Cautious welcome for Brexit trade deal

Monday, December 28, 2020 - 07:16
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It is early days, and the full implications of the Brexit trade deal are still being assessed. Tariff free trade was vital if UK businesses, and that seems to have been secured, however, we are no longer a part of the Customs Union and Single Market and that is going to mean additional bureaucracy and paperwork for both accompanied and unaccompanied freight, and could lead to delays at the ports.

trade deal

There’s no agreement on conformity assessment even though the UK government had hoped there would be. It’s just one reminder of how many new barriers to trade there are going to be. In future, if you want to sell your product in both the UK and the EU, you may have to get it checked twice to get it certified.

On other border issues, there is also no agreement on recognising each other’s sanitary and safety standards for exporting food of animal origin, which means there will have to be pretty intrusive and costly checks for products going into the EU single market.

There will however be some measures which cut technical barriers to trade, and the mutual recognition of trusted trader schemes which will make it easier for large companies to operate across borders.

There are level playing field measures which commit both the UK and the EU to maintain common standards on workers rights, as well as many social and environmental regulations. This was a key EU demand. They don’t have to be identical in the future, so the UK does not have to follow EU law, but they do have to be seen to protect fair competition.

The UK has also agreed to stick to common principles on how state aid regimes work, and to an independent competition agency which will assess them. But it can choose to develop a system which only makes decisions once evidence of unfair competition is presented. That is different from the EU system which assesses the likely impact of subsidies before they are handed out.

If either side moves away from common standards that exist on 31 December 2020, and if that has a negative impact on the other side, a dispute mechanism can be triggered which could mean tariffs (taxes on goods) being imposed. It is based around a “rebalancing” clause which gives both the EU and the UK the right to take steps if there are significant divergences. This clause is much stricter than measures found in other recent EU trade deals, and was a key demand on the European side. It is a mechanism we may hear a lot more about in the coming years.

The overall policing of the trade agreement also means that tariffs can be targeted at a specific sector as a result of a dispute in another. There will be a binding arbitration system involving officials from both sides. It means that even though this is a tariff-free agreement, the threat that tariffs can be introduced as a result of future disputes will be a constant factor in UK-EU relations.

Business group Logistics UK (formerly FTA) has reacted with optimism to the Free Trade Agreement (FTA) reached between the UK and EU but has cautioned that there is still much to be done to protect the nation’s supply chains, and the economy as a whole.

“A deal is great news for the UK economy,” says Elizabeth de Jong, the group’s policy director, “since it removes the risk of tariffs being placed on almost every item imported from the EU, which would have raised prices and slowed the rate of economic growth.  We are still absorbing all the details, but it looks as though HGVs will continue to have access to the EU market, and aircraft will still be permitted to fly to and from the EU, which safeguards the UK’s highly interconnected supply chains and protects the jobs of those charged with keeping the country stocked with the goods it needs.

“Meanwhile, Logistics UK is urging traders to continue to get ready for new trading conditions as they were before, as the new trading relationship will still require many of the same preparations, not least the introduction of customs declarations and additional checks on food and livestock.  Logistics UK is advising traders not leave paperwork to the last minute, or ignore it, as this will cause delays to journeys.”

BVRLA Chief Executive Gerry Keaney said: “This Brexit trade deal comes as a big relief and will provide a welcome boost for the UK automotive sector, which can now plan for 2021 and beyond with more confidence and certainty. Avoiding tariffs on vehicles and parts is essential, but with the end of the transition period only days away, there is a lot to be done to prepare for January and beyond as details around the new trading terms become clear.”

Eurotunnel is delighted to welcome the new partnership agreed between the United Kingdom and the European Union.

This agreement, which ends a long period of uncertainty, will benefit both businesses and travellers alike.

It is with this in mind that we have launched the Eurotunnel Border Pass. This new service will enable customers to upload all the data needed for their journey to a virtual wallet, accessible during their crossing by Eurotunnel and the authorities of the two states, in a highly secure format.

Although this agreement has been reached only one week before the end of the Transition period, during which European Union law has continued to apply in the United Kingdom, this agreement will be applied by Eurotunnel from 1 January 2021.

Since the Referendum in the UK in 2016, Eurotunnel has worked with the two governments to provide its customers with the fastest and easiest service for crossing the Channel. The Group has invested €47 million to modernise and adapt its infrastructure to ensure the fluidity of both the border crossing and the traffic through the Tunnel. The Eurotunnel Border Pass in particular will enable the transfer of data needed for goods to cross the border from hauliers to Eurotunnel and then from Eurotunnel to the authorities in each country in a secure digital form, without truck drivers having to leave their vehicles or even present a document at the border crossing.

Yann Leriche, Chief Executive Officer of Getlink, stated: “Eurotunnel and its 2500 employees are committed to providing a reliable high-performance service to facilitate our customers’ lifestyles, as is our role as the uncontested leader across the Channel.”

Jacques Gounon, Chairman of Getlink, stated: “Getlink, an authentic bi-cultural Group is very well placed to benefit from this agreement. We thank the negotiators on both sides, who often don’t get the recognition they deserve.”

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