Brexit deal: what has been agreed, and what happens next?

James Crisp
The deal finally seems imminent - GETTY IMAGES
The deal finally seems imminent - GETTY IMAGES

The Brexit trade deal was more than 95 per cent done for weeks before reports of “white smoke” from the negotiators in Brussels on Wednesday night.

Disagreements over the three major sticking points of fishing rights, level playing field guarantees and the deal’s enforcement proved far more difficult for the two sides to agree.

And with “nothing agreed until everything is agreed”, that meant the agreement wasn’t done at all.

The issues were vital for both sides. The EU wanted guarantees that UK companies would not undercut its standards in what it said would be unfair competition with its businesses.

Britain could not sign up to any deal that tied any future government’s ability to split from EU rules.

Governance, the deal’s enforcement, was tricky. The EU insisted on robust enforcement after being infuriated by the UK putting forward clauses that broke the Withdrawal Agreement in the Internal Market Bill.

Boris Johnson has been in regular contact with Ursula von der Leyen in a bid to get the deal over the line - PIPPA FOWLES
Boris Johnson has been in regular contact with Ursula von der Leyen in a bid to get the deal over the line - PIPPA FOWLES

In the end, fishing – which was long predicted by many in Brussels to be the easiest to solve – was the last of the familiar three obstacles to remain in the way of a deal.

The sides were divided over how long a transition period should last before annual negotiations over fishing opportunities, and how much of the value of fish caught in UK waters should be repatriated to British fishermen.

So, if a deal is announced, what would be in it?

Trade

Britain wants to be able to continue trading with the EU free from tariffs or quotas in a deal that would be more generous than any offered by Brussels to another country.

If Boris Johnson manages such a deal, it would mean neither side would impose tariffs on goods being traded, and a zero quota agreement would mean no limit on the quantity of any type of goods that could be traded.

It would be similar to the “Canada plus plus” deal Brexiteers had wanted all along, as it would have the benefits of the deal the EU struck with Canada but without any of the quotas or tariffs imposed on some Canadian goods.

The goal would be for Britain not only to be able to trade freely with the EU but also to be free to strike free trade deals with other countries, meaning consumers would, over time, see prices of some goods coming down.

The fact the UK will have left the customs union from Jan 1 means there will be more friction for businesses, which will face more paperwork when exporting goods, and customs checks.

The deal is also expected to cover financial services – 80 per cent of British exports – by recognising professional qualifications, though the City of London’s access to the EU market will be judged on the basis of “equivalence” – a kind of regulatory authorisation that can be withdrawn unilaterally at as little as 30 days’ notice in some cases.

Read more: A deal seems imminent – but will Johnson be able to sell it to Conservatives?

Fishing

Britain offered the EU a three-year transition period but demanded it return 80 per cent of its quotas for catching fish in UK waters. The EU countered by demanding unfettered access to UK waters for 14 years in return for giving back just 15 per cent of its quotas.

During months of talks, Brussels came down to 10 years, then eight, leaving the sides haggling over the five-year gap between them, as well as the division of the catch between Britain and the EU in the years before the UK takes back full control of its waters.

Mr Johnson agreed that the EU would only repatriate 25 per cent of the value of fish caught in its waters during a five and a half year transition period, sources in Brussels said. The UK had originally demanded a three-year period with 80 per cent of the value, while the EU wanted a ten-year period with just 15-18 per cent. However, the EU stuck firm at 25 per cent, when the UK asked for 35 per cent. 

Mr Johnson was forced to drop his demands in exchange for a six-month cut in the transition period from the six years the EU was offering to five and a half years.

After the fishing transition period, the UK will conduct annual negotiations on fishing opportunities with the EU, which was a key British ask. 

The EU dropped its demand for a link between the fisheries agreement and the trade deal. London feared Brussels would retaliate by freezing UK companies out of the Single Market in retaliation for disputes over fish. 

If a deal is agreed, Britain will start to carve up access to its waters on an annual basis after the transition period.

UK negotiators recognise that British fishermen need time to increase the size of their fleet, as Britain could not currently catch all the fish in its waters even if it wanted to, while also giving the EU time to adjust.

The EU is also acutely aware that if it does not agree a trade deal, Britain will be entitled to 100 per cent of the fish in its waters, and, as one Tory MP memorably put it, if EU nations try to fish in our waters after Dec 31 “all they will get is a visit from the Royal Navy”.

Level playing field

Britain has already agreed to accept the principle of a “rebalancing mechanism” in a concession that helped unlock negotiations after months of stalemate.

The UK agreed to the idea that the EU could retaliate with tariffs if Britain strayed too far from EU subsidy law.

In return, Brussels dropped its demand that such remedial action be unilateral and accepted the need for arbitration via an independent panel.

Another major issue to be resolved is the EU’s last-minute demand that funding from Brussels, including a €750 billion coronavirus stimulus package, be exempted from the subsidy rules.

It would enable EU countries to be given as much state aid as they wanted, as long as the money was channelled through Brussels, a situation unacceptable to the UK. A deal will only be struck if the EU removes this demand.

Governance

A new dispute resolution body, similar to those in use in trade deals around the world, will settle future disputes on whether either side has broken the terms of the deal. The body will consist of equal representation, with an independent arbitrator holding the balance of power so it stays politically neutral.

