing British Boats to catch an estimated £140m more fish in this time. After June 2026 there will then be annual negotiations on parties’ access to the others waters and the volume of fish they are allowed to catch.

Goods

The negotiations between the UK and EU ultimately resulted in an unprecedented 100% tariff liberalisation – meaning no tariffs or quotas on the movement of goods produced between the UK and EU. The agreement also allowed both the EU and the UK to set their own rules on geographical locations and countries of origin for products, designed to guarantee the protection of quality and reputation of foodstuffs produced in a particular region. The parties also put in place a review policy, allowing them to be able to coordinate on rules and regions again at a later date.

Customs

Both sides have agreed to limit the customs red tape and instead have based their agreement on the World Trade Organisation (WTO) Trade facilitation agreement and the World Customs Organisation (WCO) Revised Kyoto Convention which ensures the provision of efficient customs arrangements covering all trade in goods.

The Customs and Trade Facilitation chapter within the agreement includes a measure that ensures the facilitation of legitimate trade, by implementing a mutual recognition of a ‘trusted trader’ (AEO) schemes. This includes provisions to support the efficiency of documentary clearance, transparency, advance rulings, and non-discrimination. This agreement also sees bespoke measures, such as cooperation at ‘roll-on-roll-off’ ports like Dover and Holyhead.

The overall take from the customs chapter is the security and protection of the parties’ respective regulatory, security, and financial interests.

Services

Previously, it had been made clear that by leaving the single market, the UK would be subject to losing some market for their trade-in financial services. Currently, more than 40% of all UK exports are in services, which accounts for around 80% of the UK’s economic activity. The general consensus following the trade agreement seems to be; UK firms can still provide services across the border but nation-states can and most likely will impose a lot of their own specific rules and constraints. Which will most likely mean, Britons can expect to see quite a blow to this sector.

Following the end of the transition period Britain’s services sector lost two of the key operating mechanisms, vital to the fluidity of its operations; its ‘passporting rights’ and the Mutual Recognition of Professional Qualifications (MQPR). This means that those offering services, across a wide range of sectors, will now struggle to operate in a similar function now that the UK has left the single market. Typically, UK nationals who are planning to service clients in the EU and EU citizens holding UK qualifications will need to have these qualifications recognised on a state-by-state basis in the EU.

Energy

Whilst the UK is now no longer part of the single market, contingencies within this plan have ensured that energy will continue to flow between the UK and EU through new trading arrangements over interconnectors. The energy provisions listed in the agreement were designed to support and strengthen the UK and the EU’s respective energy and climate ambitions, working together to safeguard the security of the supply and integration of renewable sources into their respective markets. The agreement signed also commits both parties to continue working on developing and implementing new, efficient trading agreements by April 2022.

Both sides were keen to ensure that their integrity and security were safeguarded throughout the agreement and beyond and so have put in place various contingencies to do so. They want to ensure that the competition between the EU and the UK remains fair and Ursula Von Leyen, President of the European Committee, stated in her announcement that both sides are prepared to implement ‘effective tools’ to react to if and when fair competition is distorted to ensure that there is no impact over trade.

Prime Minister, Boris Johnson stated ‘This bill embodies our vision – shared with our European Neighbours, of a new relationship between Britain and the EU as sovereign equals, joined by friendship, commerce, history, interests, and values, whilst respecting one another’s freedom of action and recognising that we have nothing to fear if we sometimes choose to do things differently and we have much to gain from the healthy stimulus of competition’. Many welcomed the final signing of a trade deal, a happy ending, after a tumultuous four years of negotiating and deliberating.

If you have any further queries about how your business operations may be affected by the deal between the EU and UK, get in contact with one of our expert consultants today, who will be happy to guide your business towards optimised operations. Get in contact today by calling us on +44 (0)207 060 0835, emailing us at info@animoassociates.com or filling out a contact form below. We at Animo understand that the next month may be overwhelming for businesses as they become accustomed to new ways of operating, and our team welcomes the opportunity to advise and support both current and prospective clients in any way we can!

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