Brexit deal is done, but is it over? by esharelife

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Brexit bulletin nr. 4

Brexit deal is done, but is it over?

10 January 2021

Dr Lorenc Xhaferraj _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 1

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Contents INTRODUCTION ...................................................................................................................................... 3 POST BREXIT TRADE DEAL BETWEEN THE UK AND THE EU ......................................................................... 5 THE SMALL PRINT ................................................................................................................................. 11 BREXIT IS DONE , BUT IS IT OVER? .......................................................................................................... 18 POST- BREXIT GLOBAL BRITAIN ............................................................................................................ 20 CONCLUSION ....................................................................................................................................... 23 ABOUT US ........................................................................................................................................... 25

_________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 2

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INTRODUCTION On 18 December, European Commission President Ursula von der Leyen declared "big differences" remain in the Brexit trade talks with the UK, with fisheries still the main sticking point between the two sides. At the same time, the UK warned progress in the talks had been "blocked" and that time is running out for a deal to be done. However, the Post-Brexit deal was announced on December 24th, 2020, on the Christmas eve, by Boris Johnson, the UK Prime Minister and Ursula von der Leyen, President the European Commission. Boris Johnson claimed this as his early Christmas gift to the UK people, in compensation of his U-turn regarding the restrictive measures over the Christmas period. This agreement was reached after 10 months of painful and intensive negotiations amid the Covid-19 global emergency, and after four and a half years of the process begun with the UK’s referendum vote to leave the EU. At least, the UK and EU were able to avert the “no deal Brexit” scenario. On Christmas eve, the United Kingdom and the European Union have agreed a Trade and Cooperation Agreement, an Agreement on Nuclear Cooperation and an Agreement on Security Procedures for Exchanging and Protecting Classified Information. These Agreements are designed to honour the instruction of the British people – expressed in the referendum of 2016 and the general election last year – to take back control of our laws, borders, money, trade and fisheries. It changes the basis of our relationship with our European neighbours from EU law to free trade and friendly cooperation. At 11pm on 31 December, the Big Ben, barely visible from the heavy reconstruction works, bonged to signal that from now and on the United Kingdom is formally no longer part of the European Union or subject to its rules. For many in the UK, it was a glorious day. Departure from the EU, for those who voted leave, is a moment to signify the UK has finally reclaimed it sovereignty and took back control from the EU. For others, almost the same number, was simply a moment of relief, a moment to signify the end of Brexit wars, that have lasted eight long years, from the moment then UK PM David Cameron committed the Conservatives to a referendum in January 2013.

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Brexit is done, but the country is divided. Brexit was opposed by majorities in Scotland, Northern Ireland, and London and other cities, as well as by most young people and most graduates. On 30 December, the MPs voted the deal through by 521 votes to 73 – a majority of 448,1 a result that even PM Johnson never have dreamed for. Johnson’s deal passed through the Commons with ease with Labour’s support, with Labour leader, Keir Starmer, describing the deal as “thin”, but Labours backed it because the alternative would be devastating for the UK. All the other parties, the Liberal Democrats, SNP and Democratic Unionist party voted against it.

The Brexit deal leaves behind all manner of sources of future conflict for British politics. The culprit is in the fine print of the agreement, largely ignored of a scrutiny process. Problematic areas include, but are not limited to new immigration controls, the maintenance of regulatory alignment, the status of service industries, fishing, access to databases, defence cooperation and, perhaps above all, the ambiguous place of Northern Ireland within the deal. 2021 will be a great year, not only in terms of expected global economic recovery from the Covid-19 pandemic, but as well in terms of the UK having the opportunity to show to the world its potential as a true, independent from the EU, global leader. During 2021, post-Brexit Global Britain will host G7 Presidency and the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow on 1 – 12 November 2021.

https://www.theguardian.com/politics/2020/dec/31/post-brexit-trade-deal-boris-johnson-thanks-mps-andpeers-for-passing-bill _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 4

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POST BREXIT TRADE DEAL BETWEEN THE UK AND THE EU A week before Christmas, Ursula von der Leyen, the president of the EU Commission said big differences2 remain in the Brexit trade talks with the U.K., with fisheries still the main sticking point between the two sides. At the same time, the UK warned progress in the talks had been blocked and that time is running out for a deal to be done3. Tough negotiations and arguments in Brussels between the EU’s chief negotiator, Mr. Michel Barnier, and his British counterpart, Lord David Frost, dragged on through the week on three familiar issues at stake: • • •

a level playing field, for regulation to prevent unfair competition; fishing, with EU seeking access to British fishing waters; a dispute-settlement mechanism.

