Deal Or No-deal: The Countdown On Brexit

The UK left the European Union (EU) on January 31, 2020, and entered a transition period, with a deal to be brokered by the end of the year. However, with less than three months left on the transitional phase, and no concrete deal in sight, things are now getting a tad messier. Prime Minister Boris Johnson introduced the Internal Markets Bill, which violates several of the deals that were agreed upon in the Withdrawal Agreement, causing the EU to be even more suspicious of the UK keeping to its side of the deal.

An EU summit in mid-October was the unofficial deadline for completing the deal, which would still then need to be turned into a legal text and translated into all EU languages, and also ratified by parliaments on both sides. Mr. Johnson has said that if a deal is not agreed upon by the October meeting, the two should "move on" and accept the UK's exit. According to government estimates, the country's economy would be four to nine per cent lower under Brexit (based on how it leaves the bloc).

POINTS OF FRICTION

Under the overhand of COVID-19, a deal remains elusive after seven rounds of negotiations. The EU continues to demand continuity on matters like workers' rights, environmental regulations and state aid (monetary assistance given by the government to businesses to help them progress) while the UK feels the whole point of Brexit was to avoid such compliance.

There is also the issue of fishing: the UK would like full access to the EU market to sell its fish, but in return, the EU wants full access for its boats to fish in the UK waters. British negotiators say that's not possible because the UK is now an independent coastal state. While fishing isn’t a big part of the economy, it is an important occupation.

The last big issue is how the UK plans to implement the invisible land border in Ireland, which will turn into a border between the EU and the UK.

A no-deal Brexit would invariably lead to taxes on exports and customs checks and may cause "severe" disruption to supply chains, with next to no border management systems up and running to ensure that consignments would be cleared on time to proceed to the EU.

Overall, it is projected that the UK's losses would be far greater were Brexit to go ahead. For example, in the automotive sector, due to reduced exports to the UK, EU export revenues are to fall by 4.3% globally, whereas, in the UK, the sector falls by more than 22% due to the reduced exports to the EU. The rest of the sectors seem to follow suit as per a report by Baker McKenzie, a multinational law firm.

ALL ABOUT THE BILL

The Internal Markets Bill is said to "ensure the integrity of the UK internal market" and hand power to Scotland and Wales as per the PM, and will also protect the Northern Ireland peace process. Most people, however, say that the move will damage the UK's international standing. Britain’s Direct Ruler in Ireland, Brandon Lewis, has even admitted in the Westminster parliament that the Bill breaks international law, while Scotland's First Minister Nicola Sturgeon has called it a “naked power grab which would cripple devolution".

The Bill proposes:

1. No new checks on goods moving from Northern Ireland to the rest of Great Britain, but checks on those moving from the Republic of Ireland.
2. UK ministers have the power to modify or "disapply" rules that are about the movement of goods if the UK and EU do not reach an alternative trade deal.
3. Gives powers to override previously agreed obligations on state aid.

Under the earlier Northern Ireland protocol, Northern Ireland would continue to follow some EU rules to avoid checks along the Irish border after the transition period ends. The overall aim of the protocol was to stop a"hard" land border forming between Northern Ireland and the Republic of Ireland (now in the EU).

The new arrangement would mean that some goods entering Northern Ireland from Great Britain will be subject to checks. UK ministers say that the legislation is necessary to prevent "damaging" tariffs on goods travelling from the rest of the UK to Northern Ireland if negotiations with the EU on a free trade agreement fail. 

The Bill would also see Scotland, Wales and Northern Ireland hand over powers in areas like air quality and building efficiency, which are currently regulated at EU level. It will also set up a new body — the Office for the Internal Market — to make sure standards adopted in different parts of the UK do not undermine cross-border trade.

GLOBAL TRADE 

UK will now have the space to trade with different partners which will by default follow the World Trade Organisation standards. While within the EU, the UK was automatically part of around 40 trade deals with more than 70 countries. 19 of these existing deals, concerning 50 territories, have passed This, however, represents only roughly 8% of total UK trade. The UK states that it is now in negotiation with 18 other countries, including Canada, the United States, and Japan.

However, trade deals aren’t going as smoothly in some spots such as Japan or the U.S. A deal with Japan, one of the first in the Brexit era, was dashed recently, which accounted for  2% of British exports. Hopes for a deal with the U.S. have also faded, which buys almost a fifth of British exports. There has also been increased friction with the Internal Markets Bill, with the U.S. saying Ireland’s rights are important to it. 

If an agreement is not reached by the end of the year, those countries' imports will face the same charges and rules as those countries from other nations without trade deals with the UK. They will have the new UK Global Tariff imposed on them. The UK could then retreat to a WTO-rules-based regime, and the EU would then categorise the UK as a ‘3rd Country’, which could be a recipe for chaos.

NON-TRADE ISSUES

While a successful Brexit could be a boon for nationalists and the working class that sees immigration as a threat to their jobs, those who dream of studying abroad are not as happy. In the chance of a no-deal, EU students would be on the same footing as other students around the world, and vice versa. On the issue of immigration, a new points-based system would be used, but the UK has had a bad track record of this as well. In 2019, 48 per cent of asylum seekers were forcibly returned to their home country, with 98 per cent of those made to return kept in detention while in the UK. There is also no clear picture of how Brexit would impact those looking for employment in the UK. As of 2019, 13.3 per cent of NHS staff in hospitals and community services in England reported a non-British nationality. Among doctors, the proportion is 28.4 per cent. This could spell trouble for an already stretched NHS.