The UK and EU Trade Negotiation Process and Outcomes

The UK and EU trade negotiation process was a complex and time-consuming journey. The negotiations began in March 2017 and lasted for nearly four years.

The UK's decision to leave the EU, commonly known as Brexit, created a significant trade barrier between the two parties. The UK's departure from the EU's single market and customs union meant that trade agreements needed to be renegotiated.

The UK government's goal was to secure a free trade agreement with the EU, which would allow for tariff-free trade in goods and services. The EU, on the other hand, was seeking to protect its interests and maintain a level playing field.

The negotiations were led by the UK's Department for International Trade, with the EU's European Commission representing the EU's interests.

The negotiation process between the UK and the EU was a complex and contentious one, with several key issues at play. The UK government, led by Boris Johnson, wanted to trade freely with the EU while being subject to as few EU rules as possible.

The EU, however, insisted that the UK comply with EU regulations, including those on subsidies, social and environmental issues, to avoid distorting competition in the single market. This was a major point of contention.

The negotiations were led by Michel Barnier for the EU and David Frost for the UK, and they began on 31 March 2020. The talks were originally due to be concluded by the end of October 2020, but they continued beyond that deadline.

The negotiations formally ended on 24 December 2020, when an agreement was reached in principle after ten negotiating rounds.

Stepping over the red lines in a negotiation can be a costly mistake. It's essential to know what you're willing to compromise on and what you're not.

Negotiators often get caught up in the heat of the moment and accidentally cross a boundary that's non-negotiable. This can lead to a breakdown in the negotiation process.

Knowing your non-negotiables beforehand can help prevent this from happening. In a previous negotiation, a company's CEO was willing to compromise on price but not on the quality of the product.

The key is to identify your red lines early on and communicate them clearly to the other party. This can help prevent misunderstandings and ensure a smoother negotiation process.

The UK government led by Boris Johnson pursued a desire to trade freely with the EU while being subject to as few EU rules as possible.

Formal trade negotiations between the UK and EU began on 31 March 2020, with Michel Barnier representing the EU and David Frost representing the UK.

The negotiations were originally due to be concluded by the end of October 2020, but continued beyond this deadline.

The UK government's goal of avoiding the jurisdiction of the European Court of Justice was a major point of contention in the negotiations.

The EU insisted that the price for UK access to the European Single Market was compliance with EU regulations to avoid distorting competition in the single market.

The issue of fisheries was another major point of contention, with the UK wanting to regain full control over their fishing waters and EU coastal states demanding to retain all or most of the fishing rights they enjoyed under the EU's Common Fisheries Policy.

The negotiations formally ended on 24 December 2020, when an agreement was reached in principle after ten negotiating rounds.

There are three big questions that need to be answered in the negotiation process. We don't know what the British government's goals are when it comes to trade policy, making it unclear how other nations will treat UK exports.

The three classes of trading partners are the EU27, countries with preferential trading arrangements with the EU, and countries with a most-favoured nation (MFN) relationship with the EU based on tariffs and services schedules negotiated in the WTO.

The relationship with the EU27 is complex because it's unclear whether the Treaty on the Functioning of the European Union (TFEU) allows negotiation of the post-Brexit arrangements between the UK and the EU27 in parallel with the Article 50-mandated negotiations on the terms of the exit.

If the EU27 won't allow a new trade relationship to be negotiated until the UK has left the EU, the default position would be that both sides treat each other on MFN terms, which is unlikely to be desirable for either.

Here are the three classes of trading partners:

The UK and the EU have made commitments on subsidies that go beyond other trade agreements, but these provisions are vague in terms of substance. The EU-UK Partnership Council may provide guidance on what types of energy and environment subsidies would not normally have negative impacts on trade and investment.

The EU and UK will need to decide on the best institutional framework to pursue cooperation on global trade and economic issues. A ministerial forum could be established to hold open discussions on issues such as economic security, trade, and climate.

The UK has concluded a separate agreement with Euratom on peaceful cooperation on nuclear technology, which has not entered into force.

The EU and the UK both intend to use industrial policies to promote growth and competitiveness. The EU's 2024-2029 European Commission could explore developing an industrial policy at EU level, which would include using subsidies to promote green technologies.

The UK government has also announced plans to adopt a new industrial policy as one of its flagship projects. The UK and EU have made commitments on subsidies in the TCA, but these provisions are vague in terms of substance.

The TCA's 'level playing field' disciplines provide for the right to apply remedial measures in case one party considers a subsidy has a significant negative effect on trade and investment. This could lead to more potential for conflict as both parties use subsidies more frequently.

The EU-UK Partnership Council might provide guidance on what types of energy and environment subsidies would not normally have negative impacts on trade and investment. This would provide greater predictability for businesses and investors.

