Updated 18 January 2021
This blog is one of a series answering some frequently asked questions (FAQs) about the UK’s exit from the EU, and what changes on 1 January 2021. These blogs are based on information available at the time of publication, and clearly the situation, and our understanding of it, will continue to be subject to change.
They provide some general information and should not be seen as definitive advice for individual circumstances which may be complex. However, wherever possible links to further sources of information are provided.
Other blogs cover the topics below, and can be found at the following links:
Brexit FAQs: Negotiations
Both the UK and the EU set out their positions ahead of the negotiations starting. On 27 February 2020, the UK Government published a paper outlining its approach to the negotiations.
The UK Government approach paper set out its desire to negotiate a comprehensive free trade agreement. In addition, the UK Government approach was clear that it was seeking to reach a number of other agreements with the EU covering areas such as fisheries, law enforcement and judicial cooperation in criminal matters, transport, and energy.
The European Council (which “defines the EU's overall political direction and priorities”), also adopted negotiating directives providing a mandate to the Commission for the negotiations. The mandate set out that the EU hoped to negotiate a comprehensive new partnership which covered the following areas: trade and economic cooperation; law enforcement and judicial cooperation in criminal matters; foreign policy; security and defence, and thematic areas of cooperation.
The three high profile areas which both negotiating teams highlighted when reporting back on the negotiations were provisions for a level playing field, fisheries and governance of the future relationship. During the negotiations, these issues presented the biggest stumbling blocks to agreeing a deal.
Perhaps the most identifiable descriptions of trading under WTO rules would be the imposition of tariffs (customs duties) on goods imported from the EU and on goods exported from the UK to the EU. In addition to tariffs, there would have been quota restrictions limiting the volume of a product which can be exported or imported, along with customs checks.
A SPICe blog provides more details on this issue, and is available on the SPICe Spotlight blog.
On 24 December 2020, the EU-UK Trade and Cooperation Agreement was finalised. It came into effect on 1 January 2021.
The new Agreement consists of three pillars:
- A free trade agreement.
- Law enforcement and judicial cooperation in criminal matters.
- Governance arrangements, including dispute settlement.
SPICe Spotlight has published a long read on the new agreement.
There are huge uncertainties about the ultimate Brexit outcome on the Scottish economy. A range of scenarios and forecasts have been produced (e.g. Scottish Government, Fraser of Allander). However, these have been complicated by the unprecedented negative economic impact of the COVID-19 pandemic on the economy.
The Scottish economy’s reliance on particular sectors and skills suggests that there could be a differential economic impact from Brexit on Scotland, as compared to the rest of the UK. However, all firms are likely to be impacted in some way, regardless of whether they have an EU trade relationship or not.
Information on the economic impact for the UK is summarised in a House of Commons Library briefing (18 December 2020).
A trade deal exists when two or more countries agree to reduce or, in some cases remove altogether, trade barriers between them, allowing goods to circulate freely across the countries.
Modern trade deals typically also involve commitments such as regulatory alignment or mutual recognition of standards. More detail is available in the SPICe briefing on the Anatomy of modern Free Trade Agreements.