Brexit round-up – 06/11/20

Serious differences remain over a post-Brexit trade deal

Following the completion of the latest round of trade talks which took place in Brussels, the EU and the UK have both confirmed that differences remain over a post-Brexit trade deal. EU negotiator Michel Barnier said there were “serious divergences” over fishing and competition rules and UK negotiator David Frost said “I agree with Michel Barnier that wide divergences remain on some core issues. We continue to work to find solutions that fully respect UK sovereignty.” With time running out for an agreement to be reached before the end of the transition period on 31 December, it is expected that talks will resume again next week. If a deal is not done, the UK will trade with the EU according to the default rules set by the Geneva-based World Trade Organization.

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UK signs economic partnership agreement with Japan

The UK and Japan have signed the UK-Japan Comprehensive Economic Partnership Agreement (Agreement), providing continuity for UK exporters to Japan after the end of the UK-EU transition period on 31 December 2020. CEPA will replace the existing economic partnership agreement between the EU and Japan. The Agreement is a comprehensive free trade agreement covering various areas of trade policy, including trade in goods, eventually eliminating tariffs on 99% of trade between the UK and Japan. It also includes provisions on services, investment and e-commerce, containing commitments liberalising cross-border trade in services and investment, and making it easier for people to travel between the countries for business purposes. The Agreement also contains an ambitious chapter facilitating digital trade and data flows. It also covers other trade-related measures, including Government procurement, competition policy and subsidies, and intellectual property rights. The House of Commons International Trade Committee has announced that it will publish a short report on the agreement after hearing evidence from stakeholders. Stakeholders may submit evidence until 11 November 2020.

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Trade deal negotiations are finalised with Kenya

Negotiations on a trade deal with Kenya have been finalised this week which will ensure all companies operating in Kenya, including British businesses, can continue to benefit from duty-free access as they export products including vegetables and flowers to their customers back in the UK. The agreement will be formally signed once it has been subject to checks. International Trade Minister Ranil Jayawardena said “I’m delighted we’ve reached a trade agreement with Kenya. This deal gives businesses the certainty that they’ll be able to continue trading as they do now, supporting jobs and livelihoods in both our countries.”

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Institute for Government publishes report on UK readiness for end of Brexit transition period

On 3 November 2020, the Institute for Government published a report, Preparing Brexit: how ready is the UK? This report assesses how ready the UK Government, business and individuals are for the end of the transition period on 31 December 2020, and identifies three main areas of concern. First, the Northern Ireland Protocol to the UK-EU withdrawal agreement will not be fully implemented on 1 January 2021. The joint UK-EU committee still needs to take decisions about the practical operation of the Protocol. The infrastructure to administer new processes on Great Britain-Northern Ireland trade will not all be operational. The Government will need to make a trade-off between applying the letter of EU law (and risk more extreme disruption to trade) and facilitating the flow of goods (and risk ending up before the Court of Justice of the European Union). The report recommends that the EU should acknowledge that fully implementing the Protocol by January 2021 will be almost impossible and be ready to show some flexibility. The UK Government must prove that it will not renege on its international obligations, the first step being to remove the clauses in the United Kingdom Internal Market Bill 2019-21 that have undermined trust. It secondly notes that disruption at the EU-Great Britain border is inevitable due to poor trader readiness and EU checks from 1 January 2021. The report recommends that the Government should consider light-touch enforcement or further delays to new import controls to minimise disruption, and should clearly communicate the changes to import processes. The report identifies business readiness as the biggest problem, with the coronavirus pandemic leaving many UK firms less prepared than they were in 2019. The report notes that in October 2020, a third of small businesses believed that the transition period would be extended, despite the deadline for any extension having passed in June 2020.

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If you have any questions about any of the issues which are raised, or would like to discuss your own organisation’s options during the Brexit process, please do not hesitate to get in touch.