Deal in danger: On post-Brexit U.K.-EU trade deal
Paper:
Mains: General Studies- II: Governance, Constitution, Polity, Social Justice and International relations.
Context:
The U.K.’s hardening stance in the post-Brexit U.K.-EU trade deal negotiations.
Background:
- The chief negotiator from the U.K. had recently stated that the U.K. would not yield on its demands despite the lack of progress in the negotiations and it would be fine even with a no-deal Brexit.
- The British Prime Minister has set an October 15 deadline for reaching a post-Brexit U.K.-EU trade deal indicative of its hardened position in the negotiations.
- The above developments have raised fears of a no-deal scenario.
Key Details:
- The Brexit agreement seeking to avoid a hard border between Northern Ireland, which is part of the U.K., and the Irish Republic, an EU member had the Northern Ireland protocol which expected Northern Ireland to follow some EU rules while trading with the neighboring Irish Republic.
- The Good Friday Agreement or Belfast Agreement is a pair of agreements signed in 1998 that ended the political conflict in Northern Ireland. Northern Ireland’s present devolved system of government is based on this agreement.
Other issues:
- There is a lack of consensus on issues such as workers’ rights, environmental regulations, state aid to businesses and the fishing rights issue as well.
- While the EU wants the U.K. to adopt rules that are close to its own to ensure a level playing field in the inter-European trade, the British government is reluctant to accept E.U. rules and has been arguing that the whole point of Brexit was to break free from common rules under the EU.
Concerns:
- A no-deal Brexit would have substantial costs involved for the U.K. as well as the EU.
- It will inflict severe economic costs on the U.K., at a time when the economy is in dire straits due to COVID-19. It would hinder the movement of goods and services between the E.U. and the U.K. and this would have a direct impact on the employment opportunities.
- It would also have undesirable political consequences as it risks disrupting the hard-won peace in the island of Ireland.
Terms Associated:
Article 50
- The exit clause within the Lisbon Treaty, the terms of which form the constitutional basis of the EU. A member state must invoke the treaty before it can formally and legally leave the bloc.
- The UK triggered Article 50 on March 29, 2017, becoming the first EU member to do so.
- The article allows a departing country two years to negotiate an exit deal, a period that has been extended by the EU for the UK.
Canada model
- Pursuing the so-called “Canada model” would mean the UK attempting to strike up a free-trade deal with the EU outside of the single-market model once it has left the bloc.
- Canada’s deal with the EU, known as the Comprehensive Economic and Trade Agreement (CETA), means it enjoys almost completely tariff-free trade in goods with the bloc.
- Under this model, the UK would not have to contribute to the EU budget and would not be bound by the single market’s laws, such as allowing for the free movement of people.
Customs Union
- An agreement under which two or more countries agree not to impose taxes on imported goods from one another and to apply a common tariff on goods imported from countries not party to the agreement.
- Under the terms of the EU’s customs union, goods that have been legally imported into the bloc can circulate throughout its member states with no further customs checks and member states are forbidden from negotiating trade agreements separately from the bloc.
Hard border
- A physical border controlled and protected by customs authorities, police or military forces could be erected between Northern Ireland, a constituent part of the UK, and the Republic of Ireland, an EU member state.
- This raises concerns about the future of the Good Friday Agreement, a peace deal signed in 1998 which helped to end the Troubles – a conflict in Northern Ireland between nationalists in favour of uniting Ireland and unionists in favour of the country remaining part of the UK.
- The Good Friday deal removed security checkpoints along the border and helped make it all but invisible. It did not mention borders or customs.
Hard Brexit
- There is no strict definition of hard Brexit, but it is generally accepted to mean a version of withdrawal from the EU which would see the UK leave the bloc’s single market and customs union.
- A hard Brexit would also likely see the UK stop paying into the EU’s budget and end freedom of movement, a founding principle of the union which permits citizens of EU member states to live and work in any part of the bloc.
Norway-style compromise
- Under the so-called “Norway-style compromise” approach, the UK would remain in the bloc’s single market, otherwise known as the internal market or the European Economic Area, after it has formally left the union.
- As such, Britain would be able to trade freely within the bloc while also striking trade deals with non-EU countries.
- It would also have to make financial contributions to the EU budget and accept a significant proportion of the bloc’s law, however, including the continued free movement of people, goods, services and money.
Single market
- The EU’s single market covers all member states and four other countries – Iceland, Lichtenstein, Norway and Switzerland – and permits people, goods, services and money to move around freely as within a single country.
- Common rules and regulations are devised, implemented and adhered to by its members
Soft Brexit
- There is no strict definition of soft Brexit, but it is generally accepted to mean a version of withdrawal from the EU which would see the UK remain part of the bloc’s single market and customs union, or both.
- A soft Brexit could also include UK concessions to aspects of the freedom of movement principle.
Way forward:
- The U.K. needs to respect the withdrawal agreement and be flexible in the talks as well as on deadlines.
- Both sides should focus on reaching a consensus on trade and other future relations.