In the end Mr Johnson and Ms von der Leyen were brought in to make the necessary compromises. As has been the long-standing pattern, the EU Commission is keen to reach the decisions and compromise at “the eleventh hour”, while for the UK since the 2016 referendum, it has generally had to move the most, largely abandoning its initial position of keeping most of the benefits of the EU’s single market without the obligations. This reflects the power balance between the two, as well as the fact that no-deal would have been more damaging to the UK than to the EU4. Agreeing the deal involved compromise on both sides and both sides had to accept outcomes different from those they initially wanted. In other words, it was like any negotiation, or indeed any business deal: give and take prevailed5.

https://www.bloomberg.com/news/articles/2020-12-17/von-der-leyen-says-big-differences-remain-inbrexit-trade-talks 3 https://www.bloomberg.com/news/articles/2020-12-17/u-k-warns-brexit-talks-blocked-as-time-to-reachdeal-runs-out 4

https://www.economist.com/britain/2020/12/24/britain-and-the-european-union-agree-on-thehardest-brexit 5

UK-EU Trade and Cooperation Agreement: open letter from Ambassador Johnston to business in Ireland, https://www.gov.uk/government/news/uk-eu-trade-and-cooperation-agreement-open-letter-fromambassador-johnston-to-business-in-ireland _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 5

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The post-Brexit deal was announced on December 24th, 2020, on the Christmas eve, signalling that the UK and EU were able to avert the “no deal Brexit” scenario and secured a free trade agreement (FTA) which will maintain tariff-free trade. Although the deal falls short on key areas such as financial services, it marks the end of a turbulent period in UK-EU relations. According to the experts of Institute of Exports and International Trade (IOE&IT) some of the key details of the deal are6: 1. No tariffs Agreeing a tariff- and quota-free trade deal had been the primary objective of the negotiations. The FTA achieves this goal, allowing traders to move goods between the UK and EU without paying duties, so long as they comply with ‘Rules of Origin’ included in the deal. 2. Rules of Origin Rules of Origin determine the economic nationality of a good and are often a key component of FTAs signed between countries. Under the agreement, companies will be able to self-certify the origin of their goods and where the processing takes place will also count towards this. 3. New customs procedures will apply New customs and VAT rules will apply for UK and EU trade – including the requirement for companies to complete customs declarations. However, the FTA includes a protocol for UKEU cooperation when it comes to combatting VAT, customs and excise fraud. The UK can instruct the EU to recover unpaid UK tax from EU companies on its behalf and the EU may make the same request. 4. Independent SPS rules In a chapter on human, animal and plant life and health, the agreement states that the UK and EU may set and implement their own independent sanitary and phytosanitary (SPS) rules and controls. This will require companies trading affected goods – agri-food producers and grocery retailers in particular – to attain new certification and comply with border checks. 5. Uncertainty remains for services While the agreement gives clarity for most goods traders in the UK, it doesn’t shed as much light on the future of UK-EU services trade, particularly financial services. The UK’s access to European financial markets was not finalised in the deal, with the UK still seeking

https://www.export.org.uk/news/news.asp?id=545492 _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 6

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‘equivalence’ status from the EU. The EU has not yet decided whether the UK’s financial regulatory framework and implementation is as rigorous as its own. The UK and EU have stated that they will codify a framework for regulatory cooperation in a Memorandum of Understanding. For legal services, the FTA gives UK solicitors and barristers the right to advise clients across the EU on UK and public international law using their own titles and qualifications. 6. UK can set its own standards The UK can now set its own rules in areas such as environmental standards or labour law. However, if either the UK or EU strays too far from each other’s standards, there is a “rebalancing mechanism” whereby one party can impose tariffs should it deem that its own businesses are put at an unfair disadvantage by the divergence. This mechanism will be governed by international law rather than UK or EU law. 7. Independence on state-aid The UK government can also set its own subsidies for its domestic industries and businesses. According to the government’s own summary of the agreement: “each Party will have in place its own independent system of subsidy control and that neither Party is bound to follow the rules of the other.” However, companies in the EU can challenge government state-aid in the UK’s courts and UK companies can do the same in the EU. 8. Mutual recognition for AEO The UK and EU will recognise each other’s AEO (Authorised Economic Operator) schemes, allowing for AEO-approved firms to move goods more easily between the UK and EU. The principles of the WTO’s Trade Facilitation Agreement (TFA) and the Revised Kyoto Convention will also apply in the deal, meaning both parties will cooperate on expediting the movement, release and clearance of goods, including those that are in transit. 9. Continuity for hauliers Road haulage operators moving goods between the UK and EU will continue to do so without new permit requirements. UK hauliers will be subject to similar standards they already comply with when operating internationally, including restrictions on driver hours, requirement for professional qualifications as well as vehicle weight and dimension limits. However, British truckers will be limited to a single drop-off and a single pick-up when in Europe – a downgrade on the three pick-ups they could do within EU countries before. 10. Short term visits allowed _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 7

