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With the divorce of the European Union (EU) and the UK on the 24th (local time), the relationship between the two sides will change in various sectors from January next year.
The draft’Trade and Cooperation Agreement’ agreed upon by the two sides was △ Free Trade Agreement containing new economic and social cooperation relations △ Civil safety partnership to establish a new system for law enforcement and judicial cooperation in criminal and civil law issues △ Governance such as dispute resolution methods It is divided into three axes, such as horizontal agreement.
In particular, the Free Trade Agreement covers not only trade in goods and services, but also investment, competition, state subsidies, tax transparency, maritime, road transport, energy, sustainability, fishing, and data protection.
However, this agreement does not address specific details of the financial sector, foreign policy, foreign security, and defense cooperation.
The following are the main contents of this agreement.
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◇’Product trade’, the core of future relations negotiations
Initially, the UK and EU were in the position that tariff-free trade between the two sides should be carried out even after Brexit.
In addition, there is no restriction on the quantity of products subject to such tariff-free, that is, the quota-free period should continue.
The two sides eventually achieved this goal through an agreement on a free trade agreement.
In other words, the EU decided to guarantee greater access to a single market in an agreement with the UK than any other trade agreements previously concluded with other developed countries.
However, there are differences in comparison with the UK being under the EU single market and customs union.
First of all, from January 1 next year, customs and regulatory borders will be created for trade between the two sides. As customs clearance and quarantine procedures are applied to the movement of goods, confusion is expected compared to now.
The EU Commission said, “While compared to market access within a single market, this agreement will provide sustainable connectivity in air, road, rail and sea.”
◇ Restrictions on freedom of movement of the British
British people no longer have freedom of movement within the EU. This means that in EU member states, the right to work, study, do business or live like a citizen of that country is lost.
British citizens must obtain a visa to stay in EU member states for more than 90 days. Free movement of citizens of EU member states within the UK is also prohibited.
◇fishing
In the matter of fishing, which remained an obstacle until the last minute in trade negotiations between the EU and the UK, an agreement was reached to cut the EU catch quota in the UK waters by 25% over the next five years and six months, citing officials from AFP.
In addition, negotiations will be held annually on EU fishing vessels’ access to British waters.
Earlier, the UK had insisted on reducing it by 60% or 80% over just three years. This is a compromise, but it is predicted that it will be an unacceptable situation for many fishing zones in northwestern Europe that have been operating in British waters for a long time.
Currently, European fishing vessels catch up to 650 million euros (approximately 875 billion won) annually in British waters.
Michelle Barnier, head of the EU’s negotiations on future relations between the EU and the UK, said after the agreement was announced that the EU would stand by the fishing sector.
◇Level playing field
The fair competition environment was one of the issues that showed disagreements until the last minute in the negotiations on future relations between the UK and the EU.
The EU has emphasized that even after the UK deviates from the EU regulatory framework, it should ensure a fair competitive environment in terms of taxes, state subsidies, environment and labor rights.
Otherwise, it has been pointed out that the UK could gain competitiveness compared to EU companies by paying enormous subsidies or preferential treatment to domestic companies and gaining unfair profits.
In this agreement, the two sides agreed on a common legally binding principle regarding state subsidies. This principle is enforceable in both courts, and contains content that allows illegal subsidies to be recovered.
In addition, after Brexit, in preparation for the situation where the two-sided regulations change in areas such as labor rights, a compromise was found by establishing a’rebalancing mechanism’.
This includes independent arbitration proceedings, and has made it possible for the penalties to impose tariffs to restore fair competition.
◇Security
The UK is no longer a member of the European Organization for Legal Cooperation (Eurojust) and the European Police Agency (Europol). However, cooperation between the UK and these agencies continues, in cooperation between the police and judicial authorities on both sides.
The UK can continue to jointly use databases from EU regions that share police alerts of disappearance or theft, as well as terrorist response, suspect fingerprints, and DNA databases.
◇Financial service
Unlike products, services, especially financial services that the UK has strong, did not have specific details in the agreement. The two sides predicted that separate agreements on financial markets will be needed apart from the trade agreement negotiations.
First, from next year, financial services will be subject to regulatory equivalence evaluation.
If the EU determines that the financial regulation and effectiveness of financial supervision in non-member countries meet EU standards, financial companies in non-member countries can also operate without separate approval from individual EU member countries.
The problem is that some regulations do not have EU equivalence standards. The agreement on the day did not include a new EU decision on regulatory equivalence.
As a result, it is observed that from the new year, uncertainties may arise in key areas of financial services such as stocks and derivatives. The two sides plan to conduct separate regulatory negotiations on financial services based on the Memorandum of Understanding (MOU).
/ Reporter Park Woo-in [email protected]
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