EU & UK clinch narrow Brexit accord

UK-EU post-Brexit trade deal

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UK-EU post-Brexit trade deal

In News:

  • The EU and the UK have sealed a limited UK-EU post-Brexit trade deal.

News Summary:

  • The EU and the UK have sealed a limited UK-EU post-Brexit trade deal that aims to lay the groundwork for long-term future cooperation.
  • The deal, which must be ratified by the British and European Parliaments.
  • Once it is signed off and the text published in the EU’s official journal, it will go into effect on January 1 when Britain would have left the EU bloc’s single market.

Limited deal:

  • The UK is set to exit EU trading rules on 1st of January, 2021, and it will mean big changes for business, with the UK and EU forming two separate markets, and the end of free movement.
  • The limited trade deal eases some of the concerns.
  • Despite running into 2,000 pages, the agreement leaves critical parts of the relationship to be worked out later.
  • The trade pact will not cover services, which make up 80% of the British economy, including banking industry.
  • Free goods trade:
    • The deal enables UK goods to be sold without tariffs, and without quotas in the EU market.
    • It comes as a major relief to many British businesses, who feared disruption at the borders and the imposition of tariffs, or taxes on imports.
  • Fishing rights:
    • Under the new deal, EU fishing fleets will have to give up about 25% of their current catch in British waters over the next five and a half years, officials said.
      • Britain was pushing for an 80 or 60% cut in the EU’s share. 
      • On the other hand, giving up share of their catch was seen as difficult for many fishing communities in northwestern Europe, which have worked what are now U.K. waters for centuries.
    • Boats from the continent will also be allowed to work in British inshore waters less than 12 nautical miles from shore during the transition.
    • After this transitional period, access to its rich fishing grounds would be negotiated on an annual basis.

About: European Union (EU)

  • European Union or EU is an experiment to transform the relations between nations based on functionalist ideology.
  • It envisages to transform the relations between nations by enmeshing them in economic, social, cultural, political partnership.
  • EU is currently a block of 28 countries and 19 countries have formed Eurozone.
  • Formation of European Union is an outcome of Single European Act, 1991.
  • Mashtricht Treaty converted the EU into a monetary union.
  • Lisbon Treaty strengthened political, foreign affairs and security integration of policies of countries of European Union.

About: Brexit

  • “Brexit” is a word that is used as a shorthand way of saying the UK (The United Kingdom of Great Britain and Northern Ireland) leaving the EU – merging the words Britain and Exit to get Brexit.
  • A was held on 23 June, 2016, to decide whether the UK should leave or remain in the European Union.
  • 51.9% People voted in favour of Leave and won.
  • To leave the EU, UK had invoked Article 50 of the Lisbon Treaty which gives the two sides two years to agree the terms of the split.
    • Lisbon Treaty (Article 50) provides for exit of member countries from European Union. For any country to come out of European Union, it has to negotiate a deal with EU.
  • UK triggered this process on 29 March, 2017, meaning the UK is scheduled to leave EU on 29 March 2019.
  • The deadline got extended after the failure to reach a deal between the UK and EU that is acceptable to the UK parliament.
  • UK was to remain bound by the EU’s rules during a transition period that runs until midnight on December 31, 2020, when the U.K. will leave the the bloc’s single market and customs union.

Background – Negotiations for Britain-EU Trade Agreement:

  • The UK has voted to leave the EU in a referendum in 2016, referred to as “Brexit”.
  • After Brexit, to compensate for losing  the single market, Britain and EU were keen to negotiate a trade deal, preferably a Free Trade Agreement (FTA) that will benefit both sides.
  • Under the Withdrawal Agreement, they have until December 31, 2020 to define their future trading arrangements.
    • The agreement seeks to take in elements of current single market arrangements in certain areas, like cars and financial services.
  • Otherwise, they have to separate with no deal – which would end the current tariff-free and quota-free partnership they share in most sectors of the economy.

Points of difficulty in reaching a trade deal:

  • The two sides are far apart from agreement on some key sticking points, including  fishing rights and competition rules.
  • The central issue in the talks is how close the UK should stick to EU economic rules in the future.
    • The EU does not want to give UK tariff-free access to its markets if UK sets its own standards on products, employment rights and business subsidies, different from the EU rules they both operated on till now.
    • Meanwhile, UK insists that, as any sovereign nation, its wider business rules should be under its control, and not EU’s control, once it exits the EU.
  • Fishing rights is another major area of disagreement.
    •  The EU wants access to UK waters for EU’s fishing fleets.
    • Otherwise, it says, UK fishermen will no longer get special access to EU markets to sell their goods.

Also Read: European Parliament approves Brexit deal

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