Yahoo Finance UK and European Union strike historic Brexit trade deal
WATCH: UK and EU secure historic trade deal
Britain and the European Union (EU) have agreed an historic post-Brexit trade deal, with just days left until the end of the transition period.
“We’ve taken back control of our laws and our destiny,” said UK prime minister Boris Johnson in a press conference unveiling the zero-tariff, zero-quota deal on Thursday.
He called the agreement a “jumbo Canada-style” deal that would preserve £660bn ($895bn) of cross-border trade while allowing Britain to strike deals elsewhere, set its own rules and catch more fish in UK waters.
Johnson said it meant “a new stability and a new certainty” in a relationship that had been “fractious” between Britain and the EU.
READ MORE: Pound higher as UK and EU weigh ‘landmark’ trade deal
The prime minister faced questions from journalists over new trade barriers likely in spite of the deal however. Meanwhile business chiefs welcomed news of an agreement but said they needed to see the final text.
While the granular details of the deal have not been unveiled by the UK or EU, Johnson said:
There would be “change” for firms, encouraging them to prepare. Exporters and logistics firms face new paperwork and checks, as Britain will leave the single market and customs union.
The UK had made concessions on fish, with a longer transition period preserving significant EU access to UK waters than initially demanded by the UK. He said compromise “isn’t a dirty word.”
Both sides will be able to impose tariffs if the other is found to have undercut them, with Johnson stressing the role of “independent arbitration” rather than the European Court of Justice.
The UK had not secured everything it wanted on financial services equivalence, which would have helped maintain better EU access for the UK finance sector.
The move would preserve cross-border ties and access for hauliers, carmakers, police, scientists, and highly skilled workers.
The deal is done. pic.twitter.com/zzhvxOSeWz
— Boris Johnson (@BorisJohnson) December 24, 2020
European politicians say deal is ‘fair’
European Commission President Ursula von der Leyen said at the press conference to announce the deal: “We have finally found an agreement. It was a long and winding road but we have got a good deal to show for it.”
"It is fair, it is a balanced deal and it is the right and responsible thing to do," she added.
The EU’s chief Brexit negotiator, Michel Barnier, said: “The clock is no longer ticking."
"Today is a day of relief, but tinged by some sadness as we compare what came before with what lies ahead," he added.
However, the full details of the deal were not announced at the conference. The final document confirming the deal, which Johnson said ran to around 500 pages, is yet to be published.
WATCH: Michel Barnier says real changes are coming after Brexit deal
Breakthrough, four years after Leave vote
The deal comes more than four years after the UK voted to leave the EU in June 2016, and a year after a transition deal was struck preserving much of the status quo this year.
It concludes a year of talks between the UK’s negotiating team, led by Lord David Frost, and their EU counterparts, led by Michel Barnier.
Talks began in March and both sides had hoped to reach an initial agreement by early summer. However, talks were delayed by the onset of the COVID-19 pandemic, which complicated face-to-face negotiations and sapped the bandwidth of decision makers in government.
Negotiations have been held up for months on three issues: fisheries, ‘level playing field’ agreements to prevent unfair subsidies, and the enforcement mechanism of any deal.
UK prime minister Boris Johnson and European Commission president Ursula von der Leyen held private phone calls in recent days in a bid to try and surmount the differences between the two sides.
Von der Leyen said “effective tools” had been agreed in the deal in case either side “distorted” fair competition. She also said the EU had secured 5.5 years of "stability" for European fishing rights in UK waters, and a "strong incentive" for it to remain so.
The fishing transition period marks a compromise for both sides, as the EU had pushed for a longer transition period and the UK had pushed for a shorter one. But the scale of each side’s compromises are likely to become clear only when final legal texts are published.
The agreement must still be approved by EU member states and UK parliament before it can take effect, with provisional EU approval expected before EU’s parliament votes in the New Year.
What do industry representatives think?
RETAIL: Helen Dickinson, chief executive of the British Retail Consortium, said: "This protects consumers on both sides of the Channel from billions in import tariffs on everyday goods. Given that four-fifths of UK food imports come from the EU, today’s announcement should afford households around the UK a collective sigh of relief.”
FINANCIAL SERVICES: Bob Wigley, executive chair of UK Finance: “Concluding these negotiations with an agreement brings much-needed certainty for businesses and paves the way for the beginning of a new relationship with the European Union. The banking industry remains focused on supporting customers and businesses impacted by the Covid-19 pandemic and the end of the transition period.
"Looking ahead, it will be important to build on the foundations of this trade deal by strengthening arrangements for future trade in financial services.
“This can be achieved by building on the longstanding regulatory dialogue and supervisory cooperation between UK and EU authorities and reaching agreements on all appropriate equivalence determinations as soon as possible.
“Consumers and businesses in both the EU and UK will benefit from maintaining open and integrated capital markets and facilitating the flow of cross-border financial services in the years ahead.”
SMALL BUSINESSES: Federation of Small Businesses (FSB) national chairman Mike Cherry added: “After such a torrid year, and during such a disrupted festive trading season, it’s a huge relief to see negotiators finally strike a deal.
“The work of looking through the detail of the agreement to map out exactly what it means for the small firms that make-up 99% of our business community now begins.”
CAR INDUSTRY: Mike Hawes, CEO of Society of Motor Manufacturers and Traders (SMMT): “We welcome today’s agreement of a new EU-UK trading agreement, which provides a platform for our future relationship.
“We await the details to ensure this deal works for all automotive goods and technologies, including specifics on rules of origin and future regulatory co-operation.
“A phase-in period is critical to help businesses on both sides adapt and efforts should now be sustained to ensure seamless implementation, with tariff-free trade fully accessible and effective for all from day one. We will continue to work closely with government to ensure all companies are as prepared as possible in the limited time left.”
WORKERS’ UNIONS: Trades Union Congress (TUC) general secretary, Frances O’Grady said the deal puts workers’ rights “on the line:”
“This deal is better than nothing, but not by much. It won’t protect jobs and puts hard-won workers’ rights on the line.
“As we come out of the pandemic, we’re facing a crunch point for jobs and living standards. This deal is on the prime minister’s head – it’s his responsibility to make sure working families don’t end up worse off.
“Now the prime minister must make good on his promise to level up Britain. And he needs to act fast. There can be no more pointing the finger at the EU. Government must deliver an industrial strategy for decent work, with investment in jobs and green industries in parts of the country that need it most.
“Ministers must also urgently build on this deal to overcome the barriers to trade and higher production costs many sectors will face which puts jobs at risk. And we will not accept a race to the bottom on rights.”
