Brexit Deal: An Explanation

By Afeefa Salehmohamed and Konstantina Nouka

Post Brexit Deal—What is it and what are the Impacts?

Since the results of the Brexit referendum became public, and then later when the UK decided to officially withdraw its membership from the EU, one particular question has been at the centre of the political attention: what will the Brexit deal include?

Days before the 11-month transition period ended, on Christmas Eve, 24 December 2020, British Officials were busy coming finalising a post-Brexit deal with the European Union (EU). The deal was a much wanted one, especially for the UK. As soon as the deal was agreed upon by both parties, Boris Johnson declared it the deal that the UK wanted and needed, whilst the EU declared it a deal only.

The 1246-page ‘Divorce’ Treaty (the Trade and Co-operation Agreement (TCA)- which exists separately to the EU Withdrawal Agreement), based on International Law, is divided into seven parts. In this Article, we will be expanding on what are the most important features of the deal and its consequences and impacts for the UK.

Among the many topics discussed in the deal, the ‘Fisheries’ and ‘Trade’ categories have been publicised by the UK Government the most. However, the other topics include: Energy and Climate, Mobility, Aviation, Road Transport and Security and Thematic Cooperation.

As the UK has formally ratified the agreement, following the Royal Assent of the European Union (Future Relationship) Act 2020, this deal is now officially in force. From the EU side though, the EU has will formally approve the deal in the European Parliament, at some point in April 2021.

Trade in Goods:

The main fears of businesses and consumers were that some products (cost of resources issue for businesses) will cost more when imported, thus being sold at a higher price to consumers. The deal has partially resolved the issue. There will be zero tariffs and zero quotas on traded goods. This means that products will remain at a lower price. However, to achieve it, there are more conditions to be met. There is an increase in paperwork (‘red tape’) despite the zero tariffs and quotas, since the UK will need to nevertheless follow procedures set by the EU for third-world countries. Traders will need an EORI number, which will be issued by the EU, to move goods to and from the UK. The UK Customs Authority has estimated that around 270 million additional declarations will be needed for EU imports into the UK.

Rules of origins will have to be met to allow the zero-tariff-zero-quotas trade agreement to survive. However, the rules have been simplified. Traders will be allowed to ‘self-certify the origin of goods sold’. Complying with the EU requirements thus becomes easier and tariff-free access is permitted. Additionally, for products such as wine, organics, automotive, pharmaceuticals and chemicals, specific arrangements have been made for its zero-tariff-zero-quotas trade.

Conversely, there are downsides to the trade deal. If the ‘rules of origin’ regulations are not met, customs duties may be imposed. Strict EU laws on animal products will also cause a ban on some UK-exported meat to the EU. And these are not the only vices. If the UK shifts too far from the ‘level playing field’—measures that ‘maintain common standards on rights of workers, and social and environmental regulations’ or if businesses are shown to be unprepared at border control, delivery will be delayed. Adjustments have to be made to EU-UK supply chains as well. Although well-publicised, the trade in goods deal may complicate matters, at least until everyone gets used to the new reality. However, due to the Covid-19 outbreak, it might be harder to adjust to the new sets of regulations.

Trade in Services:

Regarding the financial sector, UK service suppliers will no longer benefit from the ‘passporting’ concept, which enables access to the EU Single Market. Instead, to be able to operate across the ‘bloc’, UK service suppliers will have to comply with the rules of individual EU Member States depending on their individual regulations on third countries. Which is increased complexity.

Despite the increased complexity there seems to be measures to enforce equality: the deal includes that EU Service suppliers should not be treated less favourably to the UK ones and vice versa. The deal also includes the ‘removal of unjustified barriers to digital trade, including prohibition of data localisation requirements, while respecting data protection rules.’ Professional qualifications will no longer be recognised automatically except for short-term business trips and temporary secondments of highly-skilled employees. These high-skilled jobs include: doctors, nurses, dentists, pharmacists, vets, engineers and architects among others. Lawyers will also be recognised though, subject to meeting some requirements and conditions.

Energy & Climate:

The deal guarantees security of energy supply as well as offshore energy cooperation in the North Sea. Although UK is no longer part of the European Atomic Energy Community (Euratom), it has reached a separate agreement on the safe and peaceful use of nuclear energy to enable the transfer of nuclear material and technology.

