You may be wondering about this headline as the UK has left the EU and signed the Trade and Cooperation Agreement, and therefore all the major decisions have been made. After all, the UK has left the Single Market and the Customs Union as well as a number of agencies such as the Europol and of course famously the European Medicines Agency. The transition or implementation period has finished and the UK is firmly on the outside. What is left to consider?
The answer is that the agreements have been signed as well as the protocols. How these protocols and agreements are implemented will determine how the U.K.’s relationship with the EU 27 will evolve.
It is the attitude employed that is now crucial rather than the precise wordings of agreements. For example, will the EU give equivalence to the City of London in its currency clearing operations in the same way that it has granted them to New York and Singapore? If it does not, then the City of London will need to reorientate its business towards the rest of the world and away from the EU. Even “The Economist”, a staunchly pro-European magazine, does not believe that the UK should be a rule taker from the EU in the important area of financial services.
The Northern Ireland protocol has been of course spectacularly undermined by the hasty decision, which was withdrawn by the EU, to freeze the protocol using Article 16. This is a story which has not reached a conclusion.
The ever politically important issue, fishing, has become even more tense as a result of the EU banning most import of UK shellfish, despite the UK not diverging from the EU regulations in any way at this point.
It is the atmosphere in which both parties operate, which will decide the future course of relationships. If both parties cooperate to smooth over difficulties, by for example, not impounding sandwiches at the border, then the UK might retain a closer relationship with its neighbours. If the agreements, however, do not translate into goodwill, cooperation and flexibility, then Britain will need to move further away from the European Union orbit.
There have been some positive signs. Every Member State of the European Union has agreed to the extension of the Social Security agreement to allow secondees from the UK to Europe to remain in the UK Social Security system for two years under the posted worker provisions. The UK gives equivalent treatment to secondees from the European Union into the UK. Given the large diversions of social security rates between some of the countries in the EU and the UK, it may be somewhat surprising that countries such as Belgium and France have opted into this agreement. It does make it easier from the point of view of international assignments and does show that post BREXIT cooperation can be made to work in practice.
The major question is however to determine how trade and services will continue. A light-touch approach which places emphasis on pragmatism will prove less disruptive to trade patterns. So far, the picture on this is mixed.
Some of the BREXIT impact has been masked by COVID but the impact of the talks going on now to deal with the issues that have come up are as important as any that have gone before.
Primondell is holding a number of seminars on BREXIT post transition arrangements.
