The trade in cars and auto parts between the UK and the EU remains duty free.
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(Foto: Bloomberg)
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London The free trade agreement between Great Britain and the EU has around 1500 pages including attachments. British Prime Minister Boris Johnson quipped in a video on Christmas Eve that it was “a feast and full of fish”.
But what does it say? The new Brexit rules will apply in seven days, and companies are eager to find out what to expect. “The companies will study the details as soon as they can,” said the British industry association CBI.
The contract text has not yet been published. The UK government only posted a 34-page summary on the Internet. Here are some key points:
Güterhandel: Trade across the English Channel remains duty-free. Since Great Britain is withdrawing from the internal market and customs union, customs forms and other papers will be required from January. The British tax office HMRC estimates the number at 270 million per year.
Logistics: British and European freight forwarders can continue to cross the English Channel without restrictions. Due to border controls on the EU side, long traffic jams are expected from January 4th. The IT systems for border clearance have not yet been tested and there are fears that many truck drivers will not have the correct papers with them. The British government wants to introduce its border controls gradually by July.
Aviation: British airlines can fly to the EU as usual, and vice versa, the same applies to European airlines. The British government announced that “operational flexibility” was also ensured. British airlines are likely to lease machines and personnel from other providers and use them on routes to Europe.
Autos: Imports remain duty-free, which protects the supply chains and sales of automakers. The rules of origin are particularly important for the future of the UK auto industry. Only finished products that contain at least 60 percent UK and European parts are duty free. Great Britain had wanted to include Japanese parts because Nissan is the largest manufacturer in the country and most of the primary products for e-cars come from Japan. The British government only writes: “The rules of origin for batteries and e-cars ensure that preferential tariffs apply to e-cars made in Great Britain.” The details are not yet known.
Pharma/Chemie: The highly regulated industries will have to grapple with two sets of rules in the future. The trade agreement provides only a few reliefs. This means that pharmaceutical manufacturers do not have to have their production facilities double-certified by British and European supervisors. In the chemistry chapter there is a commitment to international product rules and cooperation. Details are not yet known.
Skilled workers: The qualifications of doctors, architects, lawyers, engineers and other professions are no longer automatically recognized. They have to seek national recognition in the country where they want to work. After all, they can live and work on the other side of the English Channel for up to 90 days without a visa.
Financial sector: The British financial service providers will lose their passporting rights in the EU from January. The trade agreement is not a substitute. The London companies will therefore have to serve their European customers with subsidiaries in the EU. The industry is waiting for the EU Commission to recognize the British regulations as equivalent. Then they could offer certain services such as stocks and derivatives trading again from London. However, the decisions of the EU Commission are no longer expected this year.
Data exchange: A pragmatic solution seems to have been found here. It is the first time that the EU has included rules on data exchange in a trade agreement, the British government says. There are no conditions for the location of data storage and processing. Electronic signatures are also recognized.
Fishing: From an economic point of view, it was the least important issue, but it cost the negotiators an above-average amount of time. The breakthrough came the day before Christmas Eve when Johnson buckled and accepted the EU’s final offer. European fishermen forego 25 percent of their catch. The quotas will be gradually reduced over five and a half years. Then renegotiate will take place. The British fishermen can then catch a total of 160 million euros more fish a year.
More about the Brexit agreement:
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