Brexit agreement reached, now what?
The 585-page – 185-article draft is the end result of one year and a half of negotiations, but many stakeholders are critical with it and it would be a hard fight for Theresa May to get it approved.
The main chapters of the document are:
Part I. Initial provisions
- Acknowledgement of both parties on shared values, including. Human rights.
- Commitment to high-level personal data protection and personal data flow.
- It includes the terms for UK’s participation in EU programs.
- It promotes the dialogue and exchanges in shared areas of interest.
Part II. Economic Partnership
Goods
- Comprehensive arrangements to create a free trade area.
- Zero tariffs or quantitative restrictions across all good sectors.
- Agreements about customs and regulatory cooperation.
- UK and EU intention to a permanent solution to the North Ireland border to guarantee an absence of borders on the island of Ireland.
Services
- Commitments to preserving financial stability, market integrity, investor protection and fair competition.
- Commencement of equivalence assessments by both parties.
- Close and structured cooperation on regulatory and supervisory matters.
Intellectual property protection and enforcement.
Mobility: Arrangements on temporary entry and stay. Also, Mobility based on non-discrimination and reciprocity.
Transport Agreement covering market access and investment. Also, bilateral arrangements for cross-border rail services and connectivity in maritime transport sectors.
Energy Framework to facilitate cooperation between UK and WU on electricity and gas networks.
Wide Nuclear Cooperation agreement.
Fishing Opportunities
- Cooperation bilaterally and internationally to ensure fishing at sustainable levels.
- Establishing new fisheries agreement on access to waters and quota shares.
Global Cooperation
- Cooperation in areas such as climate change, sustainable development, cross-border pollution, trade protectionism and financial stability.
- Commitments to international agreements to tackle climate change.
Level playing field for open and fair competition
Part III. Security Partnership
- Law enforcement and Judicial cooperation in criminal matters
- Foreign policy, security and defence.
- Thematic cooperation (cyberspace, counter-terrorism, illegal migration)
- Classified and sensitive non-classified information
Part IV. Institutional Arrangements
- Structure: a Future relationship based on a broad institutional framework.
- Governance: mechanisms for dialogue at summit, ministerial, technical and parliamentary levels.
Part V. Forward process
- Preparatory organisational work aiming at enabling rapid commencement of negotiations
- Commencement of the formal process of negotiations after the entry into force of the Withdrawal agreement
- Development of a clear programme to deliver the matters agreed in the timetable.
Transitioning period
The transition period will end on December 31, 2020, if not extended. That way, companies and national administrations will have time to adapt to the new relationship between UK and EU.
What’s next?
May, it seems, just about got her cabinets backing, after harsh talks enduring more than five hours. The next step for May is to see the EU ratify the agreement and then the document will need Parliament approval. As things stand, none of the above is guaranteed, with a number of consequences potentially on the table if any of the next steps fail. This could include a renegotiation of the deal, a deferment of the deal, a change of leader, another referendum or even another election if things go really badly, all of which are really difficult and troublesome paths for the UK economy.
As we have seen over the last few days, there are plenty of opportunities for market shocks on the GBP. As of today, the GBPUSD dropped 1.74% on the news of the resignation of Dominic Raab, Brexit secretary, in protest over the deal. Three more resignations followed. Therefore, a bit of caution on the volatile GBP pairs at this point is advisable.
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