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It’s Not Over: Major Issues the Brexit Deal Leaves Unresolved
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|It’s Not Over: Major Issues the Brexit Deal Leaves Unresolved by Kenyans247(1): Mon 28, December, 2020 03:10pm|
(Bloomberg) -- The trade agreement between the U.K. and the European Union brought welcome relief to businesses, averting the prospect of punitive tariffs and a chaotic no-deal split from Britain’s largest trading partner this week.
a group of people walking on a city street: Postcards for sale in London, U.K., on Thursday, Dec. 17, 2020. Bank of England policy makers make their final scheduled decision of the year on Thursday as uncertain as ever whether the U.K. will get a post-Brexit trade deal.© Bloomberg Postcards for sale in London, U.K., on Thursday, Dec. 17, 2020. Bank of England policy makers make their final scheduled decision of the year on Thursday as uncertain as ever whether the U.K. will get a post-Brexit trade deal.
However, the deal leaves major issues either unresolved or at risk of flaring up again. Here’s where the Brexit accord may cause problems in future:
The UK and EU finally strike a Brexit trade deal
The UK and EU finally strike a Brexit trade deal Negotiators reached a total agreement on a post-Brexit free trade deal after nearly a year of talks."Everything that the British public was promised during the 2016 referendum and in the general election last year is delivered by this deal," said a UK official who was speaking anonymously.
Level Playing Field
A deal over the so-called level playing field, creating the conditions for fair competition between businesses, was one of the thorniest parts of negotiations. The agreed compromise means the U.K. doesn’t have to align with EU laws, but the bloc can impose proportionate tariffs, subject to arbitration, if it can show Britain’s actions have distorted fair competition.
This means the question of levies on U.K.-EU trade is still far from settled and is a live issue. One of the central arguments of the campaign to leave the bloc was that Britain would “take back control” of its own laws, and euroskeptic members of Boris Johnson’s Conservative Party have called on the prime minister to seize the opportunity to slash regulations.
Pound Advances as Britain and EU Reach Outline of Brexit Pact
Pound Advances as Britain and EU Reach Outline of Brexit Pact A trading deal the City of London has sweated over for almost half a decade looks like it’s finally here -- eliciting a cheer across U.K. assets. With Britain forging the blueprint of a deal with the European Union, the pound strenghtened 1.1% to $1.3501 after the news of a breakthrough. It earlier rallied as much as 1.6% to $1.3571, the biggest intraday gain in more than a week. The yield on 10-year government bonds jumped as much as 13 basis points to 0.31%, the biggest intraday increase since March.
The deal also contains a “review” clause which allows either side to periodically re-negotiate this part of the treaty if they are unhappy with how it is being used. The trade deal could therefore still collapse in future if the U.K. or EU decide it isn’t working out.
The deal offers little clarity for financial firms. There is no decision on so-called equivalence, which would allow firms to sell their services into the EU’s single market from the City of London. The agreement only features standard provisions on financial services, meaning it doesn’t include commitments on market access.
Johnson told the Sunday Telegraph the deal “perhaps does not go as far as we would like“ on financial services, in a rare admission his strategy in the talks had fallen short.
Video: UK and EU have struck an historic trade deal. But what is in it? (Al Jazeera)
The Treasury is due to negotiate a memorandum of understanding with the EU as an urgent priority in 2021 and London will continue discussions with Brussels over access and equivalence for financial services, Chancellor of the Exchequer Rishi Sunak said on Sunday.
Between Brexit and coronavirus, UK togetherness is fraying
Between Brexit and coronavirus, UK togetherness is fraying The United Kingdom has endured in one form or another for hundreds of years but between Brexit and the coronavirus, the country is creaking and some suggest it may be on the verge of breaking up entirely. England, Scotland and Wales have been joined since 1707 with Northern Ireland added in 1921 -- four parts of a single country -- but since the late 1990s each has won more devolved powers, including over healthcare. That ability to steer theEngland, Scotland and Wales have been joined since 1707 with Northern Ireland added in 1921 -- four parts of a single country -- but since the late 1990s each has won more devolved powers, including over healthcare.
The U.K. and EU have only agreed a temporary solution to keep data flowing between their territories. For an interim period of a maximum of six months, data can continue to be transferred until a separate legal agreement is reached.
EU officials have said a so-called data adequacy decision, which would certify that U.K. data protection standards are comparable with the bloc’s, could be made in early 2021.
The Brexit trade deal contains a five-and-a-half year transition period for fisheries, during which British fleets will see an uplift equal to 25% of the catch previously caught by EU boats in U.K. waters. After that, access will be subject to annual negotiations.
The agreement gives both the U.K. and EU the right to levy duties on each other’s fish if they can show that any future reduction in access to waters causes economic or social harm.
There was an angry response from fisherman to the compromise, with the National Federation of Fishermen’s Organisations describing it as a “betrayal.” Fishing was a totemic issue in the Brexit campaign and they will pressure the U.K. government to drive a hard line when the next talks come around.
The U.K. and EU are still yet to come to an agreement over Gibraltar, the British territory connected to mainland Spain. Without a deal, crossing the frontier could be more difficult, which could cause long queues for commuters and significant economic disruption. About 15,000 workers cross the border every day.
Any attempt by Spain to erode or even end British control of the territory has long raised the hackles of Conservative lawmakers, including former leader Iain Duncan Smith, and they will fight hard to stop the U.K. giving any concessions.
For more articles like this, please visit us at bloomberg.com
©2020 Bloomberg L.P.
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