The UK and EU Trade Agreement – What You Need to Know

On December 24, 2020, the UK and EU reached a trade deal that will govern their economic relationship after the Brexit transition period ends on December 31, 2020. The agreement came after months of tense negotiations and will have significant implications for the UK`s economy and its relationship with the EU.

The agreement covers a wide range of issues, from tariffs and quotas to intellectual property and services. It also includes provisions on fisheries, a particularly contentious issue during the negotiations. The deal is comprehensive and complex, so here are some key points to keep in mind.

Tariffs and quotas

Under the agreement, the UK and the EU will be able to trade with each other without tariffs or quotas, meaning that there will be no additional taxes on goods and no limit on the quantity of goods that can be traded between the two parties. This is a significant achievement, as a failure to reach a deal would have resulted in tariffs and quotas being imposed, which would have been costly for businesses on both sides.

Rules of origin

To benefit from tariff-free trade, businesses will need to meet certain rules of origin requirements. This means that they will need to prove that their goods originate in the UK or the EU, depending on where they are being exported to. This could be a challenge for some businesses, particularly those that rely on complex supply chains that cross multiple borders.

Services

The agreement includes provisions on services, but they are more limited than those for goods. The agreement covers areas such as professional and business services, but it does not provide for the free movement of workers, which could have implications for UK businesses that rely on EU talent.

Fisheries

Fisheries were one of the most contentious issues during the negotiations, and the final agreement provides for a transition period of five and a half years during which EU boats will continue to have access to UK waters. After that period, the two sides will need to negotiate a new agreement on fishing rights.

Impact on the UK economy

The agreement is good news for businesses in the UK, as it provides certainty and clarity on the terms of trade between the UK and the EU. However, it is also clear that there will be some negative impacts on the UK economy. For example, some industries, such as financial services, are not as well covered by the agreement as they would have liked. In addition, the end of free movement of people could make it more difficult for UK businesses to recruit talent from the EU.

Overall, the UK and EU trade agreement is a significant achievement, but it is not perfect. Businesses will need to carefully consider the impact of the agreement on their operations and make any necessary adjustments. The UK`s relationship with the EU will continue to be a major issue for businesses and policymakers in the years to come.