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Analysis of Brexit Trade Deal

  • 26 December, 2020

  • 8 Min Read

Analysis of Brexit: Limits of sovereignty

GS Paper II International issues (UPSC Mains 2021)

For complete analysis about Brexit and the Trade Deal: click here

  • The tariff­free trade accord in goods that the U.K. and the EU signed on 24 Dec 2020, days before the post­Brexit transition expires, should mitigate somewhat the consequences of Britain’s narrow decision, in 2016, to leave one of the largest trading blocs.
  • This averts a catastrophic ‘no deal’ scenario.
  • The country now faces a potential 4% loss of GDP over 15 years, compared to remaining in the EU. Leaving without any agreement would have led to a potential loss of 6% of GDP, estimates the fiscal watchdog.
  • UK was reliant on EU for about 75% of food product imports. Hence there is a significance of zero duty trade for consumers and the retail economy.
  • The tariff­free access to Europes single market has been realised in exchange for guarantees that Britain would not undercut EU competition rules and environmental regulations.
  • Among the more contentious issues in the talks, the arrangement allays apprehensions about the potential economic threat from the “Singapore­on­Thames” growth model the U.K. might pursue outside the EU.
  • There is now a five­and­a­half­year transition period that guarantees continued access for the affected EU states. The reduced terms for the latter are expected to help British fisheries.
  • A major challenge now would be to keep border checks and red tape to the minimum, besides ensuring that supply chains are not unduly disrupted. U.K. businesses have given a cautious welcome to the agreement, which has left the EU market in services out of its purview, requiring Britain’s pre­eminent financial services sector to negotiate ad hoc measures with European counterparts.

Source: TH

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