Instant International
Author: Cheng Yihua
2020-12-25 02:50
Last update date: 2020-12-25 03:03
Britain and the European Union finally reached a trade agreement on December 24. The British side released a photo of Prime Minister Boris Johnson celebrating with his arms, and described that Britain will achieve full political and economic independence.
What is the content of this agreement and how will it affect the future relationship between Britain and Europe?
To put it simply, the UK and the EU have reached a trade agreement with "zero tariffs and zero quotas", avoiding trade only in accordance with WTO rules, but this does not mean zero barriers to trade, and the UK will also bear the pain of Brexit.
The agreement also resolves the future fishing rights issues of the UK and Europe and the border issue of Northern Ireland.
The picture shows the British Prime Minister Johnson meeting reporters on Downing Street on December 24, telling the results of negotiations with the EU (Reuters)
1. Zero tariffs and zero quotas but not zero obstacles
Under the agreement, Britain and Europe agreed to trade with "zero tariffs and zero quotas." Currently, the EU market accounts for 43% of the UK's total exports and 51% of its imports. This means that the UK and EU member states can still gain advantages in each other's markets.
Although there are no tariffs and quotas, the United Kingdom will cease to be a member of the EU Single Market and Customs Union from January 1, 2021. There will be more obstacles to trade between the two sides, including customs rules, regulatory standards and more border inspections. Increase the time required for trade and increase the cost.
The British government has predicted that the border inspection process will be five times more than the current one. In the early period after the Brexit transition period, the border may be full of trucks waiting to be completed.
Due to increased trade barriers, EU member states that currently export a large amount of goods to the UK will also be affected. Among them, Ireland, which is close to the UK, is the hardest hit.
Brexit: The picture shows British Prime Minister Johnson (left) and European Commission President Von der Lein (right) in Brussels, the capital of Belgium, on December 9th (Getty)
2. Some goods will still be taxed
It is worth noting that tariffs may still be levied on some products, including most automobiles, because their parts from the UK or outside the EU account for more than the proportion required by the "Rules of Origin".
The Office of Budget Responsibility (OBR) of the UK government previously predicted that even if a trade agreement is reached, UK exports will decrease in the long run compared to staying in the EU, and it is expected to lose 4% of the country's gross product (GDP) within 15 years.
This is less than a no-deal Brexit. The office estimates that a hard Brexit will lose 6% of GDP in the long run.
Belgian scholar Hylke Vandenbussche estimates that even if an agreement is reached, the 27 EU countries will suffer 0.38% of the overall economic loss and lose approximately 280,000 jobs.
Brexit: The picture shows British Prime Minister Johnson in the Prime Minister's Office at 10 Downing Street in London on December 10.
(Getty)
3. Northern Ireland border issue
On the border issue of Northern Ireland, the British side reached a consensus with the EU on the content of the agreement in early December. Northern Ireland will continue to abide by the EU’s single market rules and remain in the customs union, which means that Northern Ireland will not have a "hard border" with Ireland. Problems, but inspections will be performed on goods arriving from the UK.
4. Five and a half years transition period for fishing rights dispute
In the final stage of the negotiations between Britain and Europe, fishing rights have always been one of the disputes between the two sides. The British side hopes to "protect" its fishing waters and reduce the quota granted to the EU.
Now the agreement stipulates that the two sides will have a transition period of 5 and a half years. The EU will continue to fish in British waters, but will reduce its fishing quota by 25%. After the transition period expires, the two parties will negotiate annually.
Extended reading:
[Brexit] Defending "Fish and Chips" to the death?
Why fishing rights are the key to Brexit
The picture shows a fishing boat in English waters on December 22, 2020. In the final stage of the negotiations between Britain and Europe, fishing rights have always been one of the disputes between the two sides (Getty)
5. Increased population flow barriers
After January 1, 2021, British and EU citizens no longer have the right to work and live in each other's country. The UK will be able to design a new immigration mechanism.
As for Britons who want to stay in the EU for a short period of time, they can still travel through the visa-free program. If they want to work, they must comply with different rules in different countries.
6. Bank access to the EU market is affected
Financial services are not part of this trade negotiation. From January 1, 2021, British banks and financial institutions will no longer have full access to the EU single market. Instead, they will be replaced by a system of “equivalence”. In the future, British banks, If an insurance company or other financial company wants to enter the EU market, it must first be recognized by the EU as "equivalent."
According to Reuters, as the UK and Europe reach a trade agreement, the EU may be more willing to provide London financial institutions with access to the market. However, before the agreement is reached, some financial institutions have transferred some jobs to the EU to avoid impact The service to EU customers involves 7,500 positions.
Brexit | The United Kingdom and the European Union announced that they reached a trade agreement and ended 9 months of stalemate negotiations
[Brexit] Defending "Fish and Chips" to the death?
Why fishing rights are the key to Brexit
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Britain, Brexit, British politics, British economy, Boris Johnson, European Union