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Short-term business visits to the EU will be allowed for up to 90 days in any 180-day month period. Both sides have compromised to reach the deal and both of them interpret the deal on their own perspective. In the UK Prime Minister’s words, the deal is “a new chapter in our national story”, the fulfilment of “the sovereign wish of the British people to live under their own laws, made by their own elected parliament”7. According to the UK government8, this deal delivers important outcomes for the business world in both countries. It secures: •

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100% tariff liberalisation. This is the first time the EU has agreed a zero tariff zero quota deal with another trading partner and this is the largest bilateral trade deal in the world (by volume of goods) continued market access across a broad scope of key service sectors, including professional and business services, supporting new and continued investment between businesses. It also means that business travellers will be able to easily move between the EU and the UK for short-term visits, and the agreement on financial services ensures financial stability and consumer protection.

“All choices are in our hands”, said the UK’s chief negotiator Lord Frost, “and it’s now up to us to decide how we go forward in the future9.” On the other side, the French Minister Clément Beune said that it was a “good agreement” and stressed the EU had not accepted a deal “at all costs”. He added also that “there is no country in the world that will be subject to as many export rules to us as the UK.10”

https://www.theguardian.com/politics/2020/dec/29/brexit-trade-deal-wins-support-of-conservative-ergmps 8 UK-EU Trade and Cooperation Agreement: open letter from Ambassador Johnston to business in Ireland, https://www.gov.uk/government/news/uk-eu-trade-and-cooperation-agreement-open-letter-fromambassador-johnston-to-business-in-ireland 9

https://www.telegraph.co.uk/politics/2020/12/26/brexit-deal-will-bring-moment-national-renewal-sayslord-frost/ 10 https://www.theneweuropean.co.uk/brexit-news/europe-news/brexit-deal-red-tape-6870508 _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 8

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The devil, of course, is in the detail. If the UK loses a dispute over food standards or cars, then tariffs may well be imposed on those areas. This ‘punishment clause11’, however, falls short of the imagined repercussion that many were worried about. Moreover, this agreement is designed to be dynamic, so there are not many things fixed in place. According to the Economist,12 for the level playing field, the two sides have agreed that an independent arbitrator should decide whether future regulatory divergence is sufficiently harmful to permit retaliation through tariffs. On fish, the EU will retain access for just over five years, though with its quota cut by 25%; after that, future arrangements will require negotiation. And there will be a system for settling disputes that does not include a role for the European Court of Justice except for interpreting EU law. With these three points settled, bringing home a zero-tariff, zero-quota free-trade agreement is an achievement for Mr Johnson. On trade in goods, this is a better deal than Canada has with the EU, the model he favoured; but it comes with more stringent obligations on maintaining a level playing field. A bigger concern is what the deal omits. Its trade provisions relate almost entirely to goods, meaning there is next to nothing for services, which constitute 80% of the UK’s economy and make up the fastest-growing sector of global exports. Nor is there anything on foreign-policy co-operation, which the British government seems not to value. And although the deal has some provisions on domestic security, British access to EU security databases and the Europol system of police work will be more limited than now. Similarly, the UK will lose its uninhibited right to use the European Arrest Warrant. For most of the UK citizen, the more immediate impact will be losing the right of free movement throughout the EU, a consequence of ending EU citizens’ right to enter the UK. There will be some travel and work restrictions, and existing arrangements for health care and car insurance are likely to end. Some scientific and research co-operation should continue, but the UK has been excluded from the Galileo satellite-positioning project and there are uncertainties over the terms for its future participation in the Horizon research programme.

https://www.telegraph.co.uk/politics/2020/12/10/vindictive-eu-harms-turning-brexit-punishment/ The Economist, Britain and the European Union agree on the hardest Brexit https://www.economist.com/britain/2020/12/24/britain-and-the-european-union-agree-on-the-hardestbrexit _________________________________________________________________________________ 12

Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 9

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The UK is also going to drop out of the EUâ&#x20AC;&#x2122;s Erasmus scheme of student exchanges. And then there is Northern Ireland, which unlike the UK will remain in the single market and customs union. Border and customs checks in the Irish Sea are likely to foment continuing debate over the future unity of the UK, as will continuing Scottish opposition to Brexit.