Mobility:

UK nationals no longer enjoy the rights of free movement within the EU to work, study, start a business or live in the EU. The UK has introduced a new immigration policy bill. It is essentially a point-based system put in place to attract the highly skilled workers. EU nationals no longer have preferential treatment in the UK, nor do UK nationals in the EU. Under the ‘divorce’ deal, UK citizens residing in the EU—and vice versa—maintain the right to remain and retain existing rights, including existing employment and social security rights. For others, Residence Permits are now required. UK nationals do not need a visa to stay in any EU country for up to 90 days in any 180-day period. Post-deal, EU and UK nationals will still receive healthcare when visiting, however subject to conditions. UK nationals travelling to EU countries will have to take out travel insurance covering medical expenses, since they might not receive free treatment. Those UK nationals who still have their EHIC cards will be able to use them until their expiry date, in any EU country, however invalidated for new visits to EEA countries. There are exceptions made for some categories of UK nationals to apply for an EHIC card post Brexit. They include: UK pensioners already living in the EU, UK students already studying in the EU, EU nationals already living in the UK and frontier workers—those who live in one country but work in another.

Roaming charges are said to be capped to 50 euros currently. However, British and EU operators may charge additional fees.

Aviation:

Flying rights remain for both commercial passenger flights and cargo flights. However, UK air carriers cannot operate flights from one EU country to another, nor can they sue an EU country as a transit area to anywhere else. In the deal, EU and UK will still cooperate on aviation safety, security and traffic air management.

Road Transport:

UK has lost its right to participate in the EU Single Market for transport services. Hauliers can no longer carry out unlimited cross-trade in the EU. However, the deal has promised ‘unlimited point-to-point access for hauliers carrying loads between the EU and UK, including full transit rights across each other’s territories.’ A horizontal ‘level playing field’ is still maintained in both the aviation and road transport sector. The deal provides for working conditions and road safety too.

Fisheries:

The second well-advertised part of the deal is fisheries and fishing rights. The UK is now recognised as an independent coastal State and it can decide on access to its waters and fishing grounds as long as it respects International rights.. The UK is no longer part of the Common Fisheries Policy. An additional five-and-a-half-year period has been agreed upon to ensure that reciprocal access rights to fish in each other’s’ water remains unchanged with gradual transfer of EU quotas to the UK. This means that initially, the value of fish caught by the EU will be cut by 25%. However, after the transition period, the EU can impose tariffs on fish imported from the UK or prevent UK boats to fish in its waters if the UK decides to make deeper cuts. Recently, there has been outrage over the fishing deal. The UK fishing industry faces a £1m losses on a daily basis post Brexit. UK Fisheries Minister Victoria Prentis did not read the details of the fishing deal before it was ratified, thereby obviously attracting more criticism. There has been a delay in exports due to the amount of paperwork, causing disruptions. According to Financial Times, fish prices have been crashing owing to the amount of increased paperwork which has made it almost impossible to export to the EU for some companies. The future of fisheries remains uncertain, with an unpromising start.

Security & Thematic Cooperation:

The deal provides for a strong cooperation arrangement between national police and judicial authorities of the UK and EU Member States. Mechanisms have been set in place for ‘swift exchanges of Passenger Name Record (PNR) data, DNA, fingerprints and vehicle registration data and criminal record information. EU Member States and the UK will cooperate on ‘cross-border health security threats and exchanges of classified information.’ In case there is disagreement over data, they will be handled by a new committee, not the European Court of Justice. The UK loses its access to sensitive EU databases and networks that support the EU’s area of freedom, security and justice.

Brexit deal and ECJ’s jurisdiction

Technically, the UK has not ended all the jurisdiction by the European Court of Justice (ECJ). Why? The ECJ has jurisdiction over the UK, though a very limited one, due to its = role in the TCA in relation to the EU programs that the UK will be involved with. Furthermore, the ECJ manages the Withdrawal Agreement and regarding the citizens’ rights part of that agreement, UK courts must pay ‘due regard’ to existing EU case law when ruling on a question of EU law and they may ask the ECJ. Lastly, the ECJ will continue to adjudicate in any legal proceedings involving the UK concerning actions before the end of the transition period.

Conclusion

As elaborated above, the post-Brexit deal has great potential. Nevertheless, it comes with its vices. The Fishing sector has already started complaining heavily, with some calling it the worst deal ever. Since all the new measures have not been used by many people, the actual affect of the deal will be more clearly seen with time. However one thing can be said with certainty- more paperwork will be required, which is likely to cause delays across various sectors. From afar it looks like a solid deal for the UK with its ‘zero-tariff-zero-quotas’ promise however time will tell whether it is completely ‘fool-proof’.