The key details of the Brexit deal, from trade to fishing
Britain has struck an historic Christmas Eve deal with the European Union just days before the no-deal deadline.
"The clock is no longer ticking," Michel Barnier, the EU’s chief negotiator, said after Boris Johnson confirmed that a trade deal worth £660 billion a year had been reached last Thursday, Dec 24.
The announcement was delayed after a last-minute hitch on fishing rights, but the negotiations had been deadlocked over the issue, the "level playing field" guarantees and the deal’s enforcement since March.
The issues were vital for both sides. The EU wanted guarantees that UK companies would not undercut its standards in what it said would be unfair competition with its businesses. Britain said it could not sign up to any deal that tied any future government’s ability to split from EU rules.
Governance – the deal’s enforcement – was tricky. The EU insisted on robust enforcement after being infuriated by the UK putting forward clauses that broke the Withdrawal Agreement in the Internal Market Bill.
However, reports from EU diplomatic sources have since revealed that the Prime Minister has "totally capitulated” on fishing in the EU trade deal negotiations, but, both the UK and the EU have made compromises.
The source continued, suggesting it was a “big move”, as the Prime Minister finally accepted the bloc’s final offer of returning 25 percent of the value of fish caught in UK waters to British fishermen. He had previously demanded 35 percent of the value of the catch.
EU ambassadors have given provisional approval on Dec 28 for Britain’s post-Brexit trade deal to be implemented from Jan 1, as MPs in Britain prepare to vote on the deal in a special sitting of Parliament on Dec 30.
The deal reached by the UK and the EU will mean neither side will impose tariffs on goods being traded, and a zero quota agreement would mean no limit on the quantity of any type of goods that could be traded.
Mr Johnson likened the final deal to the "Canada plus plus" arrangement Brexiteers had wanted all along because it will have the benefits of the deal the EU struck with Canada but without any of the quotas or tariffs imposed on some Canadian goods.
Having left the EU’s Customs Union, the UK will also be able to strike free trade deals with other countries. But the fact that Britain will have left the arrangement from Jan 1 means there will be more friction for businesses, which will face more paperwork when exporting goods, and customs checks.
The deal is also expected to cover financial services – 80 per cent of British exports – by recognising professional qualifications, although the City of London’s access to the EU market will be judged on the basis of "equivalence" – a kind of regulatory authorisation that can be withdrawn unilaterally at as little as 30 days notice in some cases.
Britain secured continued access to non-EU car parts and rules covering electric car parts, which officials said protected Japanese car manufacturers in Britain and the future of the industry in the UK.
Boris Johnson likened the final deal to the 'Canada plus plus' arrangement Brexiteers had wanted all along
Credit: Andrew Parsons/Number 10 Downing Street
Britain offered the EU a three-year transition period but demanded it return 80 per cent of its quotas for catching fish in UK waters. The EU countered by demanding unfettered access to UK waters for 14 years in return for giving back just 15 per cent of its quotas.
During months of talks, Brussels came down to 10 years, then eight, leaving the sides haggling over the five-year gap between them as well as the division of the catch between Britain and the EU in the years before the UK takes back full control of its waters.
Mr Johnson agreed that the EU would only repatriate 25 per cent of the value of fish caught in its waters during a five and a half-year transition period, sources in Brussels said. The UK had originally demanded a three-year period with 80 per cent of the value, while the EU wanted a 10-year period with just 15-18 per cent. However, the EU stuck firm at 25 per cent when the UK asked for 35 per cent.
Mr Johnson was forced to drop his demands in exchange for a six-month cut in the transition period from the six years the EU was offering to five and a half years. After the fishing transition period, the UK will conduct annual negotiations on fishing opportunities with the EU, which was a key British ask.
Fishing waters around UK
The EU dropped its demand for a link between the fisheries agreement and the trade deal. London feared Brussels would freeze UK companies out of the Single Market in retaliation for disputes over fish.