The development of more detailed guidance on the implementation of the TCA level playing field provisions on subsidies is significant not only for bilateral trade but also for informal WTO discussions on improving international disciplines on subsidies.

The TCA has a lot of potential, but it's not quite fulfilling it yet. Since the conclusion of the Windsor Framework on Northern Ireland in 2023, the EU and UK have developed a more cooperative relationship.

The TCA allows for the possibility of negotiating supplementary agreements that complement or modify certain aspects of it. This could include expanding services commitments or modifying rules of origin.

There are three sectoral agreements that could be launched based on priorities indicated by both sides. A veterinary agreement to reduce border controls on agriculture and fish products is one of them.

The veterinary agreement would significantly reduce potential areas of tension under the Windsor Framework. It would be based on regulatory alignment and the non-application of border carbon measures to bilateral trade.

The linking of emissions trading systems and the coordination of border carbon measures is another sectoral agreement that could be launched. This would facilitate trade and prevent the emergence of new trade obstacles.

A mobility protocol that facilitates youth and cultural exchanges, along with additional business mobility commitments in the TCA's services chapter, is the third sectoral agreement. This would also facilitate trade and prevent new obstacles.

Negotiations on sectoral agreements should be balanced in terms of mutual interests. Each sectoral negotiation would need to identify approaches that offer gains to both sides.

A scoping exercise should lead to a clear understanding of the parameters under which agreements are possible. This is essential to head off the risk of incompatible negotiating mandates.

The major interests of both sides need to be recognised for negotiations to succeed. This includes reaching an agreement on a stable regime for access to fisheries resources, to apply after 2026.

An agreement to facilitate trade in electricity could also be beneficial for both sides. This could entail major benefits for both the UK and the EU.

Since leaving the EU, the UK has signed various agreements to secure trade with EU member states, including those related to single market goods regulations.

The UK could signal its intention to continue to align its regulations with EU rules in areas of trade in goods on which the UK was aligned at the time of departure from the EU.

This process would involve the Commission providing early information about planned regulatory developments and facilitating contact between UK regulators and competent regulatory authorities in the EU.

The UK would notify the Commission when it has completed the process of regulatory alignment, establishing a process of information exchange.

Mutual recognition of conformity assessment or other trade facilitating measures in sectors in which regulations are aligned is also a possibility.

The UK and the EU already cooperate closely in international standardisation activities, with the British Standards Institute remaining a member of the European standardisation bodies.

Reinforcing cooperation in international regulatory bodies is more feasible when the EU and UK regulatory systems remain closely aligned.

This cooperation is particularly relevant in areas such as financial services and goods trade, where regulations often originate in international forums.

The UK and EU can benefit from a ministerial forum on global trade and economic cooperation to address challenges in a coordinated manner.

This forum would allow both sides to look into trade and global economic challenges from a strategic perspective, including consideration of trade-offs and by exploring how best to promote common interests globally.

UK foreign minister David Lammy has proposed a joint declaration on cooperation on foreign policy and security, which could encompass economic security and climate cooperation.

The forum could meet regularly to discuss global trade and economic challenges and report to the EU-UK Summit, making it a vital tool for cooperation.

The agreement on the Trade and Cooperation Agreement (TCA) has given the UK more sovereignty over the island of Britain, but at the cost of losing a considerable weight of the UK's sovereignty over Northern Ireland.

International Regulatory Cooperation is crucial for the EU and UK to work together effectively. The two sides already have close cooperation in international standardisation activities, with the British Standards Institute remaining a member of European standardisation bodies.

In areas like financial services and goods trade, the regulations adopted by both sides often originate in international forums. This means they can build on existing cooperation to reinforce their collaboration in international regulatory bodies.

The EU and UK can maintain maximum alignment of single market goods regulations by signaling their intention to continue aligning their regulations with EU rules. The Commission can provide early information about planned regulatory developments to facilitate this process.

The UK can also notify the Commission when it has completed the process of regulatory alignment, establishing a process of information exchange. This experience can inform an agreement providing for mutual recognition of conformity assessment or other trade facilitating measures in sectors with aligned regulations.

The UK and EU continue to cooperate in various areas, despite the UK's departure from the EU. The UK no longer participates in the EU security agencies, but cooperation continues with Europol and Eurojust.

In terms of data exchange, the UK still has access to certain security-relevant information, such as passenger name records and Prüm Convention data.

The UK also continues to participate in five technical EU programmes: Horizon Europe, Euratom research and training, ITER, Copernicus, and satellite surveillance (partly).

One notable exception is the Erasmus student exchange programme, which the UK no longer participates in.

The UK's participation in these programmes is a positive step towards maintaining cooperation with the EU, despite the challenges posed by Brexit.

The EU Cooperation Agreement, also known as the Trade and Cooperation Agreement (TCA), came into force in January 2021. The TCA is a free trade agreement that prevents new tariffs and quotas from being introduced, making trade between the UK and the EU less expensive.

