Britain finally withdrew from the European Union on Friday, January 31, a historic moment that was marked by both celebrations and anti-Brexit protests according to reports. This comes after 47 years of membership in the European bloc and over three years after Britons voted to leave in a referendum.
The United Kingdom is now in a transition period until the end of December 2020, when Brexit will happen in full. During the 11-month period, Britain must agree to a new trade deal with the EU or risk subjecting British companies to new barriers that could prove costly for them as well as consumers.
Within four days of the UK’s exit, there are already signs that negotiations on a new relationship between both parties, due to start in March, will be far from harmonious. This is down to several key issues – standards on the environment and safety, the role of the European Court of Justice in settling disputes concerning Britain as well as continual access for EU fishing operations in UK waters. Moreover, post-Brexit rhetoric between officials on both sides has already heated up concerning future trade relations.
“Will [Britain] continue to adhere to Europe’s societal and regulatory model in the future, or will it seek to diverge? The UK answer to this question will be fundamental to the level of ambition of our future relationship and the UK must know this,” the EU’s chief Brexit negotiator, Michel Barnier, was quoted as saying to reporters in Brussels this week. According to him, the UK can only avoid tariffs and quotas by agreeing to maintain open and fair competition with the bloc.
Barnier also said the EU was ready to be “ambitious” in offering a zero-tariff and zero-quotas trade deal but that would only happen if Britain agrees to follow most of its regulations and standards. The bloc argues that granting the UK unrestricted access to its market while adopting different regulations would threaten the integrity of its single market. Furthermore, leaders of the 27-nation bloc have said the farther Britain moves away from their rules, the less access it will have to the EU market – its largest export market.
UK Prime Minister Boris Johnson, however, has made it clear he does not intend to follow the bloc’s rules. “There is no need for a free trade agreement to involve accepting EU rules on competition policy, subsidies, social protection, the environment, or anything similar any more than the EU should be obliged to accept UK rules,” Johnson said during a speech in London.
Instead, the PM is seeking a Canadian or Australian-style comprehensive free trade deal with the EU, with zero or minimal tariffs and quotas in line with basic World Trade Organization rules. And Britain must be allowed to sign trade agreements with other countries such as the United States.
“We are ready for the great multi-dimensional game of chess in which we engage in more than one negotiation at once and we are limbering up to use nerves and muscles and instincts that this country has not had to use for half a century,” Johnson said, as reported by CNN.
On that note, analysts have warned that Britain must be realistic about what it can achieve over the short transition period. As a matter of fact, UK-based Economist lists the “extreme shortage of time” as one of the two factors that will make negotiations “more difficult.” Typically, comprehensive trade agreements take many years, not months, to negotiate, meaning the transition period of just 11 months is not enough for the goals set out by the UK government.
Experts say a more realistic target for this year is a deal with Europe that prevents tariffs but leads to new administrative and regulatory barriers to exports of goods and services. While the EU has suggested that Britain should use its right to extend the transition period by one or two years, an idea PM Johnson is against, saying severally he will not under any circumstance seek to prolong transition beyond December 31.
The divergent positions outlined by the UK and EU ahead of formal talks on a new trade deal point to another worrisome year for businesses, most of which have already endured over three years of uncertainty leading up to the official exit. Negotiations will need to be done speedily if a deal is to be secured before the transition period expires but that seems very unlikely to happen. And should both parties fail to agree on a deal, the result would be a no-deal or “hard” Brexit, the possibility of which is a huge threat to the business community.
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