EU and UK Finally Reach Brexit Trade Deal

An anti-Brexit protester shouts through an oversized megaphone at the gates of Downing Street in London on Thursday. (Victoria Jones/PA via AP)

(CN) — Four and a half years after the Brexit referendum, the United Kingdom and the European Union reached a last-minute trade deal on Thursday that will ease tensions between the two sides and keep goods flowing.

The deal was reached just one week before the U.K. officially begins its new era outside of the EU on Jan. 1 and ends months of tense negotiations that seemed at various points on the verge of collapsing into chaos. Without a deal, tariffs and other trade barriers were expected to be imposed, driving a deep wedge between the two sides.

The agreement, which still needs to be ratified by the British and European parliaments, largely allows about $900 billion in trade to continue uninterrupted across the English Channel, lifting a major shadow over Britain’s future.

Both sides hailed the deal as the best outcome and claimed victory. But details about the complex deal, covering hundreds of pages, were still under wraps on Thursday afternoon and it may take days before all the interested parties and experts have had a chance to sift through the document.

Under the free trade deal, the EU and the U.K. also are agreeing to cooperate on economic, social, environmental, fisheries and security issues and establishing an “overarching governance framework,” according to an outline of the agreement provided by the EU. The deal does not cover issues related to cooperation on foreign policy, external security and defense, the EU said.

“We have finally found an agreement. It was a long and winding road, but we have got a good deal to show for it,” said Ursula von der Leyen, the president of the European Commission, at a news conference in Brussels. “It is fair, it is a balanced deal and it is the right and responsible thing to do for both sides.”

She stressed that the agreement protects the EU’s interests by ensuring that British companies play by the same rules EU businesses use.

“The EU rules and standards will be respected,” she said. “We have effective tools to react if fair competition is distorted and impacts our trade.”

A major concern for the EU is to prevent U.K. companies from producing goods using different standards and thereby undercutting EU companies.

The agreement sets up a system to settle disputes and allows each side to seek to impose tariffs and quotas.

After months of discord and frustration, both sides struck a conciliatory tone on Thursday.

“It’s time to turn the page and look toward the future. The United Kingdom is a third country,” Von der Leyen said. “But it remains a trusted partner; we are longstanding allies, we share the same values and interests.”

She expressed both relief that a deal was achieved and sadness that British voters chose to break ties with the EU in the 2016 Brexit referendum.

British Prime Minister Boris Johnson presented the deal as a benefit for both sides.

“This is I believe a good deal for the whole of Europe,” he said at a news conference at No. 10 Downing Street. “It will not be a bad thing, in my view, for the EU to have a prosperous and dynamic and contented U.K. on your doorstep … I don’t think it would be a bad thing if we in the U.K. do things differently or take a different approach to legislation.”

Most importantly, he said, the deal fulfills the promise of Brexit and frees the U.K. from EU laws and regulations.

“We’ve taken back control of our laws, and our destiny,” he said. “We’ve taken back control of every jot and tittle of our regulation in a way that is complete and unfettered.”

He said the deal leaves the U.K. outside of the EU’s system of laws and outside the jurisdiction of the European Court of Justice, the EU’s top court in Luxembourg. He also said the deal allows the U.K. to diverge from EU rules.

Despite his rhetoric, it remains unclear how free the U.K. will be from EU standards and rules under this deal and there could still be resistance to it from hardcore Brexit supporters within Johnson’s Conservative Party. The House of Commons was scheduled to reconvene after Christmas to vote on the deal.

But the U.K. will be gaining control over its borders and starting next start year it will impose immigration restrictions. Brexit was largely driven by anxiety among Brits over the increasing numbers of immigrants from within the EU and outside.

The trade deal doesn’t cover some sectors, most importantly for the U.K. the trade in services, including financial services. Services make up about 80% of the British economy. In the coming months and years, both sides are expected to continue negotiating how to treat such areas as financial services and professional qualifications.

Despite the deal, as of Jan. 1, there will nonetheless be new customs checks and more red tape for goods going between the EU and U.K. because the U.K. is dropping out of the EU’s customs union. Northern Ireland is an exception to that because it will remain largely aligned to EU rules and regulations, a condition set in place to avoid the return of customs checks along the border between Ireland and Northern Ireland. Both sides saw such an arrangement as crucial to prevent sparking sectarian tensions in a region still recovering from decades of violence during the Troubles.   

Smoke rises from a chimney behind European Union flags fluttering in the wind outside EU headquarters in Brussels on Thursday. (AP Photo/Virginia Mayo)

Johnson, one of only a few British politicians who backed Brexit during the 2016 referendum, presented the U.K.’s departure from the EU as a great opportunity.

“We will be able to set our own standards and innovate in the way we want,” he said.

He said British voters opted for Brexit because they were uneasy with the EU’s effort to make its member states ever more integrated in their laws and rules as well as  economically, culturally and socially.

“The very dense program of integration wasn’t right for the U.K.,” he said. “And that’s why it was right to take back control in the way we have and I think that this deal expresses what the people of the country voted for in 2016, and I think there was a wisdom in what they decided.”

In reality, Brexit has convulsed the U.K. and brought about new problems. Although the Brexit faction won with about 52% of votes, majorities in Scotland and Northern Ireland chose to remain in the EU and since the referendum, public opinions polls have shown the country deeply split over the issue. An independence drive in Scotland has gained momentum too since the referendum and leading Scottish politicians called the new trade deal a disaster for Scotland.

In Johnson’s vision, the U.K. will be able to create “free ports,” “new green industrial zones” and better direct its economic future by being outside the EU. Many economists, though, question those assumptions and believe the U.K. will become less relevant after Brexit and suffer economic hardships.

Another key element in the deal was an agreement over fisheries. European fishermen, particularly French ones, rely on fish they catch in British waters. Under the agreement, European fishermen in 2026 will lose about 25% of the stocks they currently catch.

Johnson offered a message of friendship to the EU and the 4 million EU nationals living in the U.K. who are seeking to remain there.

“We will be your friend, your ally, your supporter,” he said. “Although we have left the EU, this country will remain culturally, emotionally, historically, strategically, geologically attached to Europe.”

Von der Leyen also expressed optimism over the future relationship between the EU and the U.K.

“We will continue cooperating with the U.K. in all areas of mutual interest, for example in the field of climate change, energy, security and transport,” she said.

Still, she questioned the rationale behind the U.K.’s exit from the EU and the insistence by Johnson and his Brexit backers that the U.K. is regaining its sovereignty. She suggested that the U.K. will lose out by no longer being part of the 27-member EU bloc, the largest single market in the world.

“This whole debate has always been about sovereignty,” she said. “But we should cut through the sound bites and ask ourselves what sovereignty actually means in the 21st century. For me, it is about being able to seamlessly do work, travel, study and do business in 27 countries; it is about pooling our strength and speaking together in a world full of great powers. And in the time of crisis, it is about pulling each other up instead of trying to get back to your feet alone.”

“No deal in the world can change reality or gravity in today’s economy and today’s world. We are one of the giants,” she said, referring to the EU.

She added: “So to all Europeans, I say it is time to leave Brexit behind, our future is made in Europe.”


Courthouse News reporter Cain Burdeau is based in the European Union.

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