Four years have passed since the United Kingdom European Union membership referendum took place in June 2016. Since that time many have felt as though this Brexit saga would never end. While Brexit news may have taken a recent back seat as the coronavirus pandemic dominates the headlines, it is becoming the topic of discussion once again as negotiations for the UK’s future relationship with the EU approach their conclusion. Brexit talks between the UK and the EU resumed in August 2020, while the deadline for negotiations was pushed back to mid-October of this year following the ongoing coronavirus pandemic. While the UK is currently in a transition period which keeps most of the pre-existing arrangements with the EU in place, this comes to a close on 31st December 2020 whether or not a new agreement has been reached.
Therefore, both sides are under pressure to agree a trade deal in the next two weeks. Failure to come an agreement would mean that the UK would depart with ‘no deal’, an outcome both sides have stated they are keen to avoid. So, what are the key issues that need be resolved to allow a trade agreement to be reached? And if the two sides can’t be reconciled, what might the immediate implications of ‘no deal’ be?
Key issues needing resolution
One of the main points of contention in the Brexit negotiations centres on the Northern Irish border. The crux of the issue is that as the UK will no longer have to follow the same standards as the EU on products such as livestock and food, checks would need to be put in place to ensure that goods travelling from the UK into the Republic of Ireland would still meet the EU standards.
Theresa May’s Northern Ireland Backstop proposed that if need be, the whole of the UK would have maintained its customs agreement with the EU to remove the need for checks along the Irish border. This was rejected by Conservative MPs who feared that the UK may be trapped in such an arrangement for years which would prevent the UK negotiating trade deals with other countries. When he became Prime Minister, Boris Johnson negotiated the Northern Ireland Protocol which would see Northern Ireland continuing to enforce the same customs rules as the EU in order to eliminate the need for checks on goods travelling between Northern Ireland and the Republic of Ireland. This would see checks on goods taking place in Great Britain with a nominal customs border in the sea between Great Britain and Northern Ireland.
One of the pillars on which the Brexit campaign was built was the promise that the UK would have control over who could and, more importantly, could not fish in its territorial waters. The Government is under pressure from coastal communities, where fishing is a high-profile industry, to not give ground on this issue. Similarly, the EU is under pressure from some of its own members who rely on their large fishing quotas in British waters. The current status quo is particularly important to EU member states such as Denmark that would find it impossible to catch its quotas of herring and mackerel without access to British waters.
The UK has been accused of wanting to have its cake and eat it with its demands on fishing. The UK wants the lion’s share of fishing quotas in British waters where currently more than 60% of tonnage landed is from EU boats. At the same time the UK demands unfettered access to the EU markets where over 70% of UK fish is exported. This has created an impasse where Michel Barnier, the EU chief negotiator, noted that the EU wants to maintain the status quo while the UK wants to change everything. For a deal to be struck it would appear the two sides must meet somewhere between these positions.
Level playing field
Under the current status quo, UK businesses follow the same rules and regulations on issues such as workers’ rights, health and safety and state aid, as businesses elsewhere in the Eurozone. At the end of the transition period the UK will no longer be forced to abide by these same rules which the EU fears would put UK businesses at an unfair advantage, particularly when it comes to the issue of state aid. EU negotiators insist that for the UK to have access to the single market, they must make sure that businesses operate on a level playing field when it comes to the key areas mentioned above. Of course, being free of such legislation set out by Brussels was another of the key promises made during the Brexit campaign. This brings about another impasse at the negotiations as neither party wants to give ground on such a contentious issue.
Where do we go from here?
Issues such as these could take years to negotiate and so it is no surprise that, given the limited time available, it has been a struggle to find middle ground where an agreement can be reached. From where we are now, things remain extremely uncertain with there being no clear sign of a deal on the horizon. However, some comfort can be taken that there is no sign of any major appetite for a ‘no deal’ scenario. At its most basic level, a deal with the EU could see the UK remaining relatively closely linked to the single market which would require concessions to be made on British businesses abiding by the EU standards that currently apply. But this could also provide frictionless trade meaning that no tariffs would apply to goods imported to and exported from the UK.
With only a few months remaining to the deadline date for negotiations to be concluded, inevitably a ‘no deal’ scenario looks increasingly likely. Such an exit from the EU would see the UK revert to standard World Trade Organisation tariffs on imported goods as well as requiring border checks on exports to ensure that they meet minimum standards requirements. This would mean an increase in the administrative burden faced by UK exporters as strict paperwork requirements would be implemented at EU borders, with the Government warning of severe disruptions which could include queues of up to 7,000 lorries crossing the Channel as part of their worst case scenario.
The most recent development was the Government tabling the controversial Internal Markets Bill, which would permit ministers to override parts of the Northern Ireland Protocol in breach of international law. At the time of writing, an amendment to the bill to require a vote in Parliament before ministers is under debate. Whatever the outcome of this debate, it has annoyed EU negotiators and could well shape the future of Brexit negotiations.
Even the most vital negotiations often go to the very final moment before an agreement, that may be seemingly out of reach previously, is finally agreed by both sides. Perhaps it was inevitable that something as contentious as the UK’s exit from the EU and subsequent trade negotiations would follow such a path. As immovable deadlines approach and the issues at stake are so crucial for both sides, it is reassuring to see some suggestion that an agreement at least remains possible.