Charles Tennison | @CKingTenison
So Brexit has appeared more in the news recently and has in the last couple of months. This is for two main reasons:
- The Internal Market Bill, which is making its way through Parliament at the moment
- The free trade deal signed between the UK and Japan, which is the first free trade deal the UK has signed in 50 years (independent of the EU).
We’ll breakdown what the current issues around Brexit are and what is likely to happen.
Where are we at right now?
- The United Kingdom voted to leave the European Union on the 3rd of June 2016.
- After two general elections, and two Conservative prime ministers, the UK Parliament voted to ratify the withdrawal bill on the 24th of January, outlining the relationship between the UK and EU during the transition period.
- The UK officially left the European Union and the 31st of January 2020, entry into a year-long transition period.
Support us by contributing as little as £1 so we can continue to give young people a voice and a platform they deserve
As we are still in the transition period, the UK still follows some EU laws, regulations and practices. The UK is now also agreeing on trading terms with other countries, for a future trading relationship. When the transition period ends on the 1st of January 2021, the UK will have a “no-deal” exit if the UK and EU don’t agree on a future relationship.
Internal Market Bill
So what is the controversy with the Internal Market bill, which has been slated by every living former Prime Minister? If passed, removes power from devolved governments (in Scotland, Wales and Northern Ireland) to regulate standards on things such as food and agriculture.
Firstly, this violates the Sewel Convention, which states the power to be removed from devolved government lies with the devolved governments. The Westminster government must first ask permission from the devolved governments, before removing any of their powers. The Internal Market bill ignores this convention and removes the power without voted consent from them.
Further issues come up with the state of Northern Ireland in the transition period. The transition agreement states that to ensure there is no hard border, between Northern Ireland and the Republic of Ireland, Northern Ireland will remain within the EU customs zone (so, subject to the same trade laws as the rest of the EU).
But for this to happen, goods moving from Northern Ireland to the UK will need to be exposed to customs duties (like entrance fees for products), as Northern Ireland will not be within the UK customs area, it would be within the European Union’s. The Internal Market bill plans to fix this by ensuring that no internal borders, including customs barriers, can exist within the UK.
However, this breaks various clauses within the withdrawal bill, as Northern Ireland would be both in the EU customs area as well as in the UK custom area. Therefore if the UK were to have lower entry tariffs on certain goods, a business could, in essence smuggle goods into the EU through the UK and pay less on tariffs.
This fundamentally undermines the single market, which is a foundation stone of the modern European Union. So, the European Union severely opposes the Internal Market bill.
The government plans and has stated in Parliament that it intends to break ‘international law in a very specific and limited way’. This unsurprisingly has drawn criticism from politicians from both the UK and from the EU.
All that can happen is we can wait and watch to see if the bill passes through Parliament. If the bill does pass, then the EU’s response could be to state a hard border in Northern Ireland is required and could make a no-deal inevitable. If it fails, then Boris Johnson’s government is back to the drawing board and will have to decide whether to, once we have left the EU, to impose a hard border in Northern Ireland or institute customs checks with Northern Ireland.
Japanese-UK Trade Deal
Another major headline has been that the UK and Japan are negotiating a free trade deal, which will encourage business and trade. They’ve agreed on a free trade deal in principle, which should be finished by the end of the transition period. This means that the UK will continue trading with Japan as it currently does under the existing trade deal between the European Union and Japan. Then once it has left, the UK will trade on new terms.
However, this new deal also goes above and beyond the existing EU-Japan deal in specific sectors. Notably:
- The UK has agreed with Japan for there to be more protection for various UK products, so names such as Wensleydale cheese will become a protected term.
- The UK-Japan trade deal also will lead to an increase in the trade of malt, an industry already worth £37 million. .
- Barriers to UK investment in Japan have been reduced.
- Trade for the automobile industry has also been increased. This is particularly promising for Japanese car manufacturers, such as Nissan, which have large factories in north-eastern England.
So what does this mean going forward?
In practical terms, it means the UK now has a new trade partner, which we can start dealing with. So there will be some economic growth. However, the growth predicted, as a proportion of GDP, is only 0.07% (taken for a no-deal scenario). But more importantly, this signifies that the UK can make trade deals with other countries independently.
Other discussed countries include Australia, New Zealand, Canada and the United States of America, all of which historically had close trade links with the UK, especially before the UK joined the European Community (what the EU was called for before it was named the EU). But it is worth noting that the government is yet to achieve anything with any other nation that is concrete. With only three months, at the time of writing, until the UK loses all it’s trade deals with every country in the world, except Japan, there could be some cause for concern.
As previously mentioned, the UK will, at the end of the year, exit the transition period. Unless there is a deal by the end of the transition period, which due to the Internal Market bill, has been described as unlikely by EU officials, the UK will default to a no-deal relationship with the European Union. If this is the case, then the EU, and the UK, will have to start putting customs duties on goods coming from each other.
Now putting the border with Northern Ireland, the EU and UK aside, the UK also has a significant trading border with the EU through the south-east England and France. This is where the bulk of the UK’s trade to the EU goes through. At the time of writing, there has been no notable improvement to border infrastructure: despite the possibility of a dramatic increase in checks if there is a no-deal.
Across the Channel in France, Macon’s government has tested the SI Brexit customs system with their ports, which are fully prepared to deal with the amount of income and the increased number of checks. However, the UK has not had nearly as much success, despite the government’s assurances.
The government has tried implementing various forms of technology programs to speed up the process. Yet to date, all of the five variations of government technology projects have been unsuccessful. The government has also built a car park in Ashford, near the south coast, and made plans to block up the motorway from London to Dover: to be a temporary car park. But, with a 50 000 staff shortfall, as of February, things don’t look promising.
With much of the UK’s trade with the EU coming in the form of fresh food, and medicine, there is a real concern that delays may lead to shortages as well as some goods spoiling. This is further exasperated when considering that many UK businesses have supply chains reliant on EU deliveries. Here any delays may cause a drop in productivity as business supply chains are chaotically disrupted. However, the government has said this is not a concern.
Future President Joe Biden
America has elected Joe Biden as their next president (although the results are still being disputed by Donald Trump despite no evidence). Joe Biden is Irish-American, and has been pretty clear that he won’t be supporting any agreements between the UK and the EU that threaten peace between Northern Ireland and Ireland, like an agreement that creates a hard border in Ireland. Biden’s win makes the chances of a “no-deal” a lot less likely.
So that’s the latest on Brexit. It is likely that if the Internal Market bill passes that the European Union will want to secure the single market by implementing customs duties and will introduce custom borders. These custom borders, could separate communities in Northern Ireland, as a hard border would be introduced, anda make trade of materials, for industry; and fresh food more unreliable.
Suppose the Internal Market bill doesn’t pass? In that case, it looks likely that the Conservative party will have great difficulty keeping some of their election promises. They will have to impose internal borders on parts of the UK or implement a hard border in Northern Ireland. And of course, we are waiting to see if the UK signs any trade deal with any major world partners or will only have one trade partner in January.
But we will have to wait and see as being unsolved the next few months.
Thanks for reading our article! We know young people’s opinions matter and really appreciate everyone who reads us.