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The Financial Express

Brexit: Evolving denotations and connotations

Muhammad Zamir   | Published: February 24, 2020 21:32:04 | Updated: February 25, 2020 20:37:18


European Commission President Jean-Claude Juncker jokes with European Union's chief Brexit negotiator Guy Verhofstadt ahead of a debate on the Future of Europe at the European Parliament in Strasbourg, France on February 06, 2018.        —Reuters European Commission President Jean-Claude Juncker jokes with European Union's chief Brexit negotiator Guy Verhofstadt ahead of a debate on the Future of Europe at the European Parliament in Strasbourg, France on February 06, 2018.        —Reuters

The United Kingdom having formally left the European Union (EU) has now entered what is termed as an 11-month transition period till the end of 2020.

Analysts are monitoring several denotations and connotations related to the term - Brexit. Issues are being identified as to whether this process will result in the UK enjoying "exact same benefits" as before - particularly with reference to customs checks and a future "frictionless trade" between Britain and the European Union. Strategists are indicating that there is "absolutely zero" chance of obtaining a fully functional trade deal by the end of the year.

This scenario has led some to suggest that "Boris Johnson's team is looking through the other end of the kaleidoscope. They seem to prioritise the potential, if uncertain, wins of Brexit over protecting against the guessable losses. The ability to do things differently is, for them, the point of having left. And that's why, at the moment, the Prime Minister is adamant the UK, newly sovereign at the end of this year, simply would not contemplate letting anyone else tell the country what to do".

It is being suggested that with a vast majority in the current British Parliament Johnson is not only looking for a Canada-style deal with the EU, a free trade agreement where the two sides agree not to charge taxes on imports or to restrict the amount of business that can be done but also that all deliberations in this regard are completed by the end of 2020. This complicated format, as desired by Britain, will however face challenges given the EU's efforts to preserve access to their vast market worth billions of US Dollars.

This will mean a lot of hard bargaining in the coming months. It will be worthwhile at this point to outline the different evolving parameters of the situation between now and the end of this year. During this period of transition the UK will have to conform to EU regulations in general with some interesting changes according to BBC's Tom Edgington.

They are: (a) United Kingdom's 73 MEPs (Members of European Parliament) will lose their seats in the European Parliament. However, during the transition period, the European Court of Justice will continue to have the final say over legal disputes; (b) the UK Prime Minister will have to be specially invited if he wants to join other leaders at EU Council Summits in the future. British Ministers will also no longer be able to attend regular EU meetings that decide important issues like fishing limits; (c) the UK will be able to start discussions with other countries about setting new rules for buying and selling goods and services. It may be recalled that the UK was not allowed earlier on to hold formal trade negotiations with countries like the US and Australia while it remained an EU member. Brexit supporters have in this regard have argued that having the freedom to set its own trade policy will help boost the UK's economy. Nonetheless, under this format, if any trade deal is reached, it would be functional only after the transition period ends; (d) passports of UK citizens will be subject to change. British blue passports will be making a return, more than 30 years after they were replaced by the current burgundy design. The new colour will be phased in over a number of months, with all new passports issued in blue by the middle of 2020. Existing British burgundy coloured passports will nevertheless continue to be valid; (e) nearly three million commemorative 50p Brexit coins bearing the date "31 January" and the inscription: "Peace, prosperity and friendship with all nations", have  entered circulation as of that date. This British decision has however not been accepted in principle by British citizens who were "Remain" supporters within the Brexit fiasco; (f) there will also be a symbolic step of shutting down the UK's Brexit Department which had been handling the UK-EU negotiations. This Department for Exiting the European Union was set up by former Prime Minister Theresa May in 2016. For the upcoming talks, the UK's negotiating team will be based in Downing Street where the Office of the Prime Minister is located; and (g) it will not be possible for some alleged criminals to be extradited to the UK if they flee to Germany. This will be so because Germany's constitution does not allow its citizens to be extradited, unless it is to another EU country. The German Federal Ministry of Justice has already drawn British attention to this future format. In response, the UK Home Office is understood to have observed that the European Arrest Warrant will continue to apply during the transition period - which will enable Germany to extradite non-German citizens to Britain. It has also been underlined that if a country's laws prevent extradition to the UK it "will be expected that this country will take over the trial or sentencing of the person concerned".