Now that a deal has been reached, Britain will start to carve up access to its waters on an annual basis after the transition period. UK negotiators recognise that British fishermen need time to increase the size of their fleet –Britain could not currently catch all the fish in its waters even if it wanted to – while also giving the EU time to adjust.
The EU was also acutely aware that if it did not agree a trade deal Britain would be entitled to 100 per cent of the fish in its waters and, as one Tory MP memorably put it, if EU nations try to fish in UK waters after Dec 31 "all they will get is a visit from the Royal Navy".
Brussels dropped a demand that the fisheries and the trade deal be linked, agreeing in the end to any possible retaliation measures being ringfenced to the fishing industry. Most of the fish caught in UK waters is exported to the EU.
‘Level playing field’
Britain had already agreed to accept the principle of a "rebalancing mechanism" in a concession that helped unlock negotiations after months of stalemate.
The UK agreed to the idea that the EU could retaliate with tariffs if Britain strayed too far from EU subsidy law. In return, Brussels dropped its demand that such remedial action be unilateral and accepted the need for arbitration via an independent panel.
Another major problem that delayed the deal was the EU’s last-minute demand that funding from Brussels, including a €750 billion coronavirus stimulus package, be exempted from the subsidy rules.
This would have enabled EU countries to be given as much state aid as they wanted as long as the money was channelled through Brussels – a situation unacceptable to the UK. It was necessary for the EU to remove this demand before a deal could be reached.
A formal review of the system can take place after four years. If the UK or EU does not believe the system is working, they can cancel the trade deal and trade on WTO terms.
A new dispute resolution body, similar to those in use in trade deals around the world, will settle future disputes on whether either side has broken the terms of the deal.
The body will consist of equal representation, with an independent arbitrator holding the balance of power so it stays politically neutral.
A demand by the EU that it should be able to impose lightning tariffs on the UK without arbitration was dropped at the last minute, meaning tariffs can only be imposed by the arbitrator.
Britain agreed that the trade and security deal, as well as the fishing agreement, be part of one overarching treaty in a clear win for Brussels.
London was anxious about the risk of cross-sector retaliation and that, for example, parts of the trade deal could be frozen in response to a dispute over fish. Cross-sector retaliation remains possible but, in a victory for Britain, the deal is based on international law and not that set by the European Court of Justice.
From Jan 1st, British nationals will need a visa to remain in EU countries for over 90 days in a 180 day period. EU Pet Passports will not be accepted, but owners may still travel will their pet, if they follow a new and more complex process.
Travellers may still use their EHIC (European Health Insurance Card) until they expire. After this date, the government has shared they will be replaced by a UK Global Health Insurance Card (GHIC); however, they are yet to share more details on what this card will involve.
British travellers will not need an International Driver’s Permit to drive in EU countries.
The UK and EU have come to an international mobile roaming agreement, however, the terms of this are still unclear.
UK mobile users will no longer be automatically entitled to free roaming after Dec 31, however, Vodafone, O2 and Three have indicated they will continue to offer it.
he Government had previously said it will cap automatic data charges at £45 a month for operators that do not continue free roaming.
Britain will not continue to take part in the Erasmus + student exchange programme but will pay for continued participation in the Horizon Europe research and innovation fund.
The deal supports continued partnerships between UK and European research and science experts in the Euratom research and training programme and the Copernicus space programme as well.
Number 10 sources have claimed that the deal means no new agreement on migration, but this was actually a British ask.
It is likely to be harder to return illegal migrants to the EU than it was before Brexit without complicated bilateral deals. British negotiators had hoped to strike an EU-wide agreement.
Both the UK and the EU have agreed to allow data to move through borders seamlessly. However, their deal emphasises that an individual has the right to the protection of their data. It shares that both sides have “high standards” to “contribute to trust in the digital economy and to the development of trade.”
The EU has given the UK a four-month period, which is also extendable by a further two months, where data can continue to be exchanged under the same process as it is currently. However, this will only work if the UK does not adapt its rules on data protection in the meantime.