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EXPLAINER — How will the EU-British trade deal change ties?

BRUSSELS/LONDON — British and EU negotiators clinched a wide-ranging free trade deal on Christmas Eve, meaning commerce between the trading bloc of 450 million consumers and the sixth-biggest global economy will keep on flowing without tariffs or quotas from Jan. 1.

Britain has hailed the agreement as a clean break with the European Union (EU) that will allow London to set its own agenda, while the bloc has also welcomed a “good deal” that will let the 27 member states move on.

But much will be different once Britain completes its journey out of the EU, its single market and customs union, at the end of this year. There are also areas left unfinished that will require more negotiation.

Here are examples of what will change.

LEVEL PLAYING FIELD — This issue almost derailed the talks when Britain accused the EU of introducing a new demand that would give the bloc a unilateral right to impose tariffs on Britain if it was deemed to have moved too far away from fair competition rules.

The agreement means that now both sides have the right to challenge the other through an arbitration mechanism if any regulatory divergence is deemed to have resulted in a competitiveness issue.

It also says that if such mechanisms are used too often and too long, it can trigger a renegotiation of the relevant parts of the treaty.

MORE CHECKS AND RED TAPE IN TRADE IN GOODS — Unlike so far, goods moving between Britain and the EU will be subject to customs, regulatory and animal safety checks, leading to more red tape requirements.

Ireland, the EU country most affected by Brexit, estimated in September that import and export declarations could increase 12-fold to as many as 20 million per year.

END TO FREE MOVEMENT OF PEOPLE — While the EU and the UK agreed to sidestep visas for short-term stays, the current free movement of people will end.

That means EU citizens going to the UK, and vice-versa, will be subject to more extensive border screening. EU citizens’ right to live and work in the UK — as well as British citizens’ ability to do the same in Europe — will diminish.

Pet passports will no longer be automatically recognized across the EU-UK border.

REDUCED SECURITY INFORMATION SHARING — Britain hailed the deal for ensuring a range of fast and effective security capabilities, but there are significant changes to the way Britain and the EU will share security, police, and intelligence data.

The UK will no longer participate in Europol or Eurojust, and will lose access to the Schengen Information System, though there are ways to share passenger, fingerprints, DNA and vehicle data.

A senior member of the UK negotiating team said the “extensive” deal allowed Britain to collaborate with Europol or Eurojust, but those involved would have to get used to a different process.

CURBS ON TRANSPORT — UK licences for passenger or cargo flights will no longer be sufficient to operate between EU destinations or from the EU onwards. Britain and EU states can, however, run flights between one another, and will cooperate on aviation safety and slots.

For road transport, cabotage will be reduced though hauliers carrying loads between the EU and the UK can operate with no limits and there are full transit rights.

CHANGES TO FISH QUOTAS, LIMITED ACCESS TO WATERS — Full access to one another’s fishing waters ends after a 5-1/2-year transition period from 2021, during which catch quotas will also be gradually moved from the EU to the UK.

Both sides have agreed that 25% of EU boats’ fishing rights in British waters will be transferred to the UK fishing fleet over that period. After that, there will be annual talks to set the amount EU boats can catch in British waters and vice versa.

The senior negotiating team member said both sides had had to compromise, but that at the end of the transition, Britain will have full control of its waters and access to them.

FINANCIAL SERVICES — From Jan. 1, British-based financial services groups lose automatic access to the EU’s single market. Both sides have said new market access must be negotiated outside the trade agreement in specific equivalence deals.

The two sides will also aim to agree by March 2021 a memorandum of understanding on regulatory cooperation in financial services.

SEPARATE ARRANGEMENTS FOR ENERGY AND CLIMATE — Britain will no longer participate in the EU’s internal energy market or be part of the bloc’s emissions trading scheme.

The British government said this month it would establish a domestic emissions trading scheme (UK ETS) from Jan. 1.

STATE AID — On state aid, the two have agreed to create a body to provide independent oversight and to work within six overarching principles.

But Alexander Rose, director at legal business DWF, said: “We know we will have a new UK Subsidy Control regime, but at this point… we don’t know which body will oversee this, what the rules are, and whether block exemptions (used for 99% of awards) will remain.”

ROAMING CHARGES — EU member states have agreed to drop roaming charges for mobile connections and data within their single market, a legal requirement on mobile operators that will no longer apply to Britain from the start of 2021.

Should telecom firms introduce such charges, as is the case with Switzerland, citizens crossing between the EU and the UK will have to turn their data roaming off or face higher charges. — Reuters

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