Brexit was always an exercise in reconciling opposing principles. It was to retain British access to European markets while allowing the United Kingdom to set its own rules and regulations. It was to separate the UK from the EU and ‘take back control’ of borders, without creating a hard border in Ireland or a new one in the Irish Sea. These basic dilemmas have not changed but, in time-honoured fashion, they have been fudged ever since David Cameron’s ‘renegotiation’ of the UK’s position in Europe through to the new Trade and Cooperation Agreement of Christmas Eve.
The aim of the Agreement was to meet Boris Johnson’s promise to ‘get Brexit done’ by the end of the transition period on 31 December 2020. In practice, it will be a protracted and probably conflictual process.
The Agreement has secured tariff-free access in goods but does almost nothing for services, which account for over 40 per cent of British exports to the EU and in which the UK has a surplus. Financial services will largely be subject to ‘equivalence’ decisions, which the EU will make unilaterally over time.
Tariff-free trade in goods is subject to much-debated ‘level playing field’ provisions to ensure that the UK cannot undermine EU standards. It could take a long time to see how these work out. It is true that the UK is free to make its own competition rules but these must meet strict criteria specified in the Agreement. In the event of disputes, the issue will go to independent arbitration. Neither side can go back (‘regress’) on existing standards in a range of regulatory matters including environmental standards and workplace protection. This looks relatively straightforward but is subject to interpretation. More difficult will be what happens when the EU introduces higher standards. The UK is not obliged to follow suit but the EU can then ask for ‘rebalancing’ of the Agreement and, after four years, a more thorough review. Again, the matter will be resolved by arbitration. As the rules only apply to matters that affect trade with the EU, they could be interpreted in a more or less restrictive manner. It is likely that both sides will continue to enhance environmental measures but work regulations could be a different matter. Conservative governments consistently opposed such measures during our EU membership.
The agreement on fisheries includes an ‘adjustment period’. Presumably this phrase was brought in because both ‘transition’ and ‘implementation’ had already been used to describe the period between February and December, after which Brexit was to be fully done. Fishing quotas will then be subject to regular negotiation.
A number of matters remain open for further negotiation, including professional qualifications and barriers to trade in the automotive, chemical, pharmaceutical, organic products and wine sectors. The UK will have access to EU research programmes but we do not know on exactly what terms. The EU ‘may’ invite the UK to participate in various agencies, on terms yet to be decided. There might be cooperation of regulatory standards – since EU standards have in many cases become de facto global standards, this is likely to mean the UK mimicking EU ones.
Interpreting the Agreement is not helped by the fact that each side has put its own spin on it in the summary versions they have issued. The EU has a list of items that will and will not continue, with the latter predominating. The UK highlights continuing benefits. There will be a review of the Agreement after five years. If the UK has stayed close to European rules and norms, that may yield further cooperation. Yet, some may then ask what it has gained from Brexit. Five years ago, most Brexiters were extolling the benefits of escaping burdensome European rules and unleashing enterprise (although an extensive Review of Competences under the Conservative-Liberal Democrat coalition had failed to find such opportunities). A revival of the Thatcherite tendency in the Conservative Party, however, could provoke new clashes as the practicalities of the new Agreement are worked out.