A demand by the EU that it should be able to impose lightning tariffs on the UK without arbitration was dropped at the last minute, meaning tariffs can only be imposed by the arbitrator.

Britain agreed the trade and security deal, as well as the fishing agreement, be part of one overarching treaty.

London was anxious at the risk of cross-sector retaliation and that, for example, parts of the trade deal could be frozen in response to a dispute over fish.

European Court of Justice

Britain has insisted that the European Court of Justice has no future role in British affairs. Boris Johnson – and Theresa May before him – promised that Britain would take back control of its money, borders and laws, meaning that ending the ECJ’s jurisdiction was an absolute red line.

The EU had wanted the ECJ to have a role in interpreting EU laws that were transposed into British law when Britain left the EU, but any deal struck would require that role to be down to an independent arbitration body, which would have no ECJ representation.

Borders and security

Britain wants to retain access to Europol and other European security databases in return for allowing the EU access to the UK’s world-class criminal intelligence.

Britain also expects to have full control of its borders, having ended free movement and with no new concessions over migration.

What happens next?

Now MPs must vote on the deal. Boris Johnson is prepared to push back the parliamentary recess to Christmas Eve should a deal be agreed and MPs have been primed to be recalled.

Parliament could sit on December 30 to vote on it, with Labour already signalling its support

Ministers have drawn up plans for the Bill to pass through the Commons and the Lords and achieve Royal Assent in a single day. 

However, senior Tory Brexiteers warned that they expected sufficient time to go through the deal's wording, which was expected to run to 2,000 pages, and seek legal opinion.

In addition, the UK's apparent concessions over fishing has rung alarm bells for Leaver Tories who do not want a deal that compromises over British sovereignty,

Read more: Camilla Tominey: Will this deal be good enough for Eurosceptic Tories?

What's the deadline?

The Brexit transition period ends on December 31.

The Government has repeatedly ruled out prolonging it further and legislated for a commitment not to agree to any extension.

However, it doesn’t necessarily mean that trade talks will come to a halt.

Negotiators are said to be exploring the idea of review clauses to break the deadlock in EU-UK trade talks, with the possibility that parts of the deal could be revisited several years after they take effect.

Could we still end up with no deal?

If an agreement cannot be reached and signed off by the parliaments of Europe and the UK, Britain will leave the European Union without a deal on December 31.

Michel Barnier has warned of a disruptive no-deal period, during which the EU and UK would trade on World Trade Organisation terms before resuming negotiations.

The Government has prepared the country for a no-deal Brexit and proposed the Royal Navy patrol Britain's fishing waters in the event of a no-deal, after Mr Johnson’s attempts to negotiate directly with Angela Merkel and Emmanuel Macron were rebuffed three times in a week.

Cabinet ministers are drawing up a multibillion-pound bail-out package to bolster industries hardest hit by a no-deal Brexit.

Read more: What no-deal Brexit means, and how it might affect daily life in the UK

What's happening with the Withdrawal Agreement?

After months of heated negotiations and an enormous amount of Parliamentary wrangling, the Withdrawal Agreement was signed in January.

The agreement set out a myriad of conditions of the UK extricating itself from the EU, laying the groundwork for a trade deal with the bloc.

Included in the legislation – ratified in both Brussels and London – is the framework for how the UK will make “divorce bill” payments for years to come.

It sets out areas in which the European Court of Justice still plays a role in the UK and includes an arbitration procedure for disputes about the Withdrawal Agreement.

Perhaps most importantly, the agreement includes protocol for the border on the island of Ireland.

The aim of the protocol was to avoid the return of a "hard" land border between Northern Ireland, in the UK, and the Republic of Ireland, in the EU, due to fears that infrastructure such as cameras or border posts could become a target and lead to political instability.

The Government contravened the agreement in September by tabling the Internal Market Bill, which gives the Government powers to override sections of the protocol, breaking international law in a “limited and specific” way according to ministers.

While it passed the Commons, it facing strong opposition in the House of Lords, where Peers voted to remove the section of the bill that would allow ministers to break international law by 433 votes to 165.

After a meeting between Cabinet Office minister Michael Gove and his EU counterpart Maros Sefcovic, ministers agreed they were prepared to remove these clauses in the Bill as  it moves through the Commons for a second time.

Mr Gove and Mr Sefcovic agreed that 90 per cent of goods crossing the Irish Sea will not be subject to any EU tariffs in the event of a no deal Brexit. Some animal and meat products will be subject to tariffs if they are deemed to be “at risk” of being sold in Ireland, which is part of the EU.

The EU will also have officials stationed in Northern Ireland from January 1, which the Democratic Unionist Party (DUP) said was “unnecessary” and “concerning”, while senior Brexiteers warned the Prime Minister they would be “watching” to make sure he does not give too much away when he meets the European Commission President. 

On December 13, the Democratic Unionist peer Lord Nigel Dodds revealed his hopes that the extension of talks may lead to a tariff and quota-free trade deal between Great Britain and Northern Ireland. 

Mr Dodds shared his concerns regarding a no-deal Brexit, suggesting it would be hard for trade between Northern Ireland and the EU to continue. He shared: "We must ensure that Great Britain to Northern Ireland trade is tariff-free and with the minimum checks."