The trade agreement between the UK and the European Union was welcome relief for businesses, averting the prospect of punitive tariffs and a chaotic no-deal split from Britain’s largest trading partner this week.
However, the deal leaves major problems unresolved or threatens to flare up again. The Brexit agreement may cause problems in the future:
Level playing field
An agreement on the so-called level playing field, which creates the conditions for fair competition between companies, was one of the trickiest parts of the negotiations. The compromise agreed means that the UK will not have to conform to EU law, but the bloc can impose proportionate rates, subject to arbitration, if it can show that Britain’s actions distorted fair competition.
This means that the issue of levies on trade between the UK and the EU is far from resolved and is a topical issue. One of the main arguments of the campaign to leave the bloc was that Britain would take back control of its own laws, and Euroskeptic members of Boris Johnson’s conservative party have called on the prime minister to seize the opportunity to revoke the regulations. to be deleted.
The deal also includes a “review clause” that allows both parties to periodically renegotiate this part of the treaty if they are not satisfied with how it is being used. The trade deal could therefore still collapse in the future if the UK or the EU decide it fails.
Finances
The deal offers little clarity to financial institutions. There is no decision on the so-called equivalence, which allows companies to sell their services from the City of London on the EU internal market. The agreement only contains standard clauses for financial services, which means that there are no market access commitments.
Johnson told the Sunday Telegraph that the deal “may not go as far as we’d like” in the financial services area, with a rare admission that his strategy had fallen short in the talks.
The Treasury will negotiate a memorandum of understanding with the EU as an urgent priority in 2021 and London will continue discussions with Brussels on access and equivalence for financial services, Finance Minister Rishi Sunak said on Sunday.
data
The UK and the EU have only agreed on one workaround to keep data flow between their territories. During an interval of up to six months, data may be transferred until a separate legal agreement is reached.
EU officials have said a so-called data protection decision could be made in early 2021, confirming that UK data protection standards are similar to those of the bloc.
Fish
The Brexit trade deal includes a five-and-a-half year transitional period for fisheries, during which UK fleets will see an increase equal to 25% of the catch previously caught by EU boats in UK waters. Thereafter, access will be subject to annual negotiations.
The agreement gives both the UK and the EU the right to levy duties on each other’s fish if they can demonstrate that a future reduction in access to waters will cause economic or social damage.
There was an angry reaction from the fisherman to the compromise, with the National Federation of Fisheries Organizations describing it as a “betrayal”. Fisheries were a totem problem in the Brexit campaign and they will put pressure on the UK government to work hard when the next talks come up.
Gibraltar
The UK and the EU have yet to come to an agreement on Gibraltar, the British territory linked to mainland Spain. Without a deal, it could be more difficult to cross the border, leading to long commuter queues and significant economic disruption. About 15,000 workers cross the border every day.
Any attempt by Spain to erode or even end British control of the territory has long resurrected conservative lawmakers, including former leader Iain Duncan Smith, and will fight hard to prevent UK concessions. is doing.