Head of European Commission has cast doubt over a comprehensive trade negotiation with the UK, post first level of Brexit gets completed on January 31st
- Britain’s departure from the European Union on January 31st would be a “tough and emotional day”- Ursula Von, Head of European Commission.
- It is really tough of getting a complete negotiation over complex tariffs and quotas for a varied range of products and services by December 2020- Emmanuel Macron, French President.
The new head of European Commission- Ursula von der Leyen is visiting the Downing Street to meet Prime Minister Boris Johnson for the first time after he secured a stonking mandate on December 12, 2019, general election. Ursula after her arrival to Britain on January 08 vowed to work relentlessly to fix a close tie-up with the UK with European Union in a post-Brexit era.
However, addressing to a gathering organised at the London School of Economics before meeting PM Boris Johnson, she said that it is a bit difficult to complete a comprehensive trade negation ranging from trade to defence by the end of 2020. She also added that Brexit transition period is very constrained.
EU officials have a firm belief that PM Johnson has devoted himself to a vision of Brexit that would worsen the trading condition of the business by taking Britain out of the EU single market and would be a departure from the EU’s regulatory system.
Also, PM Johnson's pledge not to extend the Brexit transition deadline beyond December 2020 seems to be unrealistic and provide a very short duration for a comprehensive negotiation over the future relationship between the UK and the European Union.
Head of European Commission also said that Britain’s departure from the EU on January 31st would be a “tough and emotional day” for us, as it will end 47-year old close tie between the two blocs.
She said that everything is going to change and quoted example of UK's financial services, as they would no longer have free access to the EU clientele to provide free services across the European Union, and brokers and asset managers based out in London will have to rely on restricted access provided by Brussels, which can be withdrawn on a short notice.
Ursula von der Leyen also spoke on foreign and security policies and said that with the UK no longer being the part of the European decision-making structure, a new way needs to be identified to have common consensus against global threats.
However, the UK Parliamentarians had voted in favour of the Withdrawal Bill and voted 358 to 234 in favour of the Brexit bill, which has now gone for a further round of scrutiny in the House of Commons. The remaining stage of the Withdrawal bill is expected to materialise quickly, probably in January itself. And, if the European Parliament also gives their consent for the same, Britain will crash out of the EU bloc as on January 31, 2020, with a formal withdrawal deal. Although, this would be only marked as the first stage towards the further comprehensive Brexit process.
Post first level of Brexit gets delivered on January 31, the UK will fall into a Brexit transition period until December 31st, 2020 and during the Brexit transition period, the nation is supposed to adhere with the prevailing EU regulatory system, till the time there is trade deal done between both the sides.
Meanwhile, French President- Emmanuel Macron has also said that the UK diverge from the EU rules could actually take an extended period of negotiations, given the complex nature of the tax, tariffs and quotas for a varied range of products.
However, the UK has time till July 01, 2020 to seek further Brexit transition extension beyond December 2020 . Also, under the terms of the Withdrawal deal, the transition period is allowed to be extended for 12 or 24 months, if negotiation get stuck in between.
And, if a trade deal is in place by the current deadline, the UK's new trade relationship with the European Union could begin immediately after the transition. If both the sides fail to secure a deal, Britain could witnesses prospects of having to deal with EU members with no-agreement, that would be catastrophic for both the sides and it will lead to checks and tariffs on the UK goods flow to the EU. However, both the sides would try to prevent this scenario, as this would lead to major disruption and chaos.
Although, PM Johnson has already rejected the idea of a further extension to the Brexit transition, which suggests the clock is already ticking.
In the wake of a no-deal kind of exit post Brexit transition period, the UK will trade with the EU on World Trade Organisations rules. Which means that the flow of goods and services from the UK will be subject to tariffs until a free trade deal comes into effect.
UK-EU free trade of goods and services, a top priority of Brexit transition
As per some media estimates, in 2018, the UK’s total trade value was at £1.3 trillion, out of which 49% of the total traded value was with the European Union. Hence, during the Brexit transition negotiation, a UK-EU free trade deal will be the top priority for both sides. This is very crucial if London wants to move its goods freely and avoid tariffs and quotas after the transition. As tariffs would be levied on imports of goods from the UK and if the goods flow is subject to quotas, it would mean there would be restrictions on how much can be traded over a specified period of time.
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