As the formal Brexit saga has drawn to an end, the bell has started tolling for critical trade talks, with Downing Street mentioning more than once the sample deal for them is the CETA free-of tariffs trade accord between Canada and the EU.
Boris Johnson is expected to make a speech on Monday outlining the negotiating goals he has set up for trade talks with the EU, which are expected to begin next month, the Daily Mail reported, also suggesting he is determined to rule out the EU-proposed extension to trade deal talks beyond the end of 2020.
The prime minister will reportedly warn the EU that failure to agree upon a full-fledged deal by the end of the year would automatically bring about tariffs on many popular EU goods, with the move potentially lowering demand on them by raising prices. The Times first reported the intention to use tariffs as “leverage” early this week.
The prime minister is also expected to rule out EU calls to retain access to the UK’s fishing waters, as well as to make the European Court of Justice oversee the final trade deal.
As Downing Street said on Friday, the PM made it “clear that we are seeking a Canada-style free trade deal” in which most goods traded between the EU and UK would be duty free and which would guarantee that Britain would complete its transition as scheduled.
What’s in a Canada-style Trade Deal?
The UK-EU free-trade agreement is proposed to be modelled on the one between the EU and Canada, inked in 2016. Such a deal will eventually remove all tariffs on goods. CETA or the Comprehensive Economic and Trade Agreement, for instance, gives European and Canadian firms access to each other’s markets for government contracts.
According to Michael Gove, head of the Cabinet Office, there would be “winners and losers” in industries as a result of the looser relationship with the EU. He added though that the government would diverge in regulatory terms only where there was an obvious competitive advantage.
He also dismissed assumptions that the UK could give away fishing access in exchange for a trade deal with the EU. “We’ll make our own decisions. We’ll be an independent coastal nation – we can have a friendly relationship with other countries but we’re in control”, he told Sky News.
The flag of the European Union is pictured on the ground covered with a mud on Brexit day in London, Britain January 31, 2020.
He separately confirmed the Canada-style agreement was likely to mean the introduction of some customs and regulatory checks on exports and imports, like tariffs on such goods as German cars, French cheese, and Italian wines.
According to Robert Ackrill, Professor of European Economics and Policy at Nottingham Trent University, any trade agreement that puts the UK outside of the Single European Market and Customs Union will mean Britons will no longer enjoy frictionless trade. “This is because, even if we remove tariffs (taxes on imports) and quotas (quantitative limits on imports), we shall now face barriers arising from different product standards, different food safety regulations, etc”, the academic explains.
He contends that a UK-EU deal cannot be like the Canadian agreement because Canada has a totally different trading relationship with the EU: for instance, roughly 10% of Canadian exports go to the EU, while with regard to the UK, the figure is about 45%, the commentator illustrates.
“CETA does include some liberalisation of services, but looking at what services products are NOT liberalised in CETA, adopting the CETA agreement as it stands would mean that about 70% of UK services and financial services exports to the EU would have barriers to trade imposed on them, where currently there are none”, the economist points out.
Something else has recently emerged that might affect what the EU is willing to concede to the UK on services: along with large net export surplus in services with the EU27, London earlier provided European fishermen with access to UK waters.
It is now believed that the UK may use it as a concession and seek to exploit continued access to UK fisheries “as a way of getting a better deal on services than the EU has offered to anyone else in the past”.
The major point for the UK seems to be regulatory break-up, he says: as compared to Theresa May’s government, the current one is much more willing, “indeed it seems to be pursuing, regulatory divergence from the EU as a matter of principle”. “Thus the factors set out above that will hit the UK economy negatively seem to be of lesser concern to the government than the commitment to regulatory divergence, seemingly as a goal in itself”, Ackrill notes.
UK’s Priorities in a Nutshell
The post-Brexit agenda is naturally a talking point not only back home, but well beyond Britain.
As Dr James Downes, a professor of comparative politics at the Chinese University of Hong Kong, put it, the UK government will need to address “thousands of pieces of legislation that deal with policy areas spanning agriculture, fisheries, single market/economics, and many more key issues”. With that, he notes, there could hardly be a way for the country to fully separate itself from the EU, in terms of economy, although it is “deeply unpopular with leading Brexiteers”.
Despite the current UK government being profoundly “Eurosceptic”, “there will need to be a ‘close’ relationship (economically speaking) between the EU and the UK over the next 5-10 years”, the professor remarks.
Lights are seen on display at 10 Downing Street on Brexit day in London, Britain January 31, 2020.
Among the aspects that the UK is expected to zero in on is affordable housing, “combatting climate change policies (all of these policies have taken a backseat over the last three years or so) for dealing with income inequality, reforms to the National Health Service (NHS)”, the commentator suggests. “All of these issues have been ignored post-2016 Brexit referendum vote and now need to be placed at the forefront of the UK government’s domestic policy agenda”, Downes says, adding a few more issues to the crucial agenda in the “still divided” country:
Almost half a century of Britain’s membership in the EU formally ended at 11 p.m. on Friday, three and a half years after a referendum in which voters chose to leave the bloc (52 percent for and 48 percent against).
The clock has now started ticking on a new deadline, 31 December, the end of an agreed transition stint.
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