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29 June 2018

Battle Lines Drawn in Brexit Trade Talks

Posted By: AIB Business

Undoubtedly, Brexit is one of the biggest challenges facing the Irish Agri-Food sector. In this article the AIB Treasury Unit provide an overview of progress made to date and what can be expected in the months ahead

The UK and EU have outlined their preliminary positions on the shape of post-Brexit trade. The UK is looking for a bespoke deal, with the flexibility to opt in and out of aspects of the Single Market, which would then give it the freedom to set its own regulations for sectors that don’t have full access, as well as negotiate trade deals with other countries.

This is seen as ‘cherry picking’ by the EU, which has completely ruled out “a pick-and-mix approach for a non-EU member”. The EU has indicated that there is “no possibility to have some exclusive form of single market for some part of our economies”. It says this is simply not in the EU’s interests.

The EU and UK did agree in March on a post-Brexit ‘transition’ period, though, to run from March 2019 to the end of 2020, during which time existing trade arrangements will largely be maintained.

While there are major obstacles to be overcome, it is hoped an EU/UK withdrawal agreement can be concluded later this year. This is likely to provide for the transition period and also outline the shape of a future EU/UK trade deal.

There are a number of key events in the Brexit process coming up over the next few months.

  • EU Summit (June 28-29): The UK and EU leaders hope to progress negotiations in a number of key areas, including the issue of Ireland’s border with Northern Ireland and customs arrangements
  • EU Summit (Oct 18-19): Chief EU Brexit Negotiator, Michel Barnier, has set this meeting as the deadline for finalising the Withdrawal Agreement, which will include the likely shape of a future EU/UK trade deal and customs arrangements. Agreement will allow the EU to sign-off on a transition period to run to end 2020
  • EU & British Parliaments to Ratify Withdrawal Deal (January 2019): This could pose more of a headache for the UK than the EU. It will be difficult to bring forward an agreement that will garner the support of opponents and supporters of Brexit in the Conservative Party, making it difficult to get the deal through parliament
  • Britain Formally Leaves the EU (March 29 2019): The hope is that a withdrawal agreement will be ratified by then, which includes the aforementioned transition period

In the event that a withdrawal agreement is not ratified, then the possibility exists of a so-called ‘hard Brexit’ scenario. This would see the UK leave the EU without a trade deal. In such an event, EU/UK trade would be conducted under the ‘default’ WTO rules. This would see tariffs imposed on goods moving between the two jurisdictions, as well as hard borders, including between Northern Ireland and the Republic, involving customs checks.

More of the latest and up-to-date information on Brexit can be found on the AIB Brexit Centre


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