UK/EU future relations – what’s been agreed?

Monday, 26 November 2018

Accompanying the UK/EU withdrawal agreement was a brief document covering some aspects of the future relationship between the UK and EU. Now the full draft of the political declaration setting out the framework for the future relationship has been released.

The 26-page document gives some insight to elements of how the future could look.  Below we outline four key aspects of the declaration and discuss implications for UK agriculture.

Key aspect

What it means for agriculture

Free Trade Area between EU and UK

The EU is the UK’s biggest trading partner for agricultural imports and exports. The type of trade deal being sought is ambitious, as there are ‘no tariffs, charges or quantitative restrictions across all goods’.

This would allow this trade to continue without tariffs, ensuring some of the negative impacts of a no-deal Brexit, notably on the arable and sheep sectors can be avoided. The AHDB Horizon report on Brexit scenarios explored this.

Reduced trade friction

 

 

 

Countries outside the EU have increased requirements for customs paperwork and checks at the border to access the market. The political declaration looks to reduce this trade friction with the aim to ‘consider mutual recognition of trusted trading/admin programmes’.

There are no details of how this will work.  It is unclear how current systems could change but desire for as much frictionless trade as possible is a good sign for businesses.

‘Cooperation’ on regulation

 

At present the EU and UK have common regulations as we are part of the single market.

This could change after Brexit as the UK would be able to set its own rules and regulations. If the UK approach is deemed by the EU to give UK businesses an unfair advantage they may decide a breakdown of cooperation has occurred.

It is unclear exactly how much influence the EU will have over the UK approach, but increased customs checks and controls could be introduced if regulations diverge – which would negate the benefits of reduced trade friction. Alternatively, it could limit the extent to which the UK would determine its own regulatory framework.

‘Cooperation’ on customs

As laid out in the withdrawal agreement, the UK would be able to negotiate trade deals with other countries. However, through the transition period, they could only come into force if the EU agrees.

AHDB have assessed our agricultural trade outside the EU in a previous Horizon report. More recently, AHDB looked at which parts of the world offered opportunities for UK exports for red meat and dairy and grains.

Striking trade deals may be more simple and straightforward, and therefore, faster for the UK as one country rather than negotiating as part of the EU. However, the UK would lose the collective bargaining power that the EU brings. There may be a tradeoff here in the resulting terms of any trade deals agreed.

We should also recognise that new trade deals could lead to increased competition for domestic producers from imports. The UK is a net importer of food so this needs to be carefully considered.

Full details of the future relationship still need to be discussed and agreed – and will be linked to approval of the withdrawal agreement. The next step will be for the UK to vote on it, expected to be 12 December. This comes after the EU Member States agreed the proposal on 25 November. If it is not agreed there are various options that could occur, which have been laid out here.