After three years of attempting to leave the European Union, the United Kingdom declared independence on Jan. 31. Originally implemented legislation received Royal Assent on Jan. 23, which led to the declaration of independence a week later. Although legislation was passed, there is still a list of negotiations to be completed for the United Kingdom to be completely on their own.
Both the United Kingdom and European Union (an economic and political union involving 28 European countries) are faced in the upcoming months with the task of deciding what relationship they want for the future. There is an 11-month transitional period where the United Kingdom will continue to follow the rules of the European Union. If negotiations are not agreed upon by Dec. 31 then the Brexit deal will be undone and the United Kingdom will continue to follow these rules.
The priority during this transitional period is a trade agreement. The importance of a trade agreement is due to the United Kingdom’s departure from the single market of the European Union after Dec. 31. It is also the most prioritized negotiation because the United Kingdom is the largest source for foreign investment in Europe and has a massive export market. If this part of the agreement is not finalized by that date, then the United Kingdom will have to trade without a deal and rules to follow. If that were to be the case, the United Kingdom would face tariffs on exported and imported goods, which are currently not in place under the European Union rules. Other trade barriers could be implemented as well. Many investors and businesses are concerned with the tension and tight timeline of the deal.
Other areas where negotiations are needed include law enforcement, security, aviation standards, access to fishing waters, supplies electricity and gas, licensing and regulation of medicines.
Prime Minister Boris Johnson has publicly committed to not extending the deadline for negotiations despite warnings that the timeline is extremely challenging to follow. The United Kingdom would need to decide on an extension by July 1. The Brexit process has already experienced multiple deadline extensions, Boris Johnson having one of his own in order to revise the deal that was eventually passed into law.
“The idea of being able to negotiate and agree a proper new trade agreement, and getting it ratified, in 11 months is nothing less than absurd,” Erik Nielsen, chief economist at UniCredit Group, said.
Currently, Boris Johnson is focused on getting a very specific trade deal and has made threats to abandon all agreements if the conditions desired by the United Kingdom are not fully met. Many fear that this tactic is more harmful to the country’s economy than sacrificing certain aspects of the deal. The Prime Minister had mentioned the trade deals of Canada and Australia as models for what the United Kingdom is seeking. Johnson is very stern on a free trade agreement.
Free trade would allow the United Kingdom to possess the right to diverge from rules enforced by the European Union, especially on product standards. It could also mean the United Kingdom would not have to provide aid or taxes to the European Union. Experts warn that if both of these events occur, a zero-tariff deal is not likely to pass.
Many believe the intense push for a free trade deal comes from a desire to trade more with the United States, but it is uncertain if a deal between the two nations would be a dramatic occurrence.
Boris Johnson also has a plan to open immigration as he opens business in the United Kingdom. He describes the deal as putting “people before passports.” Breaking from the European Union allows the nation to have a much larger role in regulations and standards.