EU-UK future relations

Now many variables has already come into play and the formal process has only just begun.

The decision of the UK to leave the EU has a significant impact on the European economy as a whole.

This process relates directly to future trading relations between the EU and the UK, but also to the impact on the EU more widely.

Worth to mention that some EU agreements may be considered as precedents for BREXIT EU-UK relations, for instance, the agreements with Norway, Canada, Switzerland etc. However, taking into consideration the trade flow between EU and UK, those agreements are not even comparable. Approximately 44% of UK total exports in goods and services go to other EU countries (the USA is a close second).

Important to mention that the British Government has declared its intention to pursue a ‘hard Brexit’, extracting the UK fully from the single market and seemingly also the customs union, with a view to pursuing a free trade agreement with the EU. This step is strongly supported by the British Government, of course, extracting the UK from the single market shall have either negative or positive consequences for the UK.

Many UK commentators have emphasized the need to avoid a ‘cliff edge’ at the end of the article 50 negotiations, yet the British Government still hopes that a free trade agreement can be struck during this two year period. It is worth noting that the CETA agreement with Canada took seven years to negotiate, but agrees that efforts should be made to avoid a vacuum between completion of the Brexit negotiations and the introduction of a future EU-UK FTA. For this reason, the option of a transition period that extends beyond the two years of the article 50 process should be strongly considered. As it was previously mentioned during the Brexit period EU law should continue to apply in the UK.

The below-mentioned potential sectors of BREXIT have much more significance:

-Non-tariff barriers (Quantitative and Qualitative) 

-Tariffs 

-Restrictions on free movement of persons (labour market)

-Regulatory divergence

Trade in GOODS: 

EU businesses would like as much as possible to ward off tariffs on goods traded with the UK so, without entering into specific sectors.

However, taking into account the nature of non-tariff barriers, of course, they are potentially more significant than tariffs.  The role of the Court of the Justice of the European Union on this is undeniable and, the single market has focused on standards, simplification of quantitative and qualitative rules since 1952. 

The British Government has already expressed its intention to leave the customs union, which means a freedom for trade agreement negotiations with third countries. This point to customs controls between the EU and the UK. However, the impact of this at the border of Ireland and Northern Ireland should not be forgotten either.

Trade in SERVICES: 

No doubt that non-tariff barriers are more suitable to the services sectors. The EU economy including the UK is onerously dependent on services. Even as some EU commentators suggest, the best way to mitigate the costs and difficulties is the conversion of all EU law relating to the services sector into British law as a part of the Great Repeal Bill.

As for one of the most important aspects of this negotiations, the free movement of persons (labour market, citizens) are unclear up to now, however, a clear distinction of such status between them should be drawn.

Thereby, the negotiation process of the EU-UK are in the edge of the propagation and it will take a lot of efforts to get all legal, economical and even political issues right.