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THE SMALL PRINT On 24 December 2020, after 9 (some claim 10) months of fraught negotiations, the UK and the EU reached a historic agreement on how their future trade would be after Brexit. The EU sought to maintain fair competition with the UK by asking the later to remain in line with EU standards. As often happen in difficult negotiations, the devil lies in the detail and in this case, in the small print of the deal. Soon after the publication of 1246 page long text of the deal, Adam Marshall, Director General of the British Chambers of Commerce, said “There’s so much complexity,” and “It’s like an onion -- the more you peel, the more you cry.13” The declaration of France’s Junior Minister for EU Affairs, Clement Beaune, that the U.K. isn’t “fully sovereign” after its split from the European Union because it still needs to follow the bloc’s rules to maintain access to its market14, angered so many Whitehall officials. In his statement in the UK parliament, Rishi Sunak said he predicts a new Big Bang for City when staff return to offices after the lockdown and that in the short-term the UK’s economy “will get worse before it gets better”15. City of London finance workers have said that the UK’s free trade agreement with the EU was effectively a ‘no-deal’ outcome for financial services due to the lack of market access and certainty it provided for the sector. As a result, according to the Financial Times,16 London has already lost €6bn in euro-denominated trade to EU financial centres including Amsterdam and Paris. The cost of sending freight across the Channel Sea has surged following the end of the transition period and logistics experts say that increased prices are here to stay. In the first week of January, moving full truckloads from France to the UK was 39% more expensive 13

https://www.bloomberg.com/news/articles/2021-01-12/u-k-businesses-drowning-in-red-tape-under-brexitborder-rules 14 https://www.bloomberg.com/news/articles/2021-01-11/u-k-not-fully-sovereign-after-brexit-french-euminister-says 15 https://www.thetimes.co.uk/article/sunak-predicts-new-big-bang-for-city-when-staff-return-to-officeslmlf69r9c 16 https://www.ft.com/content/d5c15441-84b4-4827-b7c7-5294475143f0 _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 11

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compared to average prices from the end of last year, according to data from global logistics platform Transporeon.17 According to the BBC,18 international shipping companies – including FedEx and TNT – are also levying additional charges on shipments between the UK and EU to cover new administrative charges. TNT is now imposing a surcharge of £4.31 on all shipments between the UK and the EU. The company is owned by Federal Express, which has also updated its charges. Rivals DHL and UPS have taken similar measures.

Fishing The UK Prime Minister Boris Johnson hailed the trade deal struck by the UK and EU last month as a victory for the British fishing industry. The treaty removed tariffs on a range of goods and will see the EU share of fish caught in British waters reduced by a quarter over five-and-a-half years. While the UK has successfully negotiated its own fisheries management system, the government had gone into the Brexit negotiations asking for an 80% reduction in the EU’s access to the UK’s fish quota. In the end, the EU’s quota was only reduced by 25%. As a result, UK-registered boats’ share of the catch in UK waters will increase from roughly a half to twothirds phased over the next five and a half years, worth about £145m. Fishers are also dismayed at EU access to inshore fisheries (six to 12 nautical miles from the UK coast) and, as of yet, there has been no distant fishing deal agreed with Norway, Greenland or the Faroes. Another challenge is guaranteeing that the UK quota means UK jobs – on and off shore. The UK government and devolved administrations have always been able to set provisions on UK fishing licenses, including crewing and landing requirements. However, EU membership allowed for quota to be sold by fishers across countries, and in 2019, 55% of England’s fishing quota value was caught by boats owned by Icelandic, Spanish and Dutch companies. According to BBC research, in Wales, 85% of the quota is foreign owned, whereas in Scotland (which accounts for 60% of the UK quota) only 4% is foreign owned, and in Northern Ireland 17

https://www.bloomberg.com/news/articles/2021-01-11/freight-firms-cashing-in-on-brexit-bake-in-highershipping-rates 18 https://www.bbc.co.uk/news/business-55530721 _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 12

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it falls to 2%. While most of the UK quota (400,000 tonnes of fish) is landed in the UK, between 200,000 and 300,000 tonnes is landed abroad. While it may be legally challenging to reclaim UK quota that is already owned by foreign companies, the government is currently considering the results of a consultation on ensuring 70% of English quota catch is landed in English ports. Pollard would also like the additional quota that the UK fleet will gain over the next five years to be primarily distributed to smaller boats, who currently catch only 6% of the quota share19. However, from 1 January 2021 fishermen exporting to EU customers have had to complete time-consuming new customs and health paperwork, which is creating delays and leading to orders being cancelled just two weeks into the new arrangements. Fishermen in Scotland are feeling the brunt of the new friction, with fish and shellfish exports like salmon, oysters, and langoustines not reaching customers on the continent on time, or at all. Luke Pollard, Labour’s Shadow Secretary of State for Environment, Food and Rural Affairs, said there was a “strong case for the government stepping in” to provide financial support to affected fish exporters, warning that “jobs across the fishing communities are at risk of being lost.” “The paperwork and red tape that the industry for years fought so hard against has now been quadrupled by Westminster, and that especially affects small boats20. Apart from the explained above issues on fishing, Bloomberg reports other problematic areas, from health certificates to new taxes and additional paperwork, which contributes to raising the cost of moving goods across the English Channel. Just 6% of firms told the Bank of England they were fully prepared for what was to come, and the headaches are just starting less than two weeks into the new system.

