The EU and the UK conclude a narrow Brexit agreement following torture negotiations
LONDON – Britain concluded a narrow Brexit trade deal with the European Union on Thursday, just seven days before leaving one of the world’s largest trading blocs in its most significant global shift since the loss of empire.
The deal means it has swung away from a chaotic finale to a tortuous divorce that has shaken the 70-year-old project to create European unity from the ruins of World War II.
European Commission President Ursula von der Leyen told reporters: “It was a long and winding road. But we have a good deal to show for it. It’s fair, it’s a balanced agreement, and it’s the right and responsible thing to do for both sides. ”
British Prime Minister Boris Johnson tweeted a photo of himself inside Downing Street, lifting both arms in a thumbs-up gesture of triumph. “We have regained control of our destiny,” he told reporters. “People said it was impossible, but we’ve taken control back.”
“We want to be an independent coastal state,” he said. “We will be able to decide how and where to stimulate new jobs.”
The main EU negotiator, Michel Barnier, could say for the first time in four long years: “The clock is no longer ticking.”
While the deal at the last minute prevents the most violent end to the saga on January 1, the UK is ready for a far more distant relationship with its largest trading partner than almost anyone expected at the time of the 2016 referendum.
An agreement seemed imminent for almost a day, until there was talk of how much fish EU boats could be able to catch in British waters, delaying the announcement of one of the most important trade agreements in recent European history. .
The United Kingdom formally left the EU on 31 January, but has since been in a period of transition where trade, travel and business rules remained unchanged until the end of this year.
The details of the deal are yet to be made public, but if the sides have reached a zero-tariff and zero-quota deal, it will help smooth trade in goods, which make up half of their $ 900 billion in annual trade.
It will also support peace in Northern Ireland – a priority for US President-elect Joe Biden, who had warned Johnson to uphold the 1998 Good Friday peace agreement.
Even by agreement, some disruption is certain from January 1, when Britain ends its often-filled 48-year relationship with a French-German-led project that sought to bind the devastated nations of post-World War II Europe together into a global power. .
Tony Danker, Director General of the Confederation of British Industry, gave the agreement a disgusting welcome:
“Coming so late in the day, it’s important that both parties take immediate steps to keep trade moving and services flowing.”
After months of talks that were at times undermined by both COVID-19 and rhetoric from London and Paris, leaders across the EU’s 27 member states have reached an agreement as a way to avoid the nightmare of a “no-deal” exit.
But Europe’s second largest economy will still leave both the EU’s single market of 450 million consumers, which the late British Prime Minister Margaret Thatcher helped create and its customs union.
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BREXIT
When the UK shocked the world in 2016 by voting to leave the EU, many in Europe hoped it could remain closely aligned. But it should not be. Von der Leyen said that “parting is such a sweet sorrow”.
Johnson, the face of the pro-Brexit campaign, had claimed that when 52% had voted to “take back control” of the EU, he was not interested in accepting the rules of the internal market or the customs union.
The EU did not want to give unlimited privileges to a freewheeling, deregulated British economy off the block and thus potentially encourage others to leave. The result was a hefty debate on a “level playing field” in competition – which the EU demanded in return for access to its market.
The Trade Pact does not cover services that make up 80% of the UK economy, including a banking industry that positions London as the only financial capital competing with New York.
Access to the EU market for UK banks, insurance companies and asset managers will be uneven at best.
JPMorgan said the EU had secured an agreement that would allow it to retain almost all of its benefits from trade with the UK, but with the ability to use rules to “cherry-pick” among sectors where the UK had benefits – such as services.
Brexit campaigner Nigel Farage said the deal would keep the UK too close to the EU, adding that he hoped this would be the beginning of the end of the bloc.
Even with an agreement, retail will have more rules, more bureaucracy and more costs. There will be some disruption in ports. Everything from food safety regulation and export regulations to product certification will change.
The United Kingdom, which imports about $ 107 billion more a year from the EU than it exports there, had donated until the end of fish – a totemic problem, but less than 0.1% of GDP.
In essence, the EU’s most ambivalent member is stepping out of the bloc’s path on New Year’s Eve for an uncertain future with a trade relationship that is at least on paper distant.
At the midnight battle of Brussels, both sides will be diminished.
The EU is losing its main military and intelligence power, 15% of GDP, one of the world’s two largest financial capitals and a champion of free markets that had served as an important control over the ambitions of Germany and France.
Without the collective strength of the EU, the United Kingdom will be largely alone – and much more dependent on the United States – when negotiating with China, Russia and India. It will have more autonomy, but be poorer, at least in the short term.
With an economy that was only one-fifth the size of the rest of the EU, Johnson needed a trade deal to minimize Brexit disruption, as the new coronavirus has damaged the UK economy more than other major industrial powers.
The Bank of England has said that even with a trade deal, Britain’s gross domestic product is likely to suffer a 1% hit from Brexit in the first quarter of 2021.
And Britain’s budget forecasts have said the economy would be 4% smaller over 15 years than it would have been if Britain had stayed in the bloc.
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