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The Financial Express

Post-Brexit: What next for the UK and the EU ?

| Updated: January 04, 2021 21:49:07


Post-Brexit: What next for the UK and the EU ?

The tempestuous talks have, despite the background noise, been able to end in a legal understanding and a document of more than a thousand pages that will greatly affect future UK-EU relations covering different facets of their bilateral relations.

Analysts have carefully studied the different connotations and generally agreed that both the EU and the UK had very obdurate views but eventually each treated the other as a sovereign equal. This was particularly important when it came to fishing rights -- one of the last issues to be resolved. It has also proved that the future hopes to witness interdependence rather than only denotations of each Party their asserting independence. Most fortunately, this agreement has enabled the concerned Parties to avoid the disruption of a no-deal Brexit in the middle of the Covid pandemic. It also marks a new era after more than 40 years of UK membership of the European Union.

It would be important to refer to some of the significant issues that surfaced during the negotiations.

The issue of fishing became probably the most difficult within the matrix of the negotiations. There was discussion at length about how many fishes will EU boats be able to catch in UK waters in future, and how long will any transition period last before new measures come into full force? Officials involved in the negotiations say the UK initially wanted an 80 per cent cut in the value of the fishes caught by EU boats in UK waters, while the EU initially proposed an 18 per cent cut. It was finally decided that the value of the fish caught by the EU in UK waters will be cut by 25 per cent, which is a lot less than the UK initially asked for. The cut will be phased in over a transition period lasting five and a half years -- a lot shorter than the EU initially asked for. Once the transition period is over, the UK will fully control access to its waters, and could make much deeper cuts. However, if it decides to exclude EU fishing boats they can be compensated for their losses, either through tariffs on UK fishing products or by preventing UK boats from fishing in EU waters.

This issue highlighted what could be viewed as a "level playing field" by both sides. This contained queries about what might be viewed as constituting reasonable levels of state aid, or government subsidies for business. Both sides have agreed to maintain common standards with regard to  workers' rights and also on many social and environmental regulations. The EU was particularly interested on this issue. It may however be noted here that the UK does not have to follow EU law, but they do have to be seen as protecting fair competition.

In the similar vein, there has been some agreement of sorts with regard to how there will be dispute resolution. This suggests that if either side moves away from common standards that existed on December 31 2020, and this is having a negative impact on the other side, a dispute mechanism can be triggered which could mean tariffs (taxes on goods) being imposed. It is based around a "rebalancing" clause which gives both the EU and the UK the right to take steps if there are significant divergences. Economists have noted that the process will be stricter than measures found in other recent EU trade deals. There will however be a binding arbitration system involving officials from both sides. This means that even though this is a tariff-free agreement, the threat to be able to introduce tariffs will be a constant factor in UK-EU relations.

One wonders how this process might affect countries like Bangladesh who presently enjoy certain quota-free and tariff-free facilities in both the UK and the EU.

The European Court of Justice (ECJ), the EU's highest court will remain the ultimate arbiter of European law but its direct jurisdiction will come to an end in Britain. However, it has been suggested that the ECJ will still play a role in Northern Ireland, which will have a special status under the terms of the Brexit withdrawal agreement.

After this Agreement, British citizens desiring to travel to the EU from January 1, 2021 will need a visa if they want to stay in the EU for more than 90 days in a 180-day period. During this period these visitors will still be able to use their European Health Insurance Cards till they expire. Subsequently, UK government has agreed to replace them by a new UK Global Health Insurance Card (GHIC). Importantly, UK citizens will not need an International Driver's Permit to drive in the EU. This factor had assumed importance during the talks as millions of people from the UK visit the EU every year. It would however be also important to note here that EU citizens will no longer have the automatic right to settle in the UK.

Such a give and take situation has not been seen in the context of UK being extended financial services with regard to continuing doing business in the EU market. As of now, service companies in general have not received the guaranteed access that UK companies had to the EU single market. For practical purposes that is over for the moment.

Next on the discussion sheet was the important issue of what will be the data protection rules for UK companies with regard to accessing or using data from the EU in this age of digital economy where efforts are underway pertaining to development of trade. It appears that both sides want data to flow across borders as smoothly as possible, but the agreement also stresses that individuals have a right to the protection of personal data and privacy. Both sides have also agreed for a "specified period" of four months, extendable by a further two months, as regards exchange of  data in the same way it is now, as long as the UK makes no changes to its rules on data protection.

The question of ascertaining standard of products being exported from the UK to the EU will however not be without different conformity assessment measures. There will be nuances which eventually may end up as barriers. That might particularly create difficulties for entrepreneurs trying to sell their product in both the UK and the EU. They might from next year require to have it checked twice to get it certified. There has also been another aspect that will worry those who want to export food of animal origin from the UK to the EU. There is now no agreement on recognising each other's sanitary and safety standards for exporting such food items. Economists have however pointed out that there will be some measures which will reduce technical barriers to trade. Efforts are apparently already underway for agreeing on the mutual recognition of trusted trader schemes which will make it easier for large companies to operate across borders.  Such a step will then help many Bangladeshi exporters who generally export fish, food items and vegetables to UK with the eventual destinations being France, Belgium, Italy and Germany-- presently the residence of expatriate Bangladeshis.

Many young professionals of British origin are very worried about the question of recognition of their professional qualifications in EU after 2021. It appears that they are unlikely to be recognised automatically. This will make it harder for UK citizens supplying any kind of service to work in the EU. In such a scenario they will now have to apply to individual countries to try to get their qualifications accepted, with no guarantee of success. Right now there is some sort of recognition process. This is expected to become stiffer. Consequently, many professionals are worried, especially those who have spent quite a bit of time learning the foreign language of an European country where they want to work.

Some analysts have also raised the question of extradition. There appears to be greater smoothness with this aspect. Though security cooperation will no longer be based on "real time" access, an agreement has been reached on this issue. The UK's role in Europol, the cross-border security agency, will allow it to sit in on meetings but not have a direct say in decisions.  However, any disagreement over data will be dealt with by a new committee, not by the European Court of Justice.

Having worked in London as a diplomat for many years and in Brussels as the Bangladesh Permanent Representative to the EU, I thought it would be appropriate to highlight the above issues considering that  this Agreement will form the basis for UK-EU relations for years if not decades to come.

Before concluding it would be fitting to also note that this round of talks that has now concluded has not led to any normal trade agreement. Socio-economic analysts have pointed out over the last seven decades, since the conclusion of the Second World War that trade deals are designed to make trade easier and cheaper, by bringing countries closer together.  However, this Brexit Agreement has pushed the two sides further apart. It has also ended frictionless trade between the UK and its largest trading partner by creating potential extra costs.

British economists have however tried to point out a different side of the coin. They are suggesting that UK being now outside the customs union, it will be able to negotiate its own trade deals around the world. The UK government has also stressed that one of the big benefits of Brexit will be the UK being able to make its own sovereign decisions. However, the question remains-- will the expected gains be able to replace trade that will be lost with the EU.

Nevertheless, British Prime Minister Boris Johnson, European Commission President Ursula von der Leyen and all the others involved in the discussion deserve thanks from both the UK and the EU for their efforts. The UK formally left the EU on January 31, 2020 but has since been in a transition period under which rules on trade, travel and business remained unchanged. Now, from January 1, 2021, it will be treated by Brussels as a third country after 48 years.

Muhammad Zamir, a former Ambassador, is an analyst specialised in foreign affairs, right to information and good governance.

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