This agreement has been a crucial step in establishing trade relations between the two parties, but it's essential to note that it doesn't eliminate the possibility of tariffs in the future. Stricter laws on animal products and new checks for product standards have been introduced, which may have consequences for businesses.

The TCA has been a result of the UK's departure from the EU single market, which has led to the potential impact on contracts and UK jurisdiction in court cases. However, the agreement has helped to prevent new tariffs and quotas, making trade easier and less expensive.

The UK and the EU have already started considering their objectives for a joint forward programme, which is a crucial part of any international trade negotiations. The EU's interests include protecting their fishing rights and an EU-wide scheme for movement of young people.

The UK's interests include SPS, mobility for touring artists, and recognition of professional qualifications. These objectives are likely to be iterative, with individual subjects at different stages of negotiation.

Here are some of the key stages in the negotiation process:

The UK and EU trade negotiation agreement was reached in principle on 24 December 2020, after ten negotiating rounds.

The agreement addressed the contentious issues of EU rules and regulations, with the EU insisting that the UK comply with its subsidies, social, environmental, and other regulations to avoid distorting competition in the single market.

The UK government, led by Boris Johnson, had pursued a desire to trade freely with the EU while being subject to as few EU rules as possible, and especially not to the jurisdiction of the European Court of Justice.

Fisheries was another major point of contention, with the UK wanting to regain full control over their fishing waters, and EU coastal states demanding to retain all or most of the fishing rights they enjoyed under the EU's Common Fisheries Policy.

The agreement had to be negotiated under increasing time pressure due to the end of the transition period on 31 December 2020.

Michel Barnier represented the EU and David Frost represented the UK in the formal trade negotiations, which began on 31 March 2020 and were originally due to be concluded by the end of October 2020.

Businesses in the UK will need to navigate new customs procedures, as the EU's customs union will no longer apply to the UK. This means they'll have to obtain their own customs authorisations and make declarations on imports and exports.

The UK's exit from the EU's single market will also affect businesses that import or export goods, as they'll face new tariffs and regulations.

The UK will also no longer be part of the EU's VAT system, so businesses will need to register for a UK VAT number and charge the correct rate of VAT on sales to EU customers.

Some businesses may need to adapt their supply chains to ensure they can still access the EU market, which could involve setting up new distribution networks or partnerships.

The UK's new immigration rules will also affect businesses that rely on EU workers, as they'll need to apply for a visa or other work permit for their employees.

Businesses that trade with the EU will need to be aware of the new rules and regulations, including the need to obtain a UK Economic Operator Registration and Identification (EORI) number.

The Trade and Cooperation Agreement established free trade between the UK and the EU, preventing new tariffs or quotas from being introduced.

The UK and EU are currently considering their objectives in more detail, with a view to shaping a joint forward programme at the summit. This is a crucial part of any international trade negotiation.

The UK's objectives include SPS, mobility for touring artists, and recognition of professional qualifications, while the EU is focused on protecting their fishing rights and an EU-wide scheme for movement of young people.

Here are the stages of the UK-EU relationship reset:

Note that arrangements concerning Gibraltar have been in substantive talks for some time, and both the UK and EU have already agreed on the broad outline of a security deal.

The UK and EU have a trade deal in place, known as the Trade and Cooperation Agreement, which was set up following Brexit to establish free trade between the two parties.

This agreement prevents any new tariffs or quotas from being introduced, making trade between the UK and EU relatively smooth.

However, as a result of the UK leaving the EU customs area, customs formalities are required between the two parties.

Traders can self-certify compliance with agreed rules of origin, which is a convenient aspect of the deal.

The EU deal is a bit of a complex topic, but I'll try to break it down simply. The UK and EU have a Trade and Cooperation Agreement (TCA) in place, which was established after Brexit to prevent new tariffs or quotas from being introduced.

This agreement is a result of the first stage of negotiations, where the two parties established friendly relations and a desire to deepen existing agreements. The EU and UK are now in the second stage, defining their internal interests and positions.

The UK's objectives for the next stage of negotiations include securing agreements on SPS (Sanitary and Phytosanitary measures), mobility for touring artists, and recognition of professional qualifications. The EU, on the other hand, is focused on protecting their fishing rights and implementing an EU-wide scheme for the movement of young people.

Here's a rough outline of the stages of the negotiation process:

The EU has already made some progress in the negotiation process, with arrangements concerning Gibraltar in substantive talks for some time. In fact, credible reports suggest that both the UK and EU have already agreed on the broad outline of a security deal.

The UK's economy is heavily reliant on trade with the EU, with around 45% of its exports going to the bloc. The UK is a significant trading partner for the EU, with trade in goods and services between the two worth around £600 billion in 2019.

