Written by Issam Hallak,
The withdrawal of the United Kingdom (UK) from the European Union (EU) came into effect on 1 February 2020, following the large majority gained by the Conservative Party, led by Boris Johnson, in the UK general election in December 2019. The transition period began on the same day and is due to run until the end of 2020. During this period, although no longer part of the EU institutions, the UK remains in the customs union and single market, and within the jurisdiction of the Court of Justice of the EU (with some exceptions). Negotiations during the transition period are aimed at reaching agreements that will shape the future EU-UK relationship in a range of domains, and especially that of trade.
In the Political Declaration accompanying the Withdrawal Agreement, the EU and the UK ‘agree to develop an ambitious, wide-ranging and balanced economic partnership’. However, some major obstacles have surfaced. The UK insists that it is unwilling to submit to EU Court of Justice jurisdiction, and demands autonomy in its regulatory and trade policies. The UK indicates that it seeks a free trade agreement similar to that agreed between the EU and Canada: comprehensive, but very different to the previous relationship. The EU has taken note of the UK objectives, but emphasises that the deeper the trade agreement, the more UK regulations and standards must align with those of the EU. To the EU, alignment is essential to preserve a level playing field, on the grounds that the EU and UK are close neighbouring economies and strongly interconnected. The European Commission’s 3 February 2020 recommendation for a Council decision authorising the opening of negotiations on the future relationship confirms this approach.
In this context, time is critical. The Withdrawal Agreement allows for an extension to the transition period, but the UK Withdrawal Act explicitly prohibits extension. In addition, to allow for ratification, the trade agreement should be ready well ahead of the end of the transition period. The Commission recommendation insists on including fisheries (a highly sensitive area of negotiation), in the new economic partnership and that related provisions should be established by 1 July 2020. Time-constrained negotiation may give rise to a limited economic and trade agreement that covers only priority areas, rather than the ambitious single comprehensive agreement sought under the Political Declaration and Commission recommendation.
Read the complete briefing on ‘Future EU-UK trade relationship‘ in the Think Tank pages of the European Parliament.