(Xinhua) — As Britain and the European Union (EU) kicked off their new relationship on Friday, analysts here said many aspects of their future ties are still to be resolved despite a post-Brexit trade deal.
“Despite the signing of the deal, there are many aspects of the future relationship still to be resolved, the most economically significant of which is the future arrangements for access to the EU for financial and business services,” Professor Iain Begg from the London School of Economics and Political Science (LSE) told Xinhua.
Begg, co-director of the Dahrendorf Forum at the European Institute, LSE, said the trade and cooperation agreement, only agreed by Britain and the EU just about a week before the end of the Brexit transition period on Thursday, will please some while disappointing others.
“It is best seen as a limited trade deal complemented by provisions for a wide range of other forms of cooperation. But achieving it is a milestone and it is time to move on from agonizing about who won or lost or what might have been,” he said.
Britain stopped following the EU’s rules at 2300 GMT on New Year’s Eve, leaving the regional bloc’s single market and customs union.
The new EU-Britain trade agreement should put an end to years of damaging uncertainty, even though it essentially is a re-imposition of non-tariff barriers swept away by the EU single market. It will also allow both Britain and the EU to concentrate on other priorities, not least dealing with the COVID-19 pandemic, said the expert.
“Despite being a milestone there is plenty of unfinished business left for the EU and UK to argue about over the coming years,” he said.
Among the unfinished business, Begg cited financial services, the leading source of Britain’s foreign earnings and tax revenue, which makes up 80 percent of the British economy.
“While plenty of preparatory work has been undertaken, specific equivalence determination remains to be codified,” he said.
Rajneesh Narula, the John H. Dunning Chair of International Business Regulation at the Henley Business School, University of Reading, agreed with Begg. There are difficult months ahead as some large issues are left out of the current deal, which he said will add uncertainties to the Britain-EU future relations.
“Not one word has been said about services. They have kicked that ball further down the road,” Narula said.
“It means that everything to do with services, that is to say banking, finance and insurance, and telecoms. These are all issues that will be negotiated in the new saga,” Narula added.
Meanwhile, although major British exporters will be relieved not to be facing tariffs or quotas, they will inevitably face increased costs for border formalities, the need for duplication of certification procedures and increased obstacles to the recruitment of talent from EU countries.
Begg also noted that Britain’s fishing industry, even small in its proportion to the British economy, is believed to be one of the sacrificial victims during the trade negotiations, which could have further repercussions in the years to come.
“Indeed, the value of the catch landed by UK boats in 2019 was some 20 percent below the aggregate turnover of the two Manchester football clubs, City (Manchester City Football Club) and United (Manchester United Football Club). But the wrong outcome would have had damaging repercussions, both politically and for localities dependent on the industry,” he added.
Begg said approach of both sides to sovereignty could remain an obstacle to the progress in their future talks.
“Taking back control was a potent and effective slogan for Brexiteers, but also became central to the UK negotiating position. A ‘soft’ Brexit would leave the UK subject to EU rules, yet unable to influence them sufficiently, giving rise to the notion of vassalage. But it was something the EU side was slow to appreciate,” he said.
Britain joined the bloc, known as the European Economic Community then, in 1973 but ended its membership on Jan. 31, 2020, four and half years after Britain voted to leave the EU.
The EU and Britain announced on Dec. 24, 2020 that they had reached an agreement that will govern their trade and security relationship starting from Jan. 1, 2021, after the end of the Brexit transition period.
The deal, which came after nine months of arduous negotiations between Britain and the EU, is the biggest bilateral trade deal signed by either side, covering trade worth around 668 billion pounds (913 billion U.S. dollars).
The EU is Britain’s largest trading partner. Britain is the EU’s third-largest trading partner in goods, after the United States and China.