The proposal for the Brexit deal is on the table and has already been endorsed by the EU parliament. Should it also pass in the UK parliament, it will come into force on 29th March 2019. Only very few people actually know what it is, so we have filtered the core elements from the 585 pages and condensed them to these six topics. (updated version 26.11.2018)
1. Exit Bill
The UK has agreed to pay for all projects commonly agreed on with the EU 27. The UK estimates the sum to be in the region of 40-45 billion Pounds. More about the Exit Bill.
2. Citizens’ Rights
EU citizens living in the UK and UK citizens living in the EU will keep the same rights as before. This also counts for people moving to the UK or the EU after the exit and before the end of the transition period.
3. Irish Border
As a backstop solution the UK will stay in the customs union to avoid complex customs checks. In addition, Northern Ireland will stay in the single market to avoid a hard border. This means there will be customs checks between mainland UK and NI, but these could be eased by electronic customs clearances at the point of consignment. The backstop can only be terminated by both the UK and the EU together.
4. Transition Period
After the exit on 29. March 2019 the UK stays in the EU on an interim basis, but has no say in the EU parliament anymore. For UK businesses nothing really changes. Now the UK and the EU can start to negotiate the actual trade deal (negotiations of the past 20 months were merely about the exit deal).
The transition period ends 31. December 2020. However, if no sufficient progress has been made by 1.July 2020 both sides can agree on an extension of the transition period. This can only be done once, but the duration of this period is still open. The UK can also negotiate trade deals with other economies, but these will only come into force after the transition period.
5. Future Relationship
The agreement also includes a declaration about the future relationship regarding security and foreign politics as well as economical cooperation. In short: We stay friends, partners and allies.
Economical cooperation: The aim is to negotiate a free trade agreement without tariffs and trade restrictions. Fair competition shall be guaranteed by a set of rules and standards. This should prevent a race to the bottom for corporate tax rates or the softening of EU environmental, climate, work and social standards.
In return the UK has agreed on staying in the customs union to allow for the Irish border backstop solution. This means the UK cannot undercut EU tariffs and has to keep to EU quality standards, which will make it practically impossible for the UK to negotiate its own free trade agreements as far as goods trade is concerned (UK exports are 80% services and 20% goods).
Solutions for aviation, energy and fishery have yet to be agreed on, negotiations will start right after Brexit.
6. Financial Passport
Since financial passports require the membership of the single market, the UK has agreed to the principle of equivalence. In other words, the UK can only get access to the EU financial markets if the EU recognises UK financial standards as being compatible with their own. This will be a difficult process to manage and monitor. UK banks and financial service providers are left with some uncertainty in planning.
About Marcus Broix:
Marcus Broix is an independent trade consultant based in Bristol, UK. He has more than 20 years of experience in running his own media and marketing company in Germany with a vast network of advisors and service partners.
Today his UK company Trade with Europe Ltd helps small and medium sized businesses to grow their European markets – from eCommerce fulfilment services to founding & administrating EU companies for them. This enables SMEs to legally bypass trade barriers, while managing their European enterprise from the UK or anywhere in the world.