https://www.politicshome.com/thehouse/article/luke-pollard-fishers-have-every-right-to-be-angry-overthe-brexit-deal 20 https://www.politicshome.com/news/article/scottish-fish-traders-say-brexit-is-costing-them-over-1m-aday-and-want-the-government-to-pay-them-back _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 13

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Here’s some of the biggest irritations hitting businesses because the U.K. is no longer a member of EU’s single market and customs union21: Customer Documents Companies are facing new frictions affecting cross-border trade. Firms now have to fill in forms such as customs declarations and export health certificates that weren’t required when the UK was a member of the bloc. The problem, some logistics firms say, is many customers don’t understand what documents are required. The customers are massively confused about what’s needed. The industry has long been warning of a shortage of trained staff to fill out the extra 400 million customs declarations that will be required each year for goods moving between the UK and the EU at a cost of about 13 billion pounds ($18 billion). According to the UK Transport Secretary, Grant Shapps, during the first week of January 2021, less than 1% of vehicles are turning up without the correct paperwork. By far the bigger problem, he told BBC radio, is drivers not having the Covid test necessary to get into France. Rules of Origin British firms post Brexit must show where their goods were made -- and where the components in those products come from -- to determine whether they must pay valueadded tax when resold into the EU. The answer determines whether they qualify for tarifffree treatment. Those regulations don’t exist for trade within the EU, making the old system far simpler. Confusion about the rules has already prompted complaints from big-name retailers such as Marks & Spencer Group Plc. Others have suspended sales to the EU. Debenhams temporarily switched off its Irish e-commerce site, while John Lewis Partnership Plc, Asos Plc, and Fortnum & Mason stopped deliveries to Ireland.

https://news.bloombergtax.com/international-trade/u-k-businesses-drowning-in-red-tape-under-brexitborder-rules _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 14

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“Businesses have been completely blindsided by the ‘rule of origin’ part of the deal, which leaves them at a major competitive disadvantage when selling in the EU,” said Michelle Dale, senior manager at accountancy group UHY Hacker Young. “Unfortunately, not enough was done to prepare them.” Drivers Many truckers are still warning of chaos as they struggle to adjust to the new paperwork22 required by the UK’s departure from the European Union. Drivers are being held up for hours because they lack the right documents, they say. With traffic well below its usual levels, the pain has so far manifested itself out of sight at factory gates and truckers’ depots. It’s likely to spread to the ports as activity rebounds in coming days. VAT British exporters must register to pay VAT in EU nations. That is prompting a number of companies to halt their cross-border trade, said Stuart Lisle, chair of the Brexit taskforce at professional services firm BDO LLP. “If we want to keep selling to customers from any EU state from our stocks in the U.K., we must VAT-register in each target country immediately,” said Jennie Potts, co-founder of Mama Bamboo, which sells eco-friendly disposable nappies and wet wipes. “If we don’t, we will trigger immediate liabilities. It’s so irritating. We have to ask is it worth all the time and effort.” Lisle said many of his clients have not had to face those issues before and that the added costs and complexities “can be very expensive to administer.” Health Checks

https://www.bloomberg.com/news/articles/2020-12-31/u-k-says-it-s-ready-for-brexit-border-changes-asnew-era-begins _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 15

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The Brexit deal didn’t align rules for cross-border shipments of phytosanitary products, which cover plants and seeds. Farm goods qualify for zero-tariff, zero-quota terms, but that doesn’t apply to live plants. For Andrew Skea, director of Potato House in Dundee, Scotland, that effectively means that the EU just isn’t accepting his seed potatoes. The product has been grown in Scotland for over 100 years, and half of Skea’s sales are in the EU. “Until now the EU has been a domestic market for us,” he said. “Now we’ll need phyto-sanitary certificates, and the paperwork’s going to have to accompany every order.” Red Tape and Paperwork In an effort to simplify the forms they must file, some shippers are now refusing to carry loads containing a mix of different products from different companies, according to trade body Scotland Food and Drink. That disproportionately hurts firms shipping in smaller quantities. Another issue is that the terms of the deal were announced only days before the deadline for compliance. “If you’re only issuing guidance hours before the end of the transition period and businesses are busy dealing with the pandemic, things will start to fall apart -- and they are starting to fall apart,” said James Withers, chief executive officer of the trade group. It’s asking the government to request a grace period on enforcement by the EU until July. Port Delays and Costs The cost of shipping goods across the border is rising with delays at ports and some trucking firms reluctant to deal with the hassle. “Things keep getting stuck,” said Oliver Conger, managing director of Rototherm Group, a maker of sensors and now personal protective equipment. “I’m now having to buy up what stock there is in the U.K. at three times the price.” Tough new Covid-19 lockdowns that shut non-essential businesses aren’t helping. Four in 10 companies said their cash flow deteriorated in the fourth quarter, with the very smallest hit even harder, according to a survey by the British Chambers of Commerce. “Thousands of small firms need to invest in tech, advice and operational adjustments in order to keep trading _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 16

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across the EU but donâ&#x20AC;&#x2122;t have the cash needed to do so,â&#x20AC;? said James Sibley, who follows international affairs at the Federation of Small Business. Duelling Certifications Products sold in the EU require a CE mark showing they meet health, safety and environmental standards. The UK will develop its own certification, UK CA, meaning companies selling in both regions need to register for both standards.

