What’s the deal? The nuts and bolts of the new post-Brexit agreement

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CDE / DPA / Reuters -The post-Brexit trade deal reached by the United Kingdom and the European Union goes beyond the EU’s so-called “Canada-style” trade accord, the BBC said on Friday, citing what it said was a full copy of the accord.

The 1,246-page document includes about 800 pages of annexes and footnotes, the BBC said, adding that the pages of legal text will determine every aspect of trade between the UK and the EU.

Despite enormous disagreements over the past years, the European Union and Britain breathed a collective sigh of relief on Thursday after finally managing to find common ground: A post-Brexit deal has been struck, they announced.

Here is what it means – in five basic questions.

WHAT IS BREXIT?

Brexit – or “British exit” – refers to the process of the United Kingdom leaving the EU after 47 years in the economic and political alliance of European countries built from the ashes of World War Two.

Following a referendum that the “vote leave” camp won by 52-48% in June 2016, Britain became the first country to leave the EU, a union of now nearly 450 million citizens that stretches from the Atlantic to the borders of Russia and Turkey.

Britain’s formal departure on Jan. 31, 2020 was heralded by supporters as a recovery of political sovereignty for the country of 66 million people.

Opponents saw it as an historic setback to European integration that could cause unprecedented economic damage and risk renewed strife on the Irish border, the only land frontier between the bloc and the UK.

Since its formal departure, London has followed established rules of close-knit cooperation on everything from trade to student exchanges, but this transition phase expires at midnight on Dec. 31.

WHAT DOES THE DEAL COVER?

The two sides have been in complex negotiations since March to try to keep their trade in goods flowing from Jan. 1, 2021.

The deal announced on Thursday means that this goods trade – roughly half of the $900 billion of annual EU-UK commerce – will remain free of tariffs and quotas.

However, goods moving between the UK and the EU will be subject to customs and other controls, and extra paperwork is expected to cause major disruptions.

The deal was negotiated on top of a formal Withdrawal Agreement reached last year, which ensured that extensive controls would not be put back on the sensitive border between EU member Ireland and the British province of Northern Ireland.

The third key element of the deal is dividing up fishing quotas between Britain and the EU.

WHICH OTHER AREAS ARE AFFECTED?

The deal does not envisage cooperation on the same level as before Brexit in many areas.

Financial and business services, the backbone of UK exports, are only included to a small extent.

The same is true of cooperation on foreign policy, security and defence, while provisions for transport, energy and civil nuclear cooperation will be below current levels.

WHICH OTHER TIES WILL BE DOWNGRADED?

Mobile roaming, mutual recognition of professional qualifications, access to legal services, digital trade and public procurement are other areas where cooperation will be downgraded.

While the EU and the UK agreed not to require visas for travel, free movement of people will end.

That means EU citizens going to the UK, and vice-versa, will be subject to border screening and no longer able to use biometric passports to cross swiftly through electronic gates.

IS BREXIT FINALLY DONE?

Yes, because Britain is out of the EU, its customs union and the single market, and no longer bound by their rules. Ties will now be based on the two sides’ 2020 divorce settlement and the Trade and Cooperation Agreement sealed on Thursday.

But those hoping for an end to the often-acrimonious negotiations that followed the Brexit referendum are likely to be disappointed.

The agreement includes transition periods and review clauses, meaning that more negotiation lies ahead on fisheries, trading rules and much besides.

But what is the deal actually about? Here’s a breakdown of some of the most important points – including what happens next.

TRADE

While Britain officially leaves the EU’s single market, the agreement sets out that no tariffs and no quotas will be imposed on goods. However, customs checks will potentially delay processes at the border.

This applies to all goods that comply with rules of origin; this is to prevent products from third countries that do not have a free trade agreement with the EU from entering the bloc through Britain to circumvent tariffs and quotas.

TRAVEL

It will be up to Britain to determine whether EU citizens who come for short stays in the country will have to fulfil visa requirements.

“At present, the United Kingdom provides for visa-free travel for short-term visits in respect of nationals of all Member States,” according to the British government. The EU will continue to be treated as a bloc for visa purposes.

Short-term business travellers from Britain can visit the bloc for 90 days in any 180-day period, according to the British government.

Travellers – for example tourists – will still be covered by a mutual health care scheme in case of emergency.

ENVIRONMENTAL AND LABOUR STANDARDS

In the final agreement, neither side is bound by the other’s rules on environmental or social standards, but both have committed to general level playing field principles.

If one side feels the other is putting itself at an advantage by undercutting standards, it can appeal to an independent arbitration panel – crucially for the Brits, not the European Court of Justice (ECJ) – which can grant the right to impose sanctions.

According to the British government, the two sides agreed not to lower their labour standards for worker protection “in a manner that has an effect on trade.”

STATE AID

Both trading partners will have their independent subsidy rules – but if one side feels that the subsidies are distorting or harmful to its own industries, it can challenge those measures in front of an independent arbitration mechanism, with the possibility of compensation being imposed.

This has been a crucial point for the EU, which had been concerned that if Britain were to be granted free access to the bloc’s market, it could undermine competition if no strict subsidy standards were imposed.

FISH

This was one of the hardest parts of the deal, an EU official said, with negotiators poring over it “line by line, fish by fish.”

For a transition period until June 2026, the EU will retain 75 per cent of its fishing quotas in British waters, transferring a quarter to the British fishing industry. This big boost for the British side is worth 146 million pounds (198 million dollars) over five years, according to the British government.

From then on, there will be annual negotiations on catch quotas and access between Britain and the EU, as the bloc already does with some neighbours. The exact zones are up for discussion.

NORTHERN IRELAND

In order to avoid a hard border with EU member Republic of Ireland, neighbouring Northern Ireland will stay aligned with many EU standards when it leaves the bloc’s single market and customs union with the rest of the United Kingdom. This compromise eliminates the need for many checks at the Irish border and was worked out long before the trade deal. Most Northern Irish politicians welcomed the deal, but said they will need time to study it to assess the full ramifications.

NOT IN THE AGREEMENT

While the agreement is extensive – the legal text spans over 1,246 pages – some parts have been left out: Britain will not participate in the student exchange programme Erasmus, nor has a framework been agreed for cooperation on foreign policy or defence.

NEXT STEPS

On December 31, the post-Brexit transition period runs out, after which Britain will no longer be part of the bloc’s single market and customs union – but the agreement still needs to be ratified on both sides. London has called for a special parliamentary session on December 30. EU ambassadors discussed the deal on Friday, but the Council of the European Union still needs to unanimously agree to it.

The European Parliament also needs to sign off on it – and as that is likely to happen only next year, a provisional application is necessary. The European Commission suggests for that provisional period to run until February 28.

A rejection of the deal on any side is unlikely, however, given the stakes that are at play.