Brexit Day Arrives

After 47 years and a month of being a Member State, the UK will formally exit the European Union at 11pm (midnight CET) on the 31st of January.  Whichever your viewpoint, the date will be historic. Whether it actually signifies the delivery of the promise to ‘get Brexit done’ is another matter.  There is much to be decided as the 2nd leg of the negotiations on the Future Relationship take centre stage.

For agriculture, what we do know is that until the end of the year at least, the UK will enter a Transition Period where its trading relationship with the EU will remain effectively the same.  The relationship with non-EU countries will also be unchanged as the EU is requesting those nations it has trade agreements with (circa 160 countries) to treat the UK as if it is still in the bloc, even though it will have formally left.  This will mean that the UK will still need to comply with the obligations placed on the EU by the international agreements (covering trade and non-trade issues) until the end of the Transition Period.  However, whether the UK continues to get the benefits of those international agreements is ultimately up to the partner countries. In practice, it is difficult to envisage partner countries refusing the UK as they are likely to be keen on striking up more attractive bilateral trade deals with Britain in the longer-term. This also means that while the UK can progress trade negotiations with other countries (e.g. the US), these could not become effective until after the Transition Period ends. 

Once the European Parliament formally ratifies the Withdrawal Agreement (29th January), the next step in the process will be for the European Commission to formally receive its negotiating mandate from the European Council (the remaining 27 Member States).  With the next Council meeting taking place on 20th February, formal negotiations with the UK are unlikely to begin in earnest until March.  As a decision on extending the Transition Period is due by 30th June, this leaves very little time to have the bulk of the trade negotiations completed, let alone other issues relating to data, aviation etc.  Despite the UK Government’s insistence, it is possible that an extension could be agreed.  It can be the EU that requests this, rather than the UK, thus enabling the Government to claim it has kept its promise.   Technically, only one extension is possible under the terms of the Withdrawal Agreement.  It is, therefore, likely that some form of ‘flex-tension’ will be agreed whereby specific parts of the Future Relationship become operational whilst others are still being negotiated.

For now, the food and farming sector will continue to trade with EU and non-EU partners on the same terms as present.  What happens with regards to standards in the longer-term remains to be seen.  The Government has made conflicting noises of late and it is clear that it is pushing hard for its right to diverge in future, whilst pointing out that it will not diverge for the sake of it.  The prospect of a ‘No Trade Deal’ with the EU at the end of the year cannot be ruled out either.  So, all we really know is that Brexit will formally take place on 31st January and that the Ireland/Northern Ireland Protocol (meaning no hard border on the island of Ireland) will apply, even in the event of a No Trade Deal. Aside from that, all of the uncertainty from last year will start to ratchet up as the clock (but not Big Ben) starts to tick once again.