Last reviewed 1 February 2021
It may have been the pandemic taking the media attention away, or the fact that the final events coincided with Christmas and the New Year, but the end of four and a half years of division and sometimes bitter argument was strangely anticlimactic. We look at developments in the first month since the UK exited the institutions of the EU.
A deal was agreed on Christmas Eve and “Brexit was done” at 11pm on New Year’s Eve. The choice of hour did make it seem as though the UK couldn’t wait to leave but it was of course midnight in Brussels – the agreed time for concluding some of the most fractious negotiations with which the EU has ever been involved.
Our friends in Europe
Prime Minister Boris Johnson continues to describe his counterparts in the Member States as our friends and allies but the new relationship with Europe has not got off to a good start. This could be a problem given, as was explained in last month’s article in this series, that the two sides will soon find themselves seeking new agreements in a whole range of areas.
One rather arcane dispute could surely have been avoided as it is hard to see what benefit Foreign Secretary Dominic Raab stands to gain by refusing to grant the EU’s new ambassador to London full diplomatic status. This is, he said, because the EU is not a nation state and should be downgraded to an international organisation. A fair point, except that the other 140+ countries where the EU has a delegation all accord the Union representative ambassador status.
More seriously, what started as a good news story also degenerated into a war of words as the EU found itself lagging behind the UK when it came to getting supplies of Covid vaccine. It then threatened to block exports from AstraZeneca’s plants in Belgium and the Netherlands if the Anglo-Swedish firm failed to meet its contractual commitments to supply the Union. The European Commission took emergency action, seemingly without consulting the Member States, and trouble escalated — as described below.
The Northern Ireland question
One of the main problems during the UK-EU negotiations centred on the only land border between the two, that between Ireland and Northern Ireland. Recognising the years of conflict in the area, the two sides agreed that nothing should be done that would harm the Good Friday Agreement and that, whatever solution was found, it should not involve the imposition of a “hard border” between the two. The answer was the Northern Ireland Protocol which certainly removed the possibility of checks on the land border between the two although it did so by essentially creating a border in the Irish Sea.
The problems this created became clear within days of the transition period concluding and the extent of the difficulties now imposed on those trying to move goods between Northern Ireland and Great Britain can be seen in the numerous guides and advice notes issued in January by HM Revenue and Customs (HMRC) and the Cabinet Office (see https://www.gov.uk/government/collections/moving-goods-into-out-of-or-through-northern-ireland for example).
As mentioned above, the border suddenly returned to the headlines when the European Commission decided to take drastic action to stop exports of vaccines to the UK that it said should be meant for the EU. This would have meant preventing the possibility of goods moving from Ireland to Northern Ireland, however, and that meant introducing the one thing that the Commission had fought against during the years of negotiations with the UK – a hard border between Ireland and Northern Ireland. Within 24 hours, it seemed to recognise that it was undermining the principle which it had previously insisted was non-negotiable and withdrew its threat to invoke Article 16 of the Northern Ireland Protocol.
That allows either side to choose to suspend any aspects of the Protocol they consider are causing economic, societal or environmental difficulties and was expected to be a rarely-used last resort. That both sides have talked about invoking it within weeks of entering their new relationship does not bode well for future talks.
Still on the subject of what Cabinet Office Minister Michael Gove has called teething troubles, the fishing industry has not had quite the return to days of former glory that were promised during the Brexit campaign. Difficulties with paperwork needed for the shipment of fresh fish has led to delays and reports of catches destined for markets in the EU having to be destroyed. The Government responded by providing £23 million to support seafood exporters which have been adversely affected by “the challenges of adjusting to new requirements for exporting”.
The scheme will be targeted at SMEs with the maximum claim available to individual operators being £100,000. This seemed a more practical response than that offered by the Leader of the House of Commons, Jacob Rees-Mogg who had earlier claimed that fish delayed for export were “happier” because they were now British.
Brexit Business Taskforce
Emphasising its commitment to help companies adjust to new trading rules, the Government has set up the Brexit Business Taskforce with Michael Gove chairing meetings with the leaders of groups including the CBI, Institute of Directors (IoD), British Chambers of Commerce (BCC), Federation of Small Businesses (FSB) and the manufacturers’ organisation Make UK. He told them that border traffic is increasing day by day with no disruption at UK ports and less than 5% of total traffic being turned back at the border for failing to meet customs requirements or for lack of a negative Covid test.
Confirming that the Taskforce would meet weekly, Mr Gove said: “Some businesses are facing challenges with specific aspects of our new trading relationship with the EU, and I want to let them know that we will pull out all the stops to help them adjust.” He urged traders to use the Brexit Checker Tool (available at https://www.gov.uk/transition) to see what actions they need to take.
Reaching for compliance
Another sector which seems to have got off to a smooth start is the chemicals industry with the UK REACH regime coming into effect on 1 January 2021. The ‘Comply with UK REACH’ system is available at https://www.gov.uk/guidance/how-to-comply-with-reach-chemical-regulations and can be used by businesses to fulfil their transitional provisions and create new registrations. Environment Minister Rebecca Pow said: “Having our own independent chemicals regulatory framework will ensure that we make decisions that best reflect the UK’s needs while maintaining some of the highest chemicals standards in the world”.
Businesses trading with the EU Member States should have few problems as UK REACH essentially replicates, with the necessary changes to make it operable in a domestic context, EU Regulation 1907/2006 concerning the registration, evaluation, authorisation and restriction of chemicals (the REACH Regulation).
Good news from Nissan
Given the concerns expressed in recent years about the future of the UK car industry after Brexit, probably the best news for the Government in January was conformation that Japanese car-maker Nissan would be maintaining its Sunderland plant in the long term. Furthermore, it has plans to move additional battery production to the area. This should be enough to satisfy the rules of origin laid down in the UK-EU Trade and Cooperation Agreement (TCA) which have caused other manufacturers problems as they require at least 55% of a car's value to be derived from parts made either in the UK or the EU to qualify for zero tariffs.
Signs of cooperation
When the transition period ended on 31 December 2020, right of access to the territory of the EU previously enjoyed by UK coach and bus operators was removed. This problem was partly alleviated by the UK becoming a member of the Interbus Agreement which allows operators limited access to all EU Member States, Albania, Andorra, Bosnia and Herzegovina, Montenegro, Moldova, North Macedonia, Turkey and Ukraine.
However, only occasional services, such as one-off tourist trips, are covered by this Agreement and a special Protocol, to include regular services — following a timetable and using fixed pick-up points on a specified route — has still to be extended to the UK. In the meantime, the EU has offered a temporary set of measures to run until 30 June 2021 or until the Protocol is agreed. This is dependent on the UK giving equivalent rights to EU operators and observing certain conditions ensuring fair competition. Furthermore, UK drivers must comply with EU rules in areas such as driving time but it does indicate a willingness to move towards mutually beneficial agreements.
To end on a final positive note, January saw the Department for International Trade (DIT) announcing tariff-free trading arrangements with Turkey. This latest success in the process of rolling over dozens of trade deals from which the UK previously benefitted as a member of the EU, is seen as a major boost for UK automotive, manufacturing and steel industries and will support a trading partnership worth £18.6 billion in 2019. Both countries have committed to working towards a more ambitious free trade agreement (FTA) in the future, which will go further than the existing deal.