The Withdrawal Agreement and Political Declaration approved in October have now come into effect. The UK has entered a transition period until the end of 2020. This means the UK has formally left the EU, but the detail of the future relationship has still to be resolved. This is certainly relevant to trade.
Trade and Export Online has been updated to reflect the current reality, most notably in the units relating the Export and Import procedures. But for the short term that reality has not changed materially.
The written statement to Parliament, ‘The Future Relationship between the UK and the EU’, published the 3rd February provides some insight, but not yet concrete detail, on where we might be heading with trade.
Clear casualties are participation in the Single Market (Customs Union) and adherence to the ‘Four Freedoms‘ (free movement of goods, capital, service and labour) that underpin it. The Government aspiration is Free Trade Agreements with the EU (and European Free Trade Area states (EFTA)) that preclude ‘tariffs, fees, charges or quantitative restrictions’. However, even if achieved, this does not mean ‘frictionless trade’.
One certainty therefore is that business needs to prepare for customs procedures coming into place from the beginning of 2021 for trade with EU entities. The Government will announce the detail as the date approaches and these are rolled out. A review of current EU:EFTA and third country arrangements indicates the likely spectrum of possible requirements, pending conclusion of more detailed negotiations. (Insight into these is available from existing course material on customs procedures).
However, the devil will be in the detail. Negotiations will be required across a range of topics, including: technical regulation and standards, sanitary and phytosanitary measures, services, fisheries, mutual recognition of standards and qualifications etc. All with the potential to introduce stickiness and cost.
Whilst substantive progress can be made by 2021, it is not unreasonable to speculate that might become a staging post, rather than an absolute conclusion. To the extent that agreement is achieved there may still be issues unresolved at that point. Also the implications of any agreement will work their way through disparate sectors in a way that may call for further fine-tuning.
There may be a few rounds to go yet!