Regardless of how you voted in 2016, both Brexiteers and Remainers are relieved that a trade deal with the EU has been struck, and we can move forward into 2021 with a bit more clarity and certainty. But what does this new deal mean for British business and jobs and will there be turbulent times to come?
What are the main points of the deal?
The referendum held in 2016 was a clear instruction from the British people to take back control of our laws, borders, money, trade and fisheries. It sounds simple in theory, but the reality of striking a deal that would give us back this control has been anything other than straight forward. On the 24th December this year, Boris Johnson delivered his Christmas present to the nation in the form of an EU/UK trade deal, so we thought we would take a look at the main points, without the ‘jargon’.
The United Kingdom and the European Union have agreed to an unprecedented 100% tariff liberalisation, meaning that there will be no tariffs or quotas on the movement of goods we produce between the UK and the EU.
The UK and EU have agreed a Rules of Origin Chapter. In short, the term ‘Rules of Origin’ refers to the economic nationality of goods. If something is made in the UK, but from parts that come from all over the world, is it a UK produced product?
The Rules of Origin in this deal that have been agreed for batteries and electric vehicles will ensure that UK-made electric vehicles are eligible for preferential tariff rates. But UK manufacturers will eventually face tariffs when exporting electric cars to the EU unless more than 45% of the components used come from European countries. Government now needs to create the conditions that will attract large-scale battery manufacturing to the UK and transform our supply chains.
An annex on motor vehicles and equipment and parts thereof will eliminate and prevent unnecessary barriers to trade in motor vehicles and parts. It confirms that the ‘Parties’ will mutually recognise approvals based on UN regulations.
UK short-term business visitors are permitted to travel to the EU for 90 days in any 180-day month period.
The UK fishing industry – which was a main sticking point in the final stage of the negotiations – will be given back 25% of the value of its catch in UK waters from the EU. This will take place over a 5 ½ year transition period. After this, fishing rights will be negotiated on a year on year basis.
The ‘Level Playing Field’, and most importantly, State Aid. This was another of the big sticking points in the negotiations. The EU wanted the UK to stick to the ‘rules’ post-Brexit but the UK government wanted to be able to set its own rules for bailing out businesses and helping them to not just survive but grow. Now state bailouts will be closely monitored by both parties and there could be compensation pay-outs applied if it appears that either side is engaging in “anti-competitive” bailouts of failing companies.
For Aviation and Travel, UK carriers are still permitted to fly to Europe, however, they can no longer fly between two points in Europe. This has been largely anticipated and carriers on both sides have put measures in place to combat this. We will still have access to the EU’s 100bn Euro research and development programme, Horizon, and the Space Industry will still have access to Copernicus, the earth observation programme.
Even though manufacturing no longer faces tariffs on exports, there is still the question of mutual conformity assessment. This could mean two lots of testing and certification to meet both UK and EU requirements, which could be both complex and costly. The Authorised Economic Operator scheme, an internationally recognised quality mark, could be a solution but may prove to be too costly for smaller businesses.
The EU/UK Trade deal is a 2000 page document that covers many areas of business and how it will work going forward. Above, we have just looked at some of the main issues that have made the headlines, and some of those that will affect our clients and candidates in the future. If you would like to look at the trade deal in more detail, you can visit the government website.
While not everyone wanted to leave the EU, there is no turning back now. We have the most important aspect of our departure in place with the EU trade deal, and while it may not be perfect, it does give us a solid base to build from and some clarity for businesses. We may be a tiny Island Nation, but we are the World’s fifth-largest economy. That is something that we should all be immensely proud of and this as an opportunity for growth and investment in our country.