Welcome to the first working day after Brexit. The UK is now out of the EU and the time to get on with the new trading relationship is upon us. Time is short as the parties have no more than 11 months to get a deal fully agreed. Trade talks will not officially commence until next month but already we are hearing from the parties what they are looking for. In brief, both parties are keen on a trade deal with minimal trade barriers but they differ on the need for alignment on standards and regulations. Here are some highlights of what has been said today:
- The British Prime Minister Boris Johnson has announced today he wants a ‘Canada Style’ agreement.
- In brief, a ‘Canada Style’ agreement means a deal where tariffs on most goods are eliminated but there are customs and VAT checks whereas the flow of services is more restricted. See here for a fuller description of what a Canada style agreement looks like.
- The PM has also echoed comments recently made by the UK Chancellor, Sajid Javid, that the UK will not accept regulatory alignment with the EU on things like “competition policy, subsidies, social protection, the environment”.
- Meanwhile, Michel Barnier, the EU’s chief negotiator has said in a speech today that he wants an ambitious trade deal with zero tariffs and zero quotas but that would be dependent on the UK agreeing to “specific and effective guarantees to ensure a level playing field” to ensure competition “is and remains open and fair”.
- The EU also wants to ensure that it has access to the UK waters for fishing.
- Additionally, he has said that all goods coming into the EU will need to comply with its rules on health or other standards and, as a result, goods entering the union “will be subject to regulatory checks”. In short, the message appears to be that the EU wants the UK aligned with its standards and regulations.
- The European Commission’s draft negotiating mandate has been published here and includes three components: general arrangements, economic arrangements and security arrangements.
To hear directly from EU representatives, Italian and UK government representatives and from KPMG’s experts, sign up for our seminar at Assolombarda tomorrow!