Brexit deal explained: what the UK and EU agreed | FT

Summary

After four and a half years post-Brexit, the UK and EU have reached a trade agreement that allows tariff and quota-free trade but introduces new restrictions. While this deal focuses on goods, it does not adequately address services, where the UK has a surplus. The agreement imposes customs requirements and regulatory constraints, highlighting a harder Brexit than many anticipated. Key issues like fishing rights and data sharing remain contentious and unresolved. Overall, this pact signifies a new phase in UK-EU relations, necessitating ongoing negotiations to address various aspects of their future interactions.

Takeaways

• 😀 The UK and EU have reached a trade and security agreement effective January 1st, ensuring tariff-free and quota-free trade.
• 📉 The EU represented 43% of UK's exports in 2019, highlighting the significance of this agreement for UK businesses.
• 📊 Despite the deal, the UK's GDP is projected to be 4% smaller by 2035 compared to what it would have been without Brexit.
• 🔄 The agreement primarily focuses on free trade in goods but offers limited provisions for services, where the UK has a surplus.
• 📝 Post-Brexit, businesses will face new customs declarations and checks, potentially disrupting supply chains.
• ⚖️ The deal includes a 'level playing field' provision to prevent the UK from undercutting EU standards on subsidies and labor rights.
• 🐟 Fishing rights were a contentious issue, with EU boats set to gradually relinquish a portion of their catch in UK waters.
• 🔗 A temporary data-sharing arrangement is in place, but a long-term solution on data privacy standards is still needed.
• 💼 Financial regulations must align to allow UK firms to continue accessing the EU market for financial services.
• ⏳ Ongoing negotiations will be necessary to address various aspects of UK-EU relations for years to come.

Q & A

What is the significance of the new trade agreement between Britain and the EU?

The new trade agreement guarantees tariff-free and quota-free trade, marking a pivotal shift in the relationship between Britain and the EU after Brexit.

How much did the EU account for Britain's exports in 2019?

In 2019, the EU accounted for 43% of Britain's exports, totaling £294 billion.

What impact is the trade deal expected to have on the UK's GDP by 2035?

The Office of the Budget Responsibility estimates that the deal will leave UK GDP 4% smaller than it would have been without Brexit by 2035.

What kind of trade does the agreement primarily focus on?

The agreement primarily focuses on free trade in goods, with limited provisions for services.

What new requirements will businesses face when trading with the EU after Brexit?

Businesses will need to fill out customs declarations, and food products will require veterinary certificates and may be checked at the border.

What was one of the most contentious issues in the negotiations?

One contentious issue was the level playing field, which constrained the UK from providing subsidies that could give domestic companies an unfair advantage.

How did the UK and EU resolve the dispute resolution mechanism?

The UK agreed to match EU rules and regulations, and a mechanism for settling disputes was established without the European Court of Justice's adjudication.

What transitional arrangements were made regarding fishing rights?

There will be a transition period during which EU boats will give up rights to about a quarter of the fish they currently catch in UK waters.

What ongoing negotiations are expected after the trade deal?

Further negotiations will address issues such as data privacy standards and the compatibility of Britain's financial regulations with those of the EU.

What is meant by a 'harder form of Brexit' as described in the agreement?

A 'harder form of Brexit' refers to the restricted terms of trade that will be in place, leading to more bureaucracy and customs checks compared to the previous arrangements within the EU.