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BREXIT IS DONE, BUT IS IT OVER? Being recalled on an extraordinary session on 30 December, the MPs had voted the Brexit deal through by 521 votes to 73 – a majority of 448,23 a result that even PM Johnson never have dreamed for. Johnson’s deal passed through the Commons with ease with Labour’s support, with Labour leader, Keir Starmer, describing the deal as “thin”, but Labours backed it because the alternative would be devastating for the UK. All the other parties, the Liberal Democrats, SNP and Democratic Unionist party voted against it. As the European Parliament scrutiny process will take much longer and aiming at avoiding the disruption of trade and other related issues after the end of the transition period, the EU agreed to allow the deal implementation on interim basis, from 1 January 2021, before the EU Parliament approval. Apart from the numerous grave concerns on how the trade will flow between the English Channel in post-Brexit era, the UK-EU agreed deal leaves behind all manner of sources of future conflict for British politics24. The culprit is in the fine print of the agreement, largely ignored of a scrutiny process, at first place by the UK Parliament and include but are not limited to new immigration controls, the maintenance of regulatory alignment, the status of service industries, fishing, access to databases, defence cooperation and, perhaps above all, the ambiguous place of Northern Ireland within the deal. All of these problematic areas indicate that the UK cannot escape in full the engagement with the EU.

The decision to leave the EU was, at its heart, an expression of English nationalism. Even during the protracted Brexit negotiations, the positions and wishes on several trade deal aspects of devolved administrations in Edinburgh, Belfast and Cardiff were largely ignored. The special status (still under the EU regulations) conferred on Northern Ireland by the Brexit agreement with Brussels —and maintaining the Northern Ireland’s open border with the Republic of Ireland while creating a new frontier with the British mainland — offers the prospect of eventual Irish unity. The immediate challenge, though, is from Scotland. Brexit has made an irrelevance of the 2014 referendum vote against Scottish independence. Scotland has been torn from the EU

https://www.theguardian.com/politics/2020/dec/31/post-brexit-trade-deal-boris-johnson-thanks-mps-andpeers-for-passing-bill 24 https://www.theguardian.com/commentisfree/2020/dec/24/brexit-blame-game-no-10-deal-prime-minister _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 18

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against the wishes of the 62 % of the Scots who voted “remain”. Brexit has thus imposed an unwanted choice between union with England and integration with Europe. Recent opinion polls suggest that, faced with that there is now a consistent majority in favour of independence. The prime minister says he will refuse to allow another referendum, but Scottish independence voices are getting stronger with a single day passing. As Philip Stephens, Director of the Editorial Board and Chief Political Commentator of the Financial Times says “The status quo is no longer an option”25. State of Union26 expects that Northern Ireland Special Protocols, granted under the Brexit deal with the EU, will remain a key issue in the early post-deal months of 2021, with all eyes on what the new special arrangements look like in practice across the Irish Sea. All Northern Ireland parties voted against the deal at Westminster, and while many of the most significant potential barriers in the Withdrawal Agreement have been resolved or deferred, don't expect the political fallout from the different arrangements for NI and GB to go away anytime soon. Even Wales might want to join the club of breaking out of the UK. Around a third of voters in some recent polls have shown support for the idea of Welsh independence, with new movement YesCymru seeking to reach out beyond the traditional voice of independence, Plaid Cymru, to build an online presence to push the agenda forward. On the flip side, look out for the increasing footprint of devo-scepticism and those trying to abolish the Senedd. Prospective Conservative candidates are already being sounded out27 on whether they would roll back the current settlement in a referendum, and anti-devolution party Abolish the Assembly looks likely to pick up seats on the regional list in May's election. While less headline grabbing than the Scottish Parliament results, how the Senedd looks after May will have a big impact on Welsh and UK politics beyond 2021.

https://www.ft.com/content/8fa3b25e-f769-4885-a547-df5a2f8f2bf8 https://stateoftheunion.uk/newsletters/f/newsletter-1st-january-2021 27 https://nation.cymru/news/senior-advisor-to-andrew-rt-davies-promises-to-campaign-to-scrap-the-welshparliament/ _________________________________________________________________________________ 26

Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 19

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POST- BREXIT GLOBAL BRITAIN Now the time has come for the UK to unleash its potential and to show to the world what the UK wants to achieve out of the EU chains. As the UK PM Boris Johnson himself has put it, “we have the newly recaptured powers, we know where we want to go, and that is out into the world”28. 2021 will bring some good luck to the UK in this respect. It will assume the G7 presidency and also host the COP26 climate summit in Glasgow. These two global and so unique events, will give the postBrexit UK a chance to leave its marks on the multilateral stage. It will be good for the UK to have EU partners by its side in this endeavour, as well. And it will be good for EU members to be able to count on the UK as a partner in the efforts to strengthen multilateralism. Time will tell if they will cooperate or become rivals. In 2021, the UK and the EU will open a new chapter in their relationship, a chapter that will no longer be dominated by negotiations over a Brexit agreement. That gives the UK and the EU a chance to focus more on what they can do together in order to shape global order.

By coincidence, the UK assumed the rotating G7 Presidency in January 2021. The coronavirus outbreak has also meant that the next summit of WTO trade ministers has been moved from this year to next. This gives the UK a chance to use its G7 presidency to push the WTO in the direction it wants it to go. It will push to reform the World Trade Organisation and trade agreements to reflect the values of free enterprise and fair play, make progress on data and digital trade, and promote greener trade. Without losing time, the UK has declared it is determined to press ahead with trade liberalisation and to restore the powers of the Geneva-based WTO to punish countries that defy trade agreements. In launching the Global Britain debate, Secretary of State for International Trade Elizabeth Truss, emphasized that now for the first time in forty-eight years the UK have full control of its trade policy. “In 2021, we will use this year, including our Presidency of the G7, to champion free and fair trade in an era rife with pernicious practices29” The UK will ‘champion free trade and back the WTO’ during the G7 presidency and it is seeking to work with like-minded countries, like United States, Australia and New Zealand, to reverse

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https://www.gov.uk/government/speeches/pm-speech-in-greenwich-3-february-2020 https://www.gov.uk/government/speeches/opening-statement-on-global-britain-debate _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 20

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the rise of protectionism that began in the years after the financial crisis in 2008 and has been amplified by the coronavirus crisis. It is a fact of great significance and showing the commitment of the UK government that since the UK voted to leave the EU in 2016, the UK has increased its team in Geneva – where the WTO is based – four-fold. As well, at a WTO meeting in Geneva in May, the UK's Deputy Permanent Representative to the organisation restated the UK’s support for the WTO30. Also, the UK Government appointed Dr Liam Fox, the previous minister for trade in the UK, as a candidate to replace Roberto Azevedo at the post of the Director General of the WTO. The bid was unsuccessful, but through Dr Fox the UK Government had the opportunity to express globally its vison toward reforming the WTO31. Through its Mission in Geneva, the UK has reiterated its commitment to help developing countries through COVID-19, where “the WTO “has a major role to play” and its concern that “low and lower middle-income countries are particularly vulnerable to COVID-19 because of the exposure to international shocks, lack of financial stability and macroeconomic imbalances”. Working with WTO the UK has set a plan of measures the UK is taking to keep supply chains open and to offset the immediate impacts: •

•

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The UK’s existing Aid for Trade programmes have been reoriented to work with affected businesses and support developing country who are WTO members. The aim is to help countries and business “make proportionate, evidence-based trade-offs between virus containment and open trade”. The UK is also working to protect key supply chains and trade routes so that essential goods and services, including critical medical and food supplies, reach the most vulnerable. Through the UK’s Trade and Investment Advocacy Fund and funding of the World Bank, the UK is supporting developing country WTO members.

https://www.export.org.uk/news/news.asp?id=509397 https://www.wto.org/english/thewto_e/dg_e/dgsel20_e/stat_gbr_e.pdf _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 21

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As a result of all these measures, those countries would “better understand the trade-related impacts of COVID-19 on their economies, notify COVID-related measures to the WTO’s monitoring exercise, and tackle the COVID crisis through better trade facilitation”32. Another brilliant opportunity to manifest the potential of post-Brexit Global Britain is the COP26 summit that will bring world leaders together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change. At the beginning of year, the UK Government has decided to appointing Mr Sharma as full time President and releasing him from the other official duties. By doing so the UK Government showed to the world that it is fully committed to a successful outcome of the summit. In his statement, Mr Sharma said: “The biggest challenge of our time is climate change and we need to work together to deliver a cleaner, greener world and build back better for present and future generations,” and “Given the vital importance of tackling climate change I am delighted to have been asked by the prime minister to dedicate all my energies to this urgent task.” This would be the largest summit the United Kingdom has ever hosted, bringing together representatives from nearly 200 countries, with over 30,000 delegates, including world leaders, experts, campaigners and government officials33.

