The United Kingdom and the European Union have reached trade deal

After a few weeks of hectic negotiations facing a deadline at the beginning of 2021, a deal has finally been agreed upon on the 24th of December. What was all the fuss about and what does this deal mean? In an article from Reformatorisch Dagblad, Professor of Public Economics at Erasmus School of Economics Bas Jacobs comments on the new trade deal.

According to Jacobs, any deal is better dan no deal: ‘The damages wouldn’t have been comprehendible. The Netherlands would have been one of the biggest losers, since the United Kingdom is our biggest trade partner with regards to the sheer size of trade transactions, after Germany and Belgium’. Even though the existence of a trade treaty is a better alternative than no deal, the Brexit still is a pity, according to Jacobs. In the framework of the economy, the Brexit is unexplicable.

Effects

For the Netherlands, one clause of particular importance is the one regarding the fishing industry. When the United Kingdom was part of the European Union, Dutch fisheries were under the terms of existing treaties authorised to make use of the waters of Britain. Under the current circumstances, the Brits claim back their waters, which implicates a huge impediment to the Dutch fishing industry.

Another clause that draws attention, is a clause concerning tariffs and trade barriers. One of the main objectives of the treaty is to ensure free access to the markets of both parties. However, if any disagreement arises in the future, this clause opens up the possibility of imposing tariffs and barriers. This makes the treaty more unstable, since the subjective term ‘disagreement’ means that a change in political opinion could give rise to renegotiations.

A week before 2021, both parties reached an agreement. However, the European Parliament still has to ratify the treaty, as well as the British parliament. Thanks to a provision in the treaty, this can be done afterwards: the treaty will enter into force the first of January, after which both parliaments can officially and retroactively give their consent.

Professor
More information

You can read the article from Reformatorisch Dagblad, 24 December 2020, here.

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