The long-awaited agreement on post-Brexit relations between the European Union (EU) and the United Kingdom ended up arriving on Christmas Eve. After yet another delay and discussions all night long on fishing quotas, a free trade agreement of nearly 1,500 pages, including the annexes, was approved on Thursday 24 December. Negotiated in less than a year, a record time for such a text, it constitutes what the British Prime Minister, Boris Johnson, calls “A new base of friendship [entre Londres et Bruxelles], to stabilize this relationship ”.
Many details of the agreement will only emerge in the days and weeks to come, while lawyers and specialists digest it. But here are the highlights of what will change the 1er January, when the agreement will apply.
Return from customs, but no customs duty
The main subject of the agreement is to regulate trade between the EU and the United Kingdom, which amounts to around 700 billion euros each year. London and Brussels have agreed: there will be neither customs duties nor quotas.
“But there will be real changes, this is the consequence of Brexit”, specifies Michel Barnier, the European negotiator. From 1er January, goods going from the UK to the EU (and vice versa) will need to be declared to customs. Concretely, a British company exporting to the EU will have to make an export declaration, while the one buying the product will have to make an import declaration. In the case of food products or live animals, sanitary or phytosanitary declarations must be added. This is the return of customs, which had been abolished with the creation of the single European market in 1993.
These customs declarations are not insurmountable: European trade to Canada or South Korea currently follows similar rules. But they put friction, and therefore costs, back into trade. On average, economists expect the UK to lose four points in gross domestic product (GDP) over the long term (fifteen years) as a result of the deal.
Supervision of competition rules
Mr Johnson’s main concession was to accept a framework for competition rules. London and Brussels commit to “Maintain high standards” in the fields of the environment, the fight against climate change, social rights, tax transparency and state aid. This demand from the Europeans aims to prevent the British from embarking on a race to the lowest social or environmental, by practicing dumping at the gates of the EU. Brussels, however, had to give up “Dynamic alignment” standards, where London should have followed Brussels automatically with each reinforcement of measures.
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