 TRANSITION PERIOD: It has been noted that despite being in a state of flux during the rest of 2020, certain aspects related to UK and the EU will continue. During this transition period, the following regulations will apply: (1) in matters pertaining to travel - flights, boats and trains will operate as usual. When it comes to passport control, during this period, UK nationals will still be allowed to queue in the areas reserved for EU arrivals only; (2) British valid driving licences will continue to be accepted within the EU; (3) during this period of transition, European Health Insurance Card (EHIC) that provide UK nationals with state-provided medical treatment in case of illness or accident can be used in any EU country, as well as in Switzerland, Norway, Iceland and Liechtenstein; (4) freedom of movement will continue to apply during the transition, so UK nationals will still be able to live and work in the EU as they currently do. The same applies for EU nationals wanting to live and work in the UK; (5) UK nationals living in the EU will continue to receive their state pension and will also receive the annual increase; (6) the UK will continue to contribute their share into the EU budget during the period of transition. This means existing schemes, paid for by EU grants, will also continue to be funded and (7) in matters related to the UK-EU trade matrix, such trade will continue without any extra charges or checks being introduced.

It would be important at this point to try and understand what a Canada-style comprehensive free trade agreement or trade deal can be for Britain. One needs to understand the ramifications as this is more acceptable for the British prime Minister.

 The EU's agreement with Canada is called the Comprehensive Economic and Trade Agreement (CETA). The EU began negotiating with Canada in 2009, and CETA provisionally came into force in 2017, although it has not yet been agreed to by all the EU member states. This arrangement gets rid of most, but not all tariffs - taxes on imports - on goods traded between the EU and Canada. Tariffs remain on poultry, meat and eggs. It increases quotas related to products that can be exported without extra charges but does not get rid of them altogether. It does little for the trade in services and in particular almost nothing for the trade in financial services, which is very important for the UK economy. It also does not remove border checks, so there is still a possibility that goods have to be examined at ports to make sure they meet regulatory requirements, and their paperwork is in order.

CETA also provides cooperation between the two countries on standards. Consequently, a piece of equipment made in an EU country can go through all its safety and quality checks there, without needing to have them repeated in Canada - and vice versa. CETA also allows professional qualifications to be recognised both in Canada and the EU, making it easier, for example, for architects or accountants to work in both places.

Despite all the serious efforts and discussions that are underway, there appears to be little hope that a trade agreement between the EU and UK can be reached and ratified between February and December 2020. In all likelihood, an extension in time will most probably be necessary if the UK is not to end the transition period with any agreement about the future relationship in place. The timing for such a request by UK could however prove to be tricky. While the EU will need the UK to decide on an extension quickly, Johnson might prefer to delay it, to avoid having to admit shortly after winning the premiership on a promise to 'get Brexit done' that the UK would actually need to continue to abide by EU rules for longer and pay more into the Union's budget than planned. The world in general and Bangladesh in particular will be watching the situation very carefully. In this regard, everyone knows that there is a lot of hard bargaining ahead. The kind of deal that might be reached or not reached would have an impact on millions of jobs within not only the UK and the EU but also in countries who have significant trade links with Britain.

It also needs to be understood that the UK cannot bring up or possibly refer to what has been termed by 10 Downing Street, London as a deal similar to an "Australian deal". There is also the complexity related to entry and exit of goods through Northern Ireland. The UK authorities know that if there is no comprehensive trade deal between the UK and the EU by the end of the year, the UK might have to move to a situation of trading with the EU on World Trade Organisation (WTO) terms. This would mean taxes on exports and customs checks which, if it came to pass, could be massively disruptive for businesses and very costly for the British economy.

The evolving dynamics and the uncertainty has led French President Macron to mention that he was "deeply sad" because of Britain's official departure from the EU. However, according to him, the UK was leaving the EU, not Europe. EU Parliament's Brexit co-ordinator Guy Verhofstadt, former Prime Minister of Belgium, has also remarked after 31 January the EU "will look after your star and work to ensure the EU is a project you'll want to be a part of again soon".

One can only hope that this complex traction will be resolved satisfactorily by both Parties - the sooner, the better.

Muhammad Zamir, a former Ambassador, is an analyst specialised in foreign affairs, right to information and good governance.

muhammadzamir0@gmail.com

 

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