The UK's population is around 67 million, with a GDP of around £2.2 trillion. The EU's population is around 512 million, with a GDP of around £16.5 trillion.

The UK's main industries include financial services, manufacturing, and services, with a strong presence of multinational companies in the country.

Brexit has had a significant impact on the EU, with trade barriers now in place affecting the value of goods traded between the UK and EU countries. The EU's trade with the UK has been a major topic of debate for businesses.

The UK's departure from the EU has led to a 6% increase in food prices due to the implemented trade barriers. This change has likely affected consumers and businesses alike.

The EU's trade with the UK has been a significant portion of their overall trade, with the latest figures showing that the EU accounted for 48.1% of UK foreign trade in goods in 2019.

The UK is in a bit of a tricky negotiating position with the EU. Previous UK negotiating performance has been weak, and the EU are tough negotiators, even with friends.

The EU will almost certainly benefit more than the UK from an SPS deal given a large surplus, but the UK is still trying to make its demands known. This includes things like a youth mobility scheme and reduced student fees for EU students.

A well-functioning EU committee in the House of Commons could help shape the agenda and provide negotiators with reasons to push back on certain demands. This could be a game-changer for the UK's negotiating position.

The UK does have some strengths in the process, including many friends in Brussels and Member States who could be crucial in the negotiations. There's never a single EU view, and there are many sceptics who could be persuaded to work with the UK.

A clear message from the UK Government that it will not be risking EU relations for a US trade deal has gone down well in Brussels. This could be a positive step towards building trust and cooperation with the EU.

The UK remains a full member of the EU with access to the Single Market until the Article 50 procedures are completed.

Currently, the UK's trade policy is determined by the EU and implemented by the EU Commission, which means existing EU agreements with other WTO members still apply.

All UK imports from and exports to EU partners and third countries receive the same treatment as before the referendum.

The UK government has complete control over the treatment of imports after Brexit, subject to WTO commitments.

The UK could choose to continue applying the same measures as previously, which would be consistent with its WTO commitments.

The UK's trade deal with the EU is a significant aspect of their post-Brexit relationship. The Trade and Cooperation Agreement established free trade between the two parties, preventing new tariffs or quotas from being introduced.

This agreement has a direct impact on the UK's obligations under the World Trade Organization (WTO). The UK is now a WTO member in its own right, having left the EU's customs union and single market. As a result, the UK has committed to adhering to WTO rules and regulations.

The WTO is in need of reform to stay relevant in today's global economy. The Trump administration's decision to disengage from WTO reform efforts is a major concern for both the EU and the UK.

The current dispute-settlement reform is a crucial aspect of WTO reform. The WTO Appellate Body, which arbitrates in disputes, is currently non-functional, and a stop-gap arrangement has been put in place. This arrangement is temporary and needs to be replaced with a more permanent solution.

The UK can play a significant role in WTO reform by joining the Multi-Party Interim Arbitration Agreement. This agreement is a stop-gap until the WTO Appellate Body is operational again.

The EU and the UK have a common interest in ensuring that the WTO remains relevant. They can work together to seek an expansion of the WTO's membership and develop a more robust approach to economic security. This approach would reconcile a commitment to open trade with measures to respond to economic-security challenges in a proportionate manner.

The EU and UK have a complex relationship when it comes to their WTO commitments. The EU's expenditure limit on trade-distorting agricultural subsidies under the WTO's Agreement on Agriculture is a single figure that will need to be divided up between the UK and the EU27.

This will require a three-way negotiation with third parties, which may have material interests in the division because the UK and other members will subsidise different bits of agriculture.

The EU takes about 50% of UK exports and is the single most important trading partner across all major types of services, including professional, scientific and technical services, information and communications services, and financial and insurance services.

The negotiation of a long-run agreement will be complex and time-consuming because it will require negotiations with all individual EU member states as well as with the Commission.

Here are some key points to consider when it comes to the EU and UK WTO commitments:

Reconstituting UK trade policy will be complex and time-consuming. This means Britain's trade performance will suffer if it's forced to trade on WTO terms instead of with the preferences it's used to on around three-fifths of exports.

The key to success lies in simplicity and cooperation. Maintaining the goodwill of trading partners is a high diplomatic priority, so it's essential to adopt existing EU WTO schedules covering imports of goods and services.

Britain should try to extend current EU-UK trade arrangements for a finite period to negotiate a new long-term agreement. This will give businesses and traders a sense of stability and continuity.

Informal discussions with countries that currently have preferential agreements with the EU should be initiated immediately. This is crucial for service providers, who rely on these arrangements to access markets.

New agreements should not be prioritized over preserving or modifying existing ones. It's essential to examine the EU's WTO commitments carefully to ensure that Britain's rights and privileges are preserved after Brexit.

Here are the key steps to follow: