Last reviewed 20 February 2020

The UK ceased to be a Member State of the EU on 31 January 2020 and is now in a transition period that will end on 31st December 2020. The UK and EU can jointly agree to an extension before 1 July 2020 to extend the transition period for up to one or two years’ but the UK Government has made it clear that it will not seek an extension. The two parties must therefore negotiate a future relationship by the end of 2020, building on the framework set out in the Political Declaration.

The UK approach

Prime Minister Boris Johnson said in a written statement to Parliament on 3rd February that any agreement with the EU cannot include any regulatory alignment, any jurisdiction for the EU Court of Justice over the UK’s laws or any supranational control in any area, including the UK’s borders and immigration policy. This therefore points to a comprehensive free trade agreement covering substantially all trade, an agreement on fisheries and an agreement to cooperate in the area of internal security, together with a number of more technical agreements covering such areas as aviation and civil nuclear cooperation. The UK will develop separate and independent policies in areas such as immigration, competition and subsidy policy, the environment, social policy, procurement and data protection. There is likely to be substantial cooperation on foreign affairs and related issues. The UK would also like to consider participation in certain EU programmes. The UK’s level of ambition is to reach agreement on provisions which are at least as good as those in the recent EU FTAs with Canada and Japan.

The EU approach

The Commission published its proposed negotiating directives on 3rd February, defining the scope and terms of the future partnership that the EU envisages with the UK. Michel Barnier, the EU negotiator, explained that it has three main chapters covering the economic partnership, the security partnership and the institutional framework and governance.

He said the EU was ready to offer a highly ambitious trade deal including:

  • zero tariffs and zero quotas on all goods entering the EU Single market

  • An ambitious free trade agreement in services, ranging from business services to telecoms to environmental services

  • Digital trade, intellectual property and access to public procurement markets

He warned, however, that because of our geographical proximity and economic inter-dependence there would be two conditions:

  • Competition must remain open and fair. There must be specific and effective guarantees to ensure a level playing field on social and environmental matters, climate, tax and state aid

  • The FTA must include an agreement on fisheries providing for continued reciprocal access to markets and to waters with stable quota shares.

Barnier also warned that however good a deal is agreed, we will still have two separate markets which will mean that rules of origin and customs formalities will apply between the UK and EU, access to the EU market will be subject to certification and market authorisation and supervision activities and there will be no harmonisation or mutual recognition of rules (so UK financial services suppliers for example will no longer have passporting rights). All imports of goods or services into the EU will need to comply with EU rules, whether on safety, health or other standards and be subject to regulatory checks. Where rules converge it will be easier for businesses.

Timetable

If the Council adopts the negotiating directives on 25 February, the Commission will be authorised to start negotiations which would probably begin in early March. There will be a High Level Conference between the EU and UK in July 2020, as foreseen by the Withdrawal Agreement, which will take stock of progress in negotiations. The real hard negotiating is then likely to start with a view to agreement by October to allow time for ratification of the agreement before the end of the year.