Pragmatic Brexit now on agenda for both UK and EU

It is now almost nine years since the UK voted to leave the European Union (EU), the customs union and the single market.

It was a vote that caught most by surprise and the UK government didn’t have a plan in place on how to proceed if a vote was successful.

It was a case of starting the planning process after the vote and the big problem was that very few people really appreciated what the political divorce would mean.

After much wrangling internally in the UK and with the EU, a tariff-free deal was arrived at, coming into effect at the start of 2021.

Even then, there was serious gaps in practical preparation and it has only been in the last year that the UK has been in a position to implement full border controls.

Brexit implementation

The EU, on the other hand, was more prepared and full border controls were introduced on day one.

These were a shock to UK exporters and were so burdensome for animal and plant origin products that many smaller traders simply stopped exporting altogether.

It was only large companies that could afford the additional administration and it has been estimated that the cost of this new non-tariff barrier was, in effect, the equivalent of a tariff on the product being exported at up to 5% of the value.

There was much debate in the post-Brexit years about what type of relationship the UK would have with the EU. What was settled on was the most basic trade deal that excluded tariffs, but reintroduced every other non-tariff cost.

This week, the agreement between the UK and EU to negotiate a sanitary and phytosanitary (SPS) agreement - commonly referred to as a veterinary agreement - would remove a huge non-tariff barrier to trade between the UK and EU.

It would eliminate the need for veterinary certificates and remove the requirement of most port inspections. It wouldn’t eliminate the need for customs controls - hence some paperwork and inspections - but it would be a major step forward.

Will it work?

The UK government, which has been in office for less than a year, has shown ambition in progressing trade deals.

A full deal has been concluded with India, a framework for further negotiation has been put in place with the US and now an SPS agreement is part of a wider deal with the EU.

There is political pushback in the UK, but export-focused industry will welcome it. There is also a major difference since the original deal was signed off – European defence has jumped up the agenda for both the UK and EU.

This is potentially big business and the UK defence industry stands to gain from access to EU defence contracts. Hence a closer trading relationship would bring noticeable benefits.

Perhaps the most noticeable of all will be the ability for British passport holders to use the faster-moving EU-only queues at airports, though this may not apply everywhere and could take time to introduce.

Northern Ireland

An SPS agreement would remove the need for most controls on movement of animal and plant origin goods from Britain to Northern Ireland. However, again, customs controls would remain and this will continue to be a politically sensitive issue.

Another big issue is access for Northern Irish farmers to UK veterinary medicines. Currently, this is allowed in a grace period that is due to finish at the end of this year.

As of yet, there is no mention of this being made permanent - getting this would be an absolute necessity as part of any deal.

After a turbulent decade for EU and UK relations, the London summit does look like a reset of relations.

There was much talk in the past by the EU about not allowing the UK to cherrypick its future relationship with the EU.

An SPS deal would be at least partial cherrypicking, but both sides will benefit.

The EU has maintained a close relationship with Switzerland and despite a previous position being that the UK wouldn’t be allowed this type of arrangement, the indications are that this is exactly what best suits both parties.

The UK will be separate from the EU, but at the same time be very closely linked.