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Deal or no deal, we will lose much on 31st December

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Debate about Brexit is now mostly focussed on the need to deliver a deal by the end of the year, and the fact that even given the pressures of the Covid epidemic the Government has decided to press ahead without asking for an extension of the Transition Period.

But regardless of the outcome of those negotiations – and even if the Government can reach a deal with the EU that delivers its election manifesto pledges and respects the commitments it gave in the Withdrawal Agreement – there are fundamental changes ahead.  These changes are the direct result of the UK’s decision not to be part of the Single Market or Customs Union – its conscious political choice to adopt what the EU treaties refer to as Third Country Status, wholly outside the Union’s institutions.

Last week, on 9 July, the European Commission published a paper setting out what those changes would be.  It’s a sobering document, all the more so for the unemotional language in which, like all Commission documents, it is written.  It provides a clear understanding of the minimum practical changes that we can expect from 1 January onwards as the Transition Period ends, and the full effects of the UK’s choice to have Third Country Status take effect.

Those changes include:

  • All UK citizens arriving in the EU will be subject to rigorous border checks.  As a result of the end of Freedom of Movement UK citizens will only be permitted to spend a maximum of 90 out of each 180-day period in the Union without a visa, and will need to meet entry conditions for third-party nationals.  They will not be permitted to work in the EU as of right.  
  • UK travellers in the EU will no longer be subject to the protections of EU law, e.g. compensation when flights are overbooked. Pet passports will no longer be valid, and UK visitors to the EU will no longer be exempt from roaming charges.
  • Regardless of any agreements on the levels of tariffs agreed in the Deal, customs processes will be applied in full when goods cross between the UK and the EU.  And if there is a deal that means that there are no tariffs between the UK and the EU, it will still be necessary to prove the country of origins of the goods, to demonstrate that they are exempt from tariffs.  And, in particular, any items which contain materials originating in the UK, or where the UK has been involved in processing, will be deemed as “non-originating” and will require the full customs processes – effectively creating a huge penalty for manufacturers who involve the UK in their supply chains.  Concluding a deal could reduce or eliminate tariffs, but wholly unprecedented bureaucracy, delays and disruptions to supply chains will still be there, and will hugely damage British exports. 
  • Goods moving from the UK to the EU will be subject to VAT or excise duties when they cross the border – again, providing a huge barrier to export.
  • Certification of standards undertaken in the UK will not be accepted in the EU. Any UK exporter to the EU will need to have their approval to EU standards, by EU certification bodies.
  • UK professional qualifications will no longer be recognised by the EU and will need to be approved in bilateral agreements with every one of the 27 Member States.
  • UK companies will no longer be able freely to provide financial services in the EU.  It will be necessary for business to comply with the third country rules of each of the 27 Member States.  The note reports that the European Commission has consistently sought information from the UK Government to help ease the transition, and that the UK Government has largely failed to provide it.
  • UK transport operators – whether air or road – will no longer be permitted to offer services between locations within the EU (known as “cabotage”).  The Political Declaration makes it clear that any such arrangements will need to be agreed under any free trade deal.

As these changes take effect, some politicians and newspapers will doubtless try to argue that these are the result of the EU being vindictive, or punishing the UK.  Nothing could be further from the truth.  These changes follow on directly from decisions by British politicians – most notably Theresa May, when she set out her red lines in her Conservative Party Conference speech in 2016 – to leave the Single Market and the Customs Union, and that the UK should therefore have third country status.  These are decisions made in London, by a Prime Minister who sought to appease the ultras of the ERG.  

The simple fact is that even if Boris Johnson manages to secure the best deal he can, UK citizens and UK businesses will be facing an unprecedented loss of rights and opportunities.  It will be devastating for Welsh manufacturers and farmers. And, for all the rhetoric of “taking back control”, that loss will be entirely down to decisions by British politicians.

Neil Schofield-Hughes, Chair of Cardiff For Europe