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Ibid https://www.gov.uk/government/news/alok-sharma-appointed-cop26-president _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 22

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CONCLUSION 2020 has been a very difficult year for all. It will be remembered for the Covid-19 pandemic, which disrupted the normalcy of billions around the world. It will be remembered for the end of Donald Trump’s US Presidency, and the year in which the UK finally left the EU. The 1,246-page Brexit trade agreement, reached on the Christmas eve, has been described by many as needlessly too long and difficult to digest it in full. But it is indeed a historical agreement, that ended almost a half century “marriage” in a “civilised” way. While both sides agreed to split according to the so called “hard Brexit”- the UK left the EU’s single market and customs union on January 1st 2021, by doing so they averted a “no deal” scenario, that was portrayed by experts as a disaster mostly for the UK. The Brexit agreement falls short of the “best-in-class, comprehensive free-trade agreement” that PM Johnson once promised. But it was a result of protracted negotiations, where both parties have compromised to reach it. A bigger concern is what the deal omits. Its trade provisions relate almost entirely to goods, meaning there is next to nothing for services, which constitute 80% of the UK’s economy and make up the fastest-growing sector of global exports. Nor is there anything on foreign-policy co-operation. As this agreement is dynamic and at least constitute a solid base on which both parties, the UK and the EU will continue to work to build further agreements. Former PM, Theresa May, during her speech at the UK parliament at the time of vote for the Brexit deal, warned that “sovereignty does not mean isolationism, it does not mean we never accept someone else’s rules, it does not mean exceptionalism. It is important as we go forward that we recognise we live in an inter-connected world.” As the Brexit deal is done, in 2021 the UK and the EU will have the opportunity to focus more on building their new relationship, that will no longer be dominated by negotiations over a Brexit agreement. Both sides will have more resources available to focus more on what they can do together to strengthen multilateralism in order to shape the global order. First and foremost, a post-Brexit UK will need to work hard to build trust among its EU partners. The Internal Market Bill and its breach of good faith obligation of the Withdrawal Agreement with respect to the solutions found to protect the integrity of the Good Friday Agreement, have largely contributed to the loss of trust in the UK’s commitment to _________________________________________________________________________________ Esharelife Foundation, Charity no. 1183101 Baird House, 15-17 St. Cross Street, London, EC1N 8UW Tel: +44 207 101 0741 Website: http://www.esharelife.org/thinktank Email: thinktank@esharelife.org 23

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international law. It will take some time to rebuild the trust and to reset relations between the EU and the UK. 2021 has offered to the UK two major events: G7 Presidency and COP26 climate summit. These two events will give the post-Brexit UK a unique chance to leave its marks on the multilateral stage. It will be good for the UK to have EU partners by its side in this endeavour. Likewise, it will be good for EU members to be able to count on the UK as a partner in the efforts to strengthen multilateralism. A post-Brexit UK will â&#x20AC;&#x2DC;champion free trade and back the WTOâ&#x20AC;&#x2122; during the G7 presidency and will be seeking to work with like-minded countries, like United States, Australia and New Zealand, to reverse the rise of protectionism that began in the years after the financial crisis in 2008 and has been amplified by the coronavirus crisis. As well, it will invest to boost its bilateral relations with the US, Japan, Australia, Canada and other like-minded countries to make regional and global systems work in both the national and international interest. Along with already expressed strong commitment toward reforming the World Trade Organisation and re-writing the trade agreements to reflect the values of free enterprise and fair play, the UKâ&#x20AC;&#x2122;s future foreign policy will need to redouble its efforts in the other multilateral forums such as NATO, the OSCE and Council of Europe. This exercise will help to bond with its immediate neighbour and partner, the EU, as well to brand the Global Britain a true, global, defender and promoter of democratic values. Time will tell whether the UK and the EU will be reliable partners to each other, or rivals. ______

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ABOUT US Esharelife Think Tank is a non-profit, independent, nongovernmental organization, not associated with any particular political parties or businesses. It will serve as an open forum where like-minded people can freely share their ideas and knowledge on global development issues and the future of our planet. It is actively cooperating with several think tanks to promote the philosophy of sharing life in the digital era, disseminating information worth reading, and provoking lively discussion on matters that concern all of us. Esharelife Think Tank aims to expand its membership among the circles of academic researchers, businessâ&#x20AC;&#x2122; representatives, and societal changes influencers. Please join us!

Dr Lorenc Xhaferraj is leading the Esharelife Think Tank. He is a former diplomat, with a rich experience in multilateral diplomacy, governmentsâ&#x20AC;&#x2122; and international organizationsâ&#x20AC;&#x2122; affairs. He follows with increased interest multiple policy areas such as current international affairs, counter-terrorism and violent extremism, human rights, UN Global Goals, economic and environmental issues, clean energy and public diplomacy. He holds a PhD in European Studies and shares an equal passion for current international affairs and the latest trends in the information technology sector.

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