As of 31 January 2020, the UK is no longer part of the European Union. However, many details still need to be ironed out before Brexit is fully complete – including the establishment of a new free trade agreement between the two regions. While existing trade regulations will still be followed until 31 December 2020, the untimely arrival of the coronavirus outbreak is hampering negotiation efforts and raises the possibility of an extension – despite the British Government’s insistence on ending the transition period at the stipulated date.
Although negotiations have been temporarily postponed, the European Commission has drafted a legal agreement outlining the future of the EU-UK trade partnership. If your business operates within the two geographies, here are some important points to note:
- The EU is willing to establish a free trade zone, where “custom duties on goods originating in the other party shall be prohibited”
- Non-tariff barriers will be sought as part of any agreement, in addition to the promotion of public procurement and digital trade
- “Robust commitments” will be sought to ensure fair trade across social, environmental and competition standards – emphasising that the future of the EU-UK relationship “can only deliver benefits in a mutually satisfactory way if it prevents distortions of trade and unfair competitive advantages”
- An arbitration tribunal would be set up to issue rulings and impose non-compliance fines – with the Court of Justice of the European Union dealing with disputes or concerns over EU law (although the UK had been adamant about leaving the jurisdiction of EU courts once the transition period ends)
However the EU’s proposed terms may not line up with internal UK interests, signifying the importance of further negotiations amidst the ongoing epidemic. For more details on